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THE STRATEGIC PLAN FOR THE
SOUTH AFRICAN GRAIN INDUSTRY
6 September 2005
Final
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Table of Contents 1. Preamble 2. Context and Overview 3. Grain Industry Strategy 3.1 Vision 3.2 Mission 3.3 Goals
4. Problem Statement and Challenges 4.1 Skewed participation 4.2 Constrained competitiveness and profitability 4.3 Food security 5. Action Plan 5.1 Broadening participation in the grain industry 5.1.1 Farm level 5.1.2 Secondary and tertiary levels 5.1.3 Human resource development 5.2 Improving competitiveness and profitability 5.2.1 Expanding the market for grains 5.2.2 International Market Access and Trade Policy 5.2.3 Information and Communication 5.2.4 Technology innovation and transfer 5.2.5 Technical standards 5.3 Ensuring Food Security
6. Strategic Framework 7. Annexures: Strategic areas – Task teams contributions 7.1 Empowerment 7.2 Finance 7.2.1 Financing of the Grain Industry 7.2.1.1 Producers: Commercial 7.2.1.2 Development Farmers 7.2.1.3 Agricultural Commodities 7.2.1.4 Processors 7.2.2 Conclusion 7.3 Production and Quality 7.3.1 Introduction 7.3.2 Purpose 7.3.3 Overview of the grain production sector in South Africa 7.3.4 Problem statement 7.3.5 Interventions measures to address the problems 7.4 Grain storage and quality 7.4.1 Framework for the storers to operate in 7.4.2 Quality 7.4.3 Previously disadvantaged individuals 7.4.4 General 7.4.5 Targets
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7.5 Market access 7.5.1 Background 7.5.2 Improving market access 7.5.3 Guidelines for developing infrastructure 7.5.4 Guidelines for providing training 7.6 Technical standards 7.7 Trade and tariffs 7.7.1 Introduction 7.7.2 Grains tariff strategy and action plan 7.7.3 Grain trade strategy and action plan 7.8 Information and communication 7.8.1 Introduction 7.8.2 Report 7.8.3 Strategic planning process 7.8.4 Hurdles in developing a strategic plan for grain 7.8.5 Strategic plan/recommendations 7.8.6 Conclusion Schedule A – list of communication needs Schedule B – Information Reference System 7.9 Research 7.9.1 Introduction 7.9.2 Scope of the document 7.9.3 Research imperatives 7.9.4 Aspects highlighted in responses received 7.9.5 Summary of research activities 7.10 Food security 7.10.1 Inputs suppliers 7.10.2 Producers 7.10.3 Government 7.10.4 Traders 7.10.5 Silo Industry 7.10.6 Processors 7.10.7 Transport 7.10.8 Research 7.10.9 Information suppliers 8. General Information
8.1 GSA Development Programme 8.2 Comprehensive Trade Strategy 8.3 Key note address by the Minister – Grain SA congress 9. Acronyms and abbreviations
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THE STRATEGIC PLAN FOR THE SOUTH AFRICAN GRAIN INDUSTRY 1. PREAMBLE Building on the vision and mission of the ‘Strategic Plan for South African Agriculture’ this document
provides an implementable set of short, medium and long-term strategic initiatives at all levels of the
value chain to bring about a united and prosperous grain industry. These strategic initiatives would be
implemented through a partnership between government and the private sector from a market-
orientated perspective. In developing this strategic plan all participating role players accept the principle
that this plan is for the whole grain industry: From government, input suppliers, insurers, financiers and
the many producers of the major grain crops (maize, soybeans, sunflower, groundnuts, wheat, barley,
oats, canola and sorghum) up to the processors of a wide range of end products (maize meal, animal
feed, starch, glucose, flour, bread, sunflower oil, margarine, peanut butter, etc) and the consumer. There
is a shared commitment to improve dialogue and to ensure greater co-operation to work towards
establishing trustworthy and long standing relationships and partnerships between all stakeholders. The
success of this industry would ultimately have a positive impact on job creation, wealth creation, poverty
alleviation, food security and human nutrition. There is thus a societal interest in ensuring a prosperous,
efficient and advancing sector.
This document is dynamic and task it will be reviewed continuously on a yearly basis to take into
account new developments and dynamics within the grain industry locally and globally. Task teams will
address specific objectives (targets) for the ten identified strategic areas highlighted in the document. A
twelve months time frame will be allowed to finalise the specific targets and action plans which will be
incorporated in the document to complete the strategic plan for the South African Grain Industry. This
process will be co-ordinated by an industry driver who will also facilitate development of an
implementation plan.
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2. THE CONTEXT AND OVERVIEW OF THE GRAIN INDUSTRY
“Grain Industry” refers to all grain (barley, maize, oats, sorghum and wheat) and oilseed (canola,
groundnuts, soybeans and sunflower) industries. The grain industry is one of the largest industries of
South African agriculture producing between 25% and 33% of the total gross value of agricultural
production. The gross value of grain production is as follows:
2000/01 - R12 billion
2001/02 - R21 billion
2002/03 – R16 billion
Source: NDA Abstract 2004
The industry comprises of a number of key stakeholders including input suppliers, farmers, silo owners,
traders, processors, bakers, research organisations, financiers, etc. Grain South Africa represents a total
of 18 000 grain producers (11 000 from disadvantaged communities), representing approximately 90%
of all grains produced in South Africa.
The silo industry was established and grown rapidly during the years of controlled marketing. There is
around 17 million tons of bulk storage capacity in South Africa, 85% of which is owned by 17 grain
handling companies.
The milling industry, consisting of maize and wheat milling, is the next important partner in the grain
value chain. During 2004, large-scale maize millers number around 22 and account for 66% of all maize
meal produced in the country. The top 4 companies in this group of 22 millers produce just more than
50% of this market share. In terms of black economic empowerment in this industry it is known that two
companies (share of 39% of all maize and wheat milled) have black empowerment companies as the
majority shareholders.
Due to increased competition since deregulation and the resulting decreased capacity utilisation, the
number of wheat milling units declined from 137 units to 109. A total of 17 large-scale mills produce
about 95% of all bread and cake flour, but an estimated 70 small flour mills produce approximately
144 000 tons of bread flour and 53 000 tons of cake flour annually. In terms of company concentration it
is known that 4 companies process 90% of wheat milled. The wheat milling industry sells around
1,4 million tonnes of bread flour and 618 000 tonnes of cake flour to the baking industry.
The baking industry also went through considerable structural changes after deregulation. Wholesale
bakers closed 41 bakeries between 1997 and 1998 and we also saw a large increase in the number of
small bakeries, with most of them not having any delivery costs and thus bringing strong competition to
the large bakeries. In 2004 the baking industry consists of 85 wholesale (plant/industrial) bakeries; 600
corporate retail (in-store) bakeries, 3 700 independent bakers and 3 520 franchise bakers. Furthermore
it is estimated that at least 53 200 informal bakers operate from non-licensed premises (home
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industries). At the micro and very small business level the efforts of organisations like ‘Sasko Sally’ and
‘Bake for Profit’ have meant that more black entrepreneurs are entering the baking market as part of the
informal baking sector. It is furthermore estimated that 90% of managers in the bakeries of the retail
bakery sector are black. The baking industry launched the Bakery Empowerment Campaign with limited
start up capital of R42000 to improve the participation of blacks in the baking sector.
The Animal Feed Industry is an important client and role player in the grain supply chain. Around
4 million tonnes of grain and 1.5 million tonnes of oil cake (from imported and locally produced sunflower
and soya beans) are used by the animal feed manufacturing industry in South Africa. This industry
consists of a large number of feed manufacturers of which 38 balanced feed manufacturers and
7 premix feed manufacturers are members of the Animal Feed Manufacturers Association of South
Africa (AFMA). According to the latest estimates only one of these companies are owned by blacks while
in only one other case do we have a black manager in control of a group’s animal feed interests.
An overview of most of the secondary industries in the grain sector (inclusive of those not discussed
above) is provided in Table 1.
Since 1995 grain marketing in South Africa has been deregulated in terms of price intervention. The
agricultural derivatives market was established to provide market participants with a price risk
management facility as well as a price determination mechanism without distorting economic principles.
Grain traders who act on behalf of clients for a fixed fee or margin perform an important function in a free
market orientated grain market. These traders take positions (forward buying and selling) assume risks,
establish value and provide the real cash market for grain. They include international grain traders, local
grain traders and financial institutions that provide credit facilities.
Table 1: Number of processors in the South African grain industry Human consumption Animal feed Industrial milling Oil and oil cake
Maize 282 (31 do 80%) 242 (26 do 80%) 7
Wheat 131 (16 do 80%) 25 (7 do 80%)
Oats 3 18
Barley 6 (3 do 99.5%) 29 (13 do 80%)
Sunflower 26 (9 do 80%) 20 (6 do 80%)
Soybeans 13 39 3
Canola 4 4
Groundnuts 78 10
Sorghum 43 (6 do 80%) 55 (11 do 80%)
Source: SAGIS – processors registered with SAGIS in 2004.
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3. THE GRAIN INDUSTRY STRATEGY 3.1 Vision
The challenge is to enable the industry to realise its full potential and achieve the vision of:
“A united, prosperous and competitive grain industry”
3.2 Mission
To implement integrated programmes to address the identified constraints in the entire grain value chain
to optimally serve the country and its people in particular and the region and continent in general.
3.3 Goals This vision translates into the following goals supported by all stakeholders:
A profitable and sustainable industry
A globally competitive industry
An industry with access to resources and participation
The vision and the goals are to be achieved through the promotion of relevant research, the continued
development of the sector, international co-operation, mutually benefiting programs, capacity building
and skills development and the provision of finance at competitive costs to the whole value chain within
a policy environment that is conducive to achieving these goals.
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4. THE PROBLEM STATEMENT AND CHALLENGES FACING THE SOUTH AFRICAN GRAIN INDUSTRY
The previous section defined the status quo in the grain industry. This illustrates that there are 3 key
challenges to be addressed in order to move the industry to a new level. These challenges are:
4.1 Skewed participation The overview of the industry provided above clearly illustrates the dualism and skewed participation in
the grain industry. As indicated in the “The Strategic Plan for South African Agriculture” the challenge to
improve participation and correct the skewed distribution of land, capital and economic opportunities
remains important across all sectors. The grain industry has made a firm commitment towards the
principle of black economic empowerment in the industry, the details of which are still to be negotiated.
Despite some commendable efforts, the task of comprehensive and full-scale empowerment remains
incomplete and thus remains one of the main challenges facing the industry at all levels of the value
chain.
4.2 Constrained competitiveness and profitability
Following various meetings between the stakeholders in the different grain value chains there was
common acceptance of a range of factors constraining performance in the grain industry and thus
affecting competitiveness and profitability. These factors include inter alia the following and are divided
into those factors that can be addressed directly within the grain strategy and those that cannot:
Factors to be dealt with within the grain strategy (see the various components of annexure 7):
Poor extension and support services
New and proposed legislation that constrain competitiveness, e.g. Property Tax, Water Act, etc.
High production costs
Labour productivity and costs (quality of unskilled labour)
Deteriorating research infrastructure and capacity
Quality concerns in the value chain (quality of inputs, grain, grain products, imported grain)
Access to and cost of finance.
Poor access to timely, relevant and accurate market information
Poor infrastructure and logistical issues.
International agricultural policies distorting grain markets.
Surplus production
Deficit production
Factors falling outside the grain strategy:
Volatile currencies
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Crime factors (at all points of the value chain)
Sustainable environmental management
Low and variable rainfall and limited good arable land
4.3 Food Security
Food security has become a burning issue to such an extent that the Government commissioned a
committee to look at food prices. Food security forms part of Section 27 dealing with constitutional rights
in South Africa. The Constitution states that every citizen has the right to have access to sufficient food
and water and that the State must, by legislation and other measures within its available resources, avail
to progressive realization of the right to sufficient food.
The grain industry is one of the largest and strategic industries in agriculture. According to Minister for
Agriculture and Land Affairs, Ms Thoko Didiza at the Grain SA congress 10 March 2004, South Africa
has a large food insecure population that places a responsibility on both government and civil society to
ensure food security for majority of the population, even though there is no overall shortage of grains in
the country (see annexure 8.3).
South Africa faces the following key food security challenges:
Ensuring that enough food is available to all, now and in the future
Matching incomes of people to prices in order to ensure access to sufficient food for every citizen
Empowering citizens to make optimal choices for nutritious and safe food
Ensuring that there is adequate safety nets and food emergency systems
Possessing adequate and relevant information to ensure analysis, communication, monitoring,
evaluation and reporting on the impact of food security programmes on the target population
The Minister also referred to the following issues:
The supply and availability of food continues to be a concern for some SADC countries as well.
A precise means of addressing this food security problem in the region has not yet been finalised.
Government has committed itself to regional and continental agreement relating to the creation of a
food reserve system (FAO conference 2003). This matter should be fully investigated soonest.
Another aspect of food security challenge that is not always understood is the negative impact of food
aid on South African commercial sector. This element would also have to be taken into account in
considering a regional food security system. Particular concerns of member countries would have to be
incorporated in finding most appropriate solutions for all in accordance with their specific domestic
needs. Other external factors such as exchange rate, regional and local supply and demand factors,
climatic conditions, world commodity prices can influence the availability as well as pricing of grain
commodities. These factors have major impacts on the affordability of food for poor households.
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The grain industry is an important partner in the government’s continuous effort (see annexure 7.10) to
achieve food security for all households in South Africa. This industry plays a vital role in terms of
providing sufficient quantities of the grains necessary for basic staple food requirements. Government
has therefore an interest in ensuring that the industry remains competitive and viable.
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5. ACTION PLAN
5.1 Broadening participation in the grain industry
The following actions need to be taken into consideration for broadening participation in the grain
industry.
Broadening participation in the grain industry is one of the key objectives of this strategic plan. All role-
players accept that this strategy must be much broader than just empowering black farmers. It should
take place at all levels throughout the whole value chain. It is also important that this strategic focus
aligns with the government’s BEE strategy. According to the BEE strategy, black economic
empowerment can be achieved in four ways:
Direct empowerment through ownership and control.
Human resource development and employment equity.
Indirect empowerment through preferential procurement and enterprise development.
Social responsibility.
5.1.1 Farm level
In the spirit of partnership and mentoring of farmers a number of initiatives were launched to assist black
grain farmers across the country. These initiatives involve provision of farmer training programmes,
supplying and financing inputs, sharing experience and machinery. Some 11 000 farmers have
benefited from GSA programmes (see annexure 8.1) alone. It is recognised that there are other
independent farmer development initiatives by PDA’s, NAFU, Agribusinesses, Trusts, etc. This effort is
done in close collaboration with the ARC, Provincial Departments of Agriculture and input suppliers.
There are also many other initiatives however, many of these efforts are done independently, largely
uncoordinated and in some cases co-operation is also lacking. Frustration amongst black farmers due to
poor access to finance, poor extension service (see annexure 7.5.2 and 7.5.4) and general limited
engagement of government is also rife.
In the context of improved co-ordination and co-operation government, through its national and
provincial structures, commits itself in order to see that the partnership philosophy is lived up to. The
following plans would now be brought into action:
Provincial Departments have a joint responsibility with the industry in formation of study groups.
The relevant Provincial Department of Agriculture should be requested to assign an extension
officer (after comprehensive training) to such a group.
Government would support and co-finance accredited skills training programmes for farmers.
The government would revitalise the LRAD programme by ensuring that budgetary funding is
available to assist land purchases by individual farmers. The process would also be speeded up to
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ensure that beneficiaries that have identified land could obtain access to land much more speedily.
Mentorship should be central to such beneficiaries to ensure that farming activity can start without
delay. In addition to the land reform grant it seems appropriate to consider some start-up funding for
these beneficiaries to get their farm business going.
The government would consider a programme whereby on-farm as well as off-farm infrastructure on
newly established and targeted black-owned farms are subsidised according to guidelines
contained in the “Comprehensive Agricultural Support Programme (CASP)".
Access to production finance (see annexure 7.2) seems to be one of the major factors affecting the
ability of blacks to enter commercial farming and the mainstream of agricultural activity. It is one of
the major barriers preventing true empowerment of black farmers – especially for those farming in
the former homeland areas. This aspect is currently the major source of frustration for many black
farmers and would be addressed as a matter of priority. Government can consider the following
options:
- A state guarantee for production loans or alternatively a subsidised crop insurance scheme,
which addresses issues on premiums, administration costs and reinsurance. Government
should also play a role in reinsurance in cooperation with international re-insurers.
- Introduction of more financial intermediaries closer to farmers. Given the high costs of such an
institutional framework, government would have to finance part of the transaction costs to
enable the institution to on lend at market related rates.
- Combining production finance with market opportunities and hedging instruments through
unique contracts for designated farmer groups. The issue of crop insurance and insurance
capacity is also relevant here.
- A disaster management (or safety net) programme needs to be in place to provide guidelines to
government on how to act in extreme weather conditions. In this regard government commits to
fast track the process to implement the Agricultural Risk Insurance Bill.
Limited and poor market access is also a major factor constraining proper empowerment of black
farmers. The ‘poor market access’ that black farmers experience is largely a function of high transaction
costs. This is caused by poor information and communication about marketing opportunities, market
prices, hedging instruments and poor interpretation of contract terms. In addition long distances to
delivery points/depots/silos also hamper market access.
In an endeavour to improve market access of black farmers the stakeholders in the grain industry
commit themselves to the following:
The formation of black farmers study groups to be facilitated by the industry jointly with the
Provincial Department as far as possible.
Accepting that producing a good product goes a long way in securing market access, it is
necessary to expand existing training programmes to improve production skills and knowledge.
Silo owners (and buyers of grain) accept their responsibility to ensure credible, transparent and
non-discriminatory practices in grading, handling, storage and pricing in accordance with the
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existing code of ethics adopted by all grain silo owners. In this code of ethics grain silo owners
commit themselves to grading grain according to the grading regulations of the Directorate Plant
Health and Quality of the Department of Agriculture.
A comprehensive system of market information, tailor-made for the needs and circumstances of
black farmers, would be introduced in a collaborative effort between government (PDAs and the
Directorate Agricultural Statistics and the Directorate Agribusiness Promotion and Industry
Relations of the DoA), SAGIS, GSA, NAFU, silo owners and grain traders. The intention is that the
interpretation and dissemination function should lie with the various government departments listed
here.
Grain traders and agricultural financiers should ensure that the standard grain-trading contract
makes provision for all farmers. Participation in contract design, arbitration and dispute resolution is
important for the sake of transparency and trust. In this context it is also agreed that silo owners
and millers would continue their practice of receiving and storing any quantity of grain, provided it
complies with the minimum sanitary and phytosanitary standards.
Provincial governments in the main grain producing regions would implement a large programme of
improving rural roads so that distance to delivery points can in relative terms be shortened. A
business plan with implementable targets needs to be developed as a matter of urgency.
The formation of ‘new’ co-operatives would be a further vehicle to improve market access through
collective marketing.
5.1.2 Secondary and tertiary levels
In terms of empowerment beyond the farm gate the stakeholders agree to a facilitative process of
business development for black entrepreneurs entering the business of grain trading, storage, transport
and processing. In this context the following activities and tasks would be implemented:
Develop appropriate and innovative development programmes, project models and targets to
activate empowerment opportunities at various business points in the different grain supply chains.
Develop innovative ways to overcome the high capital requirement of access in the processing
business.
Facilitate joint ventures and partnerships through leverages as potential opportunities for black
economic empowerment.
Insurance that participants in new business ventures have continuous access to technical, business
and marketing advice.
5.1.3 Human resource delevopment
The core focus of this action plan is to improve the supply of skilled workers to the industry in terms of
international norms and standards. Successful human resource development would require that specific
attention be given to the skewed access and participation of black people in the industry in the whole
value chain. Training and skills development is needed in:
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Production practices of the different grains
Food science and practical skills in the grain processing business
General business skills (including financial, marketing and risk management)
Training on aspects related to pesticide use and handling, market quality assurance requirements
and SPS requirements by the market
Interpretation and handling of market and business information
Understanding of the components and terms of grain contracts
Elementary aspects related to the working of futures markets
A programme to address all above aspects would be developed by all stakeholders in the industry (see
annexure 7.3.5 and 7.5.2).
In the agricultural context we also need to add the following components to ensure wider participation of
blacks in the industry:
Land redistribution and restitution.
Comprehensive agricultural support structures and services.
5.2 Improving competitiveness and profitability
In terms of achieving the goals of a competitive, profitable and sustainable industry the following action
plans need to be implemented.
5.2.1 Expanding the market for grains The long term survival and financial viability of the grain industry depends on its ability to expand market
opportunities in the domestic and international market for all grain farmers and new entrants into the
industry. Surplus grain production locally and internationally has a negative impact on the profitability
and sustainability of grain industries worldwide. Expanding the market for grain milling products in SADC
would be one avenue of increasing the market. In addition alternative uses for oilseeds and maize
through bio-diesel and bio-ethanol can provide another important opportunity to expand the domestic
market for grains. Negotiations and planning for the development of an economically viable policy
framework for the production of environment-friendly and renewable fuels such as bio diesel and bio-
ethanol are under way. Avenues for expanding markets for other grains need to be addressed.
Reference is made to the CSIR studies into the potential roles of bio-diesel and ethanol in South Africa.
CSIR studies on bio-diesel and ethanol concluded that renewable fuels hold:
A cleaner environment
New job opportunities
Favourable balance of payment effect
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Development of rural communities, and
Development of new market opportunities for oil seed and grain producers.
5.2.2 International Market Access and Trade Policy
The focus of this strategy is on the ability of the South African grain industry to access international
markets. Various factors affect access to international markets and thereby the competitiveness and
profitability of the grain industry. These include:
High subsidisation levels of grain production in developed countries.
High levels of tariff and non-tariff protection in developed economies
Issues related to GMO’s in grain commodities such as segregation and identity preservation and
restrictions imposed by importing countries.
Food aid in the SADC region and the purchasing behaviour of relief organisations.
The cost, efficiency and availability of rail transport, as well as the inefficiency at the ports.
SPS standards and negotiations
The implementation of tariffs and anti-dumping measures (see annexure 7.7)
No export promotion programmes for South African grain
In the spirit of the ‘Strategic Plan for South African Agriculture’ the National Department of Agriculture
has already drafted a comprehensive agricultural trade strategy (see Annexure 8.2), which addresses all
the concerns raised by stakeholders. This strategy is based on the regional reality (SACU and SADC
context related to trade protection); our commitments under current and future bilateral agreements; and
in the third place the multilateral engagements to address world trade concerns. It is further
acknowledged that there is a need to improve our capacity and skills of negotiation and control aspects
related to all trade matters, including SPS matters. A target for the training of twenty specialist/analysts
in these matters by 2005 is set. Consideration should also be given to the establishment of export
enhancement programmes and a trade desk to support South African grain exports.
To ensure continued access to world markets it is now necessary that strong measures be implemented
to ensure segregation between GM and non-GM grain commodities. To this effect the Grain Silo
Industry and the commercial grain silo owners commit themselves to where possible make provision for
segregation of GM and non-GM grain. The segregation between GM and non-GM products should
however be backed-up by GMO labelling legislation which is under consideration.
5.2.3 Information and communication
The core focus of the information and communication action plan is to provide quality, timely and
appropriate industry information to assist strategic leadership and informed business decisions. In
addition this strategy also has as objective the creation of an effective and efficient information reference
and communication system (see annexure7.5.2 and annexure 7.8 schedule B).
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The industry has through a collective effort established a Section 21 Company, the South African Grain
Information Service (SAGIS), which operates a well developed and co-ordinated market information
function. Although SAGIS provides free, accurate and relevant information there are some concerns
regarding distribution as well as the assimilation of the information. It is related to the latter aspect of
assimilation that more analysis, interpretation and intelligence are needed. Specific efforts are required
to make market and industry information available to disadvantaged communities in a format they could
utilise. In this context the following activities and tasks need to be performed:
Government should:
- Address issues relating to strengthening its statistical and economic analysis capacity at national
and provincial level to provide more analysis and interpretation of SAGIS data and thereby also
ensure a wider dissemination of information. In this regard a much stronger collaboration
between SAGIS and government is envisaged.
- Undertake a needs analysis to identify disadvantaged communities’ information needs and
ensure that information is disseminated in the form and frequency according to their needs.
- Look at ways of improving quality of key information, such as crop estimates.
Stakeholders in the grain industry, SARS and DTI need to collaborate to ensure that :
- Actual export and import figures on all grains are available on a weekly basis. This is crucial
information for the market and a reporting system on actual trades and signed contracts for later
delivery.
- Improving the CPI and PPI figures by requesting Stats SA to record the appropriate packaging
and product type in the composition of the various indices.
- Establish an effective and efficient information reference system (see annexure 7.8.6
schedule B). The system should not carry actual information but use key words to link a person
to the various sources of information. Access to this system via multimedia, DSTV, internet and
other systems could be obtained at upgraded multi-purpose community centres.
- Establish an effective and efficient information help desk as a service where questions could be
raised in any format and the client could be directed to the appropriate service providers.
Extension officers could also be issued with a complete reference book to assist them to be able
to help farmers with their problems.
5.2.4 Technology innovation and transfer
The long-term global competitiveness of the South African grain industry depends on its ability to learn
and innovate faster than its competitors. This requires a well-designed, well-financed and well-executed
programme of research and technology development.
The research agenda for the grain industry (See Annexure 7.9) is already well defined and the various
programmes such as plant breeding, alternative crops, production requirements, alternative utilisation of
crops as well as research on sustainable livelihoods would all address the various strategic programmes
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listed above. The stakeholders in the grain industry accept that the research agenda, as compiled by the
ARC and various stakeholders, is appropriate. It is comprehensive and inclusive but the major concern
relates to the funding needed to implement the research agenda as a result of the current funding crisis
of agricultural research and the dwindling skills base to do the research. It is for this reason that two
critical activities have to embark upon:
The NARF commits itself to ensure appropriate investment in grain and oilseed research as a result
of grain’s critical role in food security. This is in line with the philosophy expressed in ‘The Strategic
Plan for Agriculture’. The NARF would be used more proactively by the industry to co-ordinate and
give direction to research and technology development in the agricultural sector.
Transformation on the approach by research organisations is also necessary. The large loss in
human capital has made it also important to train more agricultural scientists. This can be done
through allocating agricultural scholarships especially to promising young students. In addition it is
important to ensure that current research staff is maintained so that they can play the very important
mentoring role for young scientists and for continuity.
Technology innovation and transfer can also only take place if an effective extension service is in
place. Government should address the issue on the restructuring of extension service in the country
to contribute to technology innovation and transfer.
South Africa is generally not well endowed with natural resources for grain production. Consequently
tailor-made technologies have been and still have to be developed for the industry to remain
sustainable and competitive. It remains a task for the agricultural research system to develop these
technologies such as reduced tillage, soil-water conservation and crop rotation systems, disease
and pest resistance breeding, wide adaptability of crops, fertilizer studies on low organic and clay
soils. All practices that could reduce the impact of drought and high evaporation demand should be
studied to devise optimal production practices.
5.2.5 Technical standards
Aspects such as inferior quality inputs and the perception of non-transparent practices of grading of
grains also affect the competitiveness of the grain industry. An action plan on technical standards is
therefore required (see annexure 7.6). Specific concerns are raised with regard to the implementation of
legislation on agricultural inputs, namely the Fertilizers, Farm Feeds, Agricultural Remedies and Stock
Remedies Act, 1947 (Act No. 36 of 1947). The Government should address issues relating to the
improvement of the implementation of the Act by verifying on a regular basis whether the fertiliser and
chemical industries adhere to the standards set in the regulations of the Act. The Department of
Agriculture is in the process of drafting a new Bill.
The grain industry needs a clear understanding of the various sanitary and phytosanitory standards that
the industry has to comply with in order to compete internationally. The stakeholders must work together
to draw up such a list of requirements for different importing countries and different crops. In the same
line it is argued that enforcement of the various acts and regulations regarding SPS measures is also not
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executed properly. A process to improve this and to ensure uniform interpretation of regulations would
be instituted by government in collaboration with industry. This also applies to grain being imported.
Grading regulations for all the major grain commodities are in place and it should be ensured that they
are applied consistently at all delivery points. To address potential opportunistic behaviour by graders a
system of self-regulation of grain traders, graders and silo owners is currently in place. There is a
process in place whereby discrepancies and deviations are dealt with through mediation, arbitration and
price adjustment. This price adjustment can mean huge losses to the silo owner and therefore serves as
a penalty to ensure sound behaviour by graders employed by silo owners. The inspection services of the
Department of Agriculture regularly monitors and evaluates the performance of graders and in addition
silo owners also implement ‘ring’ tests through the South African Grain Laboratory to monitor grading
results. It is agreed that this monitoring process of graders by DoA should be strengthened to avoid any
suspicion about the way in which grading is implemented.
5.3 Ensuring Food Security
Emphasis is placed on partnership for joint implementation of long term strategic initiatives at all levels of
the value chain between government and the grain industry from a market-oriented perspective. The aim
being to bring about a united prosperous grain industry that meets the diverse needs of its people.
The industry agrees that a sustainable solution for dealing with market fluctuations over the short as
well as the long-term needs to be found. The grain industry is of the opinion that this would not be
achieved through a strategic grain reserve. The South African milling industry and the financial and
trading system is well developed which means that South Africa would always be able to import raw
material if there is a local shortage. Strategic grain reserves normally only carry grain stocks for
4 months which is nowadays in a deregulated environment in any case carried by millers and silo
owners on behalf of milling companies. Participants in the market might nowadays also make use of the
futures market to smooth out the effect of price movements in the commodity market.
An ongoing investigation of addressing food security in South Africa should be undertaken in committing
itself to regional and continental agreement for a joint solution, the government is striving that a
coordinated regional symbiotic system be an integral part of finding mutually reinforcing results (see
annexure 7.10).
19
6. STRATEGIC FRAMEWORK
Strategic areas Goals addressed Key role players
1. Empowerment
(Refer to annexure 7.1)
- Equitable participation
- Access to finance
DoA ; Industry as a whole; Linking
with PDA’s; Landbank
2. Finance
(Refer to annexure 7.2)
- Access to Finance
Access to Land
Landbank, Dept of Agric., Dept of
Land Affairs, Commercial banks,
Agribusinesses.
DoA; GSA; Dept of Land Affairs;
Farmer Settlement BED.
3. Production & Quality
(Refer to annexure 7.3)
- Profitability
- Competitiveness
- Sustainability
- Production options
DoA: GSA; ARC; Fertilisers; Input
Suppliers;
Seed Producers; Universities; NCM;
NAFU
4. Grain Storage & Quality
(Refer to annexure 7.4)
- Food Security
- Sustainability
- Affordable Supplies
DoA; GSA; GSI; Grain Handling
Organisations; SAFEX; ARC;
SACOTA
5. Market Access
(Refer to annexure 7.5)
- Profitability
- Competitiveness
- Sustainability
- Technology transfer
DoA; GSA; NAMC; NGO’s; BED;
GSI; Logistics; SAFEX; Spoornet;
NAFU; Trucker’s Organizations;
Pricing Committee; Landbank;
SACOTA; NCM; DTI; Cross Border
Road Transport Agency
6. Technical Standards
(for example, SPS)
(Refer to annexure 7.6)
- Profitability
- Competitiveness
- Sustainability
DoA; GSA; ARC; Industry
Associations; STANSA, NCM
7. Trade and Tariffs
(Refer to annexure 7.7)
- Profitability
- Competitiveness
- Sustainability
DoA; STANSA; SAGIS;AFMA;
Landbank; Universities; GSA;
NAMC, DTI (ITAC.); SACOTA;
NAFU
8. Information &
Communication
(Refer to annexure 7.8)
- Equitable Participation
- Access to finance
- Profitability
- Competitiveness
- Sustainability
DoA; GSA; AGIS; SACCAS; Stats
SA; NAMC; DTI; SAGIS; ARC;
SAPO; Cross Border Road
Transport Agency; GSI; SACOTA,
NAFU, Spoornet
9. Research & Technology
Transfer
(Refer to annexure 7.9)
- Equitable Participation
- Access to finance
- Profitability
DoA; ARC; Maize Trust; NAFU;
Private Sector Research
Companies; Winter Cereal Trusts;
20
- Competitiveness
- Sustainability
Sorghum Trust; Agricultural Tertiary
Institutions; Oil & Protein Seeds
Development Trusts; NARF
10. Food Security
(Refer to annexure 7.10)
- Availability
- Sustainability
- Affordability
DoA; Landbank; NCM; Social
Development; Spoornet; GSA;
SACOTA; NAFU
Additional cross – cutting strategic concerns: Impact of HIV / Aids & Legislation on the industry
reaching its objectives needs to be taken into account at all levels.
21
7. ANNEXURES: STRATEGIC AREAS – TASK TEAMS CONTRIBUTIONS
7.1 Empowerment An AgriBEE document was noted and discussed and industry’s inputs considered. The final AgriBEE
charter would form a basis for empowerment within the grain industry and the agriculture sector as a
whole.
7.2 Finance
Improving the Growth Performance of the Grain Industry within the context of the Strategic Plan for the
South African Agriculture.
7.2.1 Financing of the Grain Industry
Various types of financial institutions are involved in providing finance to the stakeholders operating in
the grain value chain stretching from the producer to the retail trade. There are also other financial
services provided to the stakeholders in the industry, such as insurance products to cover risks of crop
losses and price hedging instruments provided by SAFEX. Some commercial banks are engaged in
what is described as precision farming practices, but this aspect of interaction between producer and
financier is not further pursued in this document, neither the question of financing the wholesale and
retail trade.
South Africa is traditionally a net importer of wheat and a net exporter of maize. The domestic price for
wheat would therefore trend towards the import parity price as compared to the export parity price for
maize. Note must furthermore be taken of the fact that tariffs on imports are triggered in terms a formula
based on price movements on the Chicago exchange. It is important to note that apart from changes in
the volumes of wheat and maize that are produced annually and which influence the domestic producer
prices, the value of the Rand vis-à-vis the major international currencies is also a factor that can have an
important impact in this regard as experience over the past few years has proved.
Grain farmers act individually but are they keen to produce surpluses that would have to be exported?
The grain requirements of the SADC region might have to be taken into account, particularly as far as
white maize is concerned, but maize farmers have once again, as in 2000, experienced the financial
consequences of surplus production in a low import parity price environment (relatively strong Rand). Is
it realistic to aim to increase wheat production to meet at least the domestic needs? A scheme was
implemented in the Eighties to persuade farmers not to plant grain on marginal land. It is therefore
essential that clarity be obtained about the growth objectives for the grain industry. Irrigation might help
to stabilise grain production, but the country’s water resources are so limited that the scope for
increased use of irrigation for grain production is extremely limited.
22
Although commercial farmers might be of the view that the best credit risk protection they can employ is
to limit grain production to the needs of the domestic economy, cognisance has to be taken of the need
to establish development farmers in the grain industry. It is increasingly being accepted that merely
providing land and finance (at market-related rates) to such farmers is not enough to ensure that they
become successful farmers. They need quite a variety of supporting services and the Department of
Agriculture is currently looking into this matter. It should be noted that the establishment of development
farmers in the grain industry is a separate issue that would have to be addressed.
7.2.1.1 Producers: Commercial
It can be argued that commercial grain producers are experiencing problems in accessing finance (short,
medium and long-term). If such problems are encountered they can mostly be attributed to credit risk
factors and the cost of money. Financial institutions are prepared to grant credit for longer periods to
grain farmers (e.g. for the acquisition of land and farming machinery) but the rate of interest on such
loans is invariably related to the prime-lending rate quoted by the commercial banks – which in turn is a
function of monetary policy. Financial institutions are therefore inclined to pass the interest rate risk on to
their clients. It is the experience of financial institutions that financing the machinery requirements of
producers is the most risky part of their lending business.
The provision of long and medium term finance to commercial producers and the related security
requirements are not discussed in this document and the main focus would fall on the provision of short-
term finance (production credit) to such producers – and the techniques available to manage risks. Input
costs in agriculture have escalated to such an extent that producers have to take steps to reduce the
risks of crop losses and producer price fluctuations. Financial institutions often require that such hedging
techniques, (crop insurance and price hedging on the futures market) be used by producers to reduce
their own credit risks. The expectation that the Government, as part of its contribution to promote greater
income stability in the agricultural sector, would financially contribute to an insurance scheme to reduce
the cost thereof for farmers has so far failed to materialise.
The commercial banks provide production finance directly to producers (plus a variety of other financial
services) but the Land Bank mostly uses co-operatives and agri-businesses as intermediaries for this
purpose. Some of these institutions have in recent years adopted the practice of selling their debtors
books. These institutions therefore also determine the required security for such loans (they manage the
risks), collect the debts from farmers and repay the loans to the Land Bank. The Land Bank, in terms of
the Land and Agricultural Development Bank Act, 2002, has a lien on the crop for any loan made to
farmers.
23
This lien can apply to either the intermediaries or the producers, depending on who was financed by the
Bank. A practical agreement on how to deal with the silo certificate where there is a Land Bank lien on a
crop has been reached by the Land Bank and silo owners.
7.2.1.2 Development Farmers
Establishing development farmers in agriculture is an important element in the Land Bank’s mission and
various financial products have specially been designed for this purpose. The commercial banks and
NGO’s as intermediaries, all have some initiatives in this regard and industries (such as Grain S.A.) also
implement their own programmes in pursuit of this objective. Establishing development farmers in
agriculture and agri-related businesses is for all practical purposes a new development and greater
progress and successes are imperative. The Government supports this policy objective via the Land
Redistribution for Agricultural Development programme, with the Land Bank acting as the agent of the
Department of Land Affairs and providing additional finance to such beneficiaries to establish them in
agriculture. However, development farmers need more than land and finances to establish themselves
successfully in agriculture. One of the greatest problems developing farmers experience is high debt
associated ratios at which they are commencing operations. The Department of Agriculture has
identified 6 areas where greater support, to emerging farmers needs to be extended, namely:
Technical and advisory services;
Information and the management of knowledge;
Training and capacity building;
Marketing and business development;
On-farm and off-farm infrastructure and production inputs, and
Financial support.
The provision of these support services would greatly help to reduce the risk of providing finance to
emerging farmers and to increase the success-rate of such ventures. The question is of course to
identify the institutions that have to provide these supporting services and to co-ordinate their activities.
These matters are still receiving attention.
7.2.1.3 Agricultural commodities
Producers have to sell their produce (durable) to wholesalers that can store them in warehouses for
consumption or processing after crops have been harvested. This whole process of marketing, price
fixing, storing and selling (e g. for processing) has changed fundamentally after the deregulation of the
agricultural industry was effected in the second half of the nineties. This is an area where the Land Bank
would like to play a more active role as financier.
24
7.2.1.4 Processors
Processors of grain also need finance for their inventories. This is available from financial institutions at
competitive rates of interest.
7.2.2 Conclusion
The conclusion that can be arrived at is that adequate finance is available for the commercial sector.
The same applies in respect of the provision of financial services in general. The same cannot be said
about the development sector, but the greatest need in this area is the provision of supporting services
to increase the success rate of such enterprises.
25
7.3 Production and Quality
7.3.1 Introduction
Grain production is the key to feeding the growing human population. Grain crops have been increasing
since the advent of the agricultural revolution.
Many economists and agronomists had observed that population grows exponentially, while food
production only grows arithmetically until it reaches some upper limit dictated by the amount of arable
land. Thus it is inevitable that at some stage, the growth of population would eventually overtake the
ability to produce food leading to starvation and war as a means of population control. Distribution of
food in the world is a constraint, and according to the Food and Agriculture Organisation (FAO) there are
millions of people experiencing starvation and food insecurity on a daily basis even though there is a
global surplus grain produced every year.
According to the FAO, world population would grow from around 6 billion people today to 8.3 billion
people in 2030. Population would be growing at an average of 1.1 percent a year up to 2030, compared
to 1.7 percent annually over the past 30 years. As a result, the growth in population would translate into
increase demand for agricultural products, particularly food. Cereals are still by far the world's most
important sources of food, both for direct human consumption and meat production. An extra billion
tonnes of cereals would be needed by 2030.
Grain crops are broadly divided into two categories, namely cereals and oil crops. Main cereal crops in
South Africa are maize, wheat, oats, barley, rye, beans and sorghum. The common oil crops are
soybean, sunflower, canola, and groundnuts.
Cereal grains are a concentrated source of energy, easily processed, stored, and distributed. They
directly supply the world’s population with about 80% of its total food calories. The cereals are principal
food sources because of their adaptability to many climates, soils, and handling methods. They are
efficient converters of light energy into food, are hardy, produce many seed per plant, store well, and are
readily processed into many uses. The well known grain crops like maize and wheat are important staple
crops and as such used mainly as food for human consumption, direct and indirect. Sorghum is used for
food as well as for making beverages.
The better-known uses of plant oils are for cooking, flavouring, margarine, and salad dressings. A
multitude of uses include the manufacturing of plastics, paint, varnishes, lacquers, soaps, detergents,
inks, cosmetics, lubricants, medicines, fabric, and paper. World production of oil seed crops is
dominated by soybeans. This is followed by peanut, sunflower, and canola.
26
The world’s main producers of grain and oilseed crops are illustrated in the table below:
CROP NAMES MAIN PRODUCING COUNTRIES
Maize USA, China, Brazil, Mexico, Argentina, European Union
Wheat China, Russia, United States, India, France, Canada, Australia, Argentina
Barley Russia, United States, Germany, France, United Kingdom, Canada
Rye Russia, Poland, Germany, United States, and Canada
Oats Russia, United States, Germany, Canada, Poland
Bean China, India, United States, Japan, Italy
Soybean United States, Brazil, China, Argentina
Groundnuts India, China, United States, Argentina
Sunflower Russia, Argentina, United States
Sorghum United States, Argentina, Australia
Source: FAO
7.3.2 Purpose
The purpose of this section is to create a broad framework for the development and support of grain
production in South Africa in order to ensure food security, economic development and global
competitiveness.
7.3.3 Overview of the grain production sector in South Africa
Grain crops in South Africa are produced both in the summer and winter rainfall areas. The following
categorisation is applicable viz. cereal grains, grain legumes and oilseeds. Cereal grains include maize,
wheat etc; grain legumes include dry beans etc whilst oilseeds include sunflower, etc. Summer grain
crops refer to the broader category of maize, sunflower, groundnuts, and sorghum which are mostly
adapted and largely produced during warmer conditions of summer rainfall areas. On the other hand,
winter grain crops includes wheat, barley, canola, etc. which are mostly grown in cooler climates of the
Western Cape, Free State, North West, Mpumalanga, and Northern Cape.
The major grain crops that are produced in South Africa are indicated in Table 1 below. The main grain
crop of South Africa is maize. The largest area of agronomic farmland is planted for maize, followed by
wheat, sunflower, soybean, groundnuts, sorghum and on a lesser scale dry bean. The main oilseeds
produced in South Africa are sunflower, soybean and groundnuts. The major grain producing provinces
in South Africa are the Free State, North West, Mpumalanga, Northern Cape, Western Cape and
KwaZulu Natal.
27
Table 1: Commercial grain crops of South Africa
Category Common
Name Scientific Name Major Producing Area /
Province Utilisation
Maize Zea mays Free State, North West and
Mpumalanga
Maize meal, animal
feed, industrial uses
Wheat Triticum aestivum Western Cape, Free State,
North West, Northern Cape,
Some parts of Mpumalanga
Baking flour
Barley Hordeum vulgare Western cape, Northern
Cape, North West
Alcoholic beverages
Rye Oryza sativa /
Secale cereale
Western Cape, Free State Alcoholic
beverages, food
Oats Avena sativa Western Cape, Free State Breakfast cereals,
baby food
Cereal
grains
Sorghum Sorghum bicolor Free State, Mpumalanga,
Limpopo, North West
Food, animal feed,
beverages.
Field beans
(dry beans)
Phaseolus
vulgaris
Mpumalanga, Free State,
North West
Grain Grain
legumes
Field peas Pisum sativa Grain
Sunflower Hilianthus annus Free State, Mpumalanga,
North West, Limpopo
Oil, animal feed
Soybean Glycine max Mpumalanga, KwaZulu
Natal, Free State, Limpopo
Oil
Groundnuts Arachis hypogaea North West, Free State,
Mpumalanga, Limpopo,
Northern Cape, Kwazulu
Natal
Grains / Oil
Oilseeds
Canola Brassica napus Western Cape, Northern
Cape, North West, Free
State, Mpumalanga,
Limpopo
Oil, animal feed
28
The grain production areas are illustrated on Fig. 1 below:
Fig.1. Grain producing areas of South Africa as reflected on provincial basis.
Source: AGIS
The grain industry is one of the largest industries of South African agriculture producing between 25%
and 33% of the total gross value of agricultural production. The gross value per annum of grain
production is usually around R12 billion.
The industry comprises of a number of key stakeholders including input suppliers, farmers, silo owners,
grain traders, processors, bakers, research organisations, and other stakeholders.
It is estimated that there are approximately 10 000 commercial grain producers in South Africa which
account for about 90% of all grains produced in South Africa. It is further estimated that there are close
to 3 million subsistence farmers.
Namibia
29
The silo industry was established and developed rapidly during the years of controlled marketing.
Currently there is around 17 million tons of bulk storage capacity in South Africa, 85% of which is owned
by 17 grain handling companies. Most of these companies started as co-operatives. Silos are located in
the main grain production areas.
The milling industry is the next important role-player in the grain value chain. Large-scale maize millers
number arround 22 and account for 66% of all maize meal produced in the country. The top 4
companies in this group of 22 millers produce just more than 50% of this market share. In terms of black
economic empowerment in this industry it is known that two companies (share of 39% of all maize and
wheat milled) have black empowerment companies as the majority shareholders.
Due to increased competition since deregulation and the resulting decreased capacity utilisation, the
number of wheat milling units declined from 137 units to 109. A total of 17 large scale mills produce
about 95% of all bread and cake flour, but an estimated 70 small flour mills produce approximately
144 000 tons of bread flour and 53 000 tons of cake flour annually. In terms of company concentration it
is known that 4 companies process 90% of wheat milled. The wheat milling industry sells around
1, 4 million tonnes of bread flour and 618 000 tonnes of cake flour to the baking industry.
The baking industry also went through considerable structural changes after deregulation. Wholesale
bakers closed 41 bakeries between 1997 and 1998 and there was a large increase in the number of
small bakeries, with most of them not having any delivery costs and thus bringing strong competition
with the large bakeries. Currently the baking industry consists of 85 wholesale (plant/industrial) bakeries;
600 corporate retail (in-store) bakeries, 3 700 independent bakers and 3 520 franchise bakers.
Furthermore it is estimated that at least 53 200 informal bakers operate from non-licensed premises
(home industries).
The animal feed industry is an important client and role player in the grain value chain. Around 4 million
tonnes of grain and 1.2 million tonnes of oil cake (from imported and locally produced sunflower and
soya beans) are used by the animal feed manufacturing industry in South Africa. This industry consists
of a large number of feed manufacturers of which 38 balanced feed manufacturers and 7 premix feed
manufacturers are members of the Animal Feed Manufacturers Association of South Africa (AFMA).
Since 1995 grain marketing in South Africa has been deregulated. The agricultural derivatives market
was established to provide market participants with a price risk management facility as well as a price
forming mechanism without distorting economic principles. Grain traders who act on behalf of clients for
a fixed fee or margin perform an important function in a free market orientated grain market. These
traders take positions (forward buying and selling) assume risks, establish value and provide the real
cash market for grain. They include international grain traders, local grain traders and financial
institutions that provide credit facilities.
30
7.3.4 Problem statement
7.3.4.1 Drought
Climate change poses a serious threat to grain production. In South Africa this has manifested itself in a
form of frequent drought spells in certain areas. Due to the fact that most grains are produced under
dryland conditions, the disruption of rainfall patterns can result in crop failure in some areas. Small-
holder farmers are in most cases the hardest-hit. This can have dire consequences for household food
security.
7.3.4.2 High costs of inputs
One of the serious challenges for the grain sector in South Africa is high cost of inputs. High production
costs result in narrow profit margins for the farmers. This affects their competitiveness on both the local
and export markets. Resource poor farmers are especially in a disadvantaged position. The majority of
seeds on the market are hybrid varieties that are also very expensive and thus unaffordable to these
farmers. The seeds cannot be replanted in the next season. Farmers must buy new seed every season.
Fertilisers present another big cost to farmers. Farmers are concerned about proliferation of poor quality
fertilisers on the market as well as ever increasing prices. Resource poor farmers are further troubled by
the fact that fertilisers are sold in big packages (about 50 kg bags) which are expensive and also too big
for their needs.
7.3.4.3 Growing demand for food
South Africa is a net exporter of many food products, including staple crops like maize. Yet close to
14 million people in this country are regarded as food insecure. Factors that contribute to this include
amongst others, high population growth rate, collapse of production at household level, poverty, cost of
logistics and reliance on few staple crops. Thus the greatest challenge facing South Africa is attainment
of food security at household level. With an increasing growth in population, there is an ever-increasing
demand on the agricultural sector to continue satisfying the needs of this country in terms of food, fibre,
energy and raw materials for the manufacturing sector.
7.3.4.4 Weak support and disaster management systems
In order to develop new policies and implement food security programmes, policy-makers at all levels of
government require considerable reliable information on the conditions of food demand and supply in
different parts of the country. This information can be used to identify risk and vulnerable areas, with
respect to food access and use. Food security information is multi-sourced and, when using existing
data collection systems through established agencies, cooperation and coordination is key to
establishing efficient and cost-effective systems.
31
One such example of weak institutional support networks relates to disaster management systems.
South Africa does not yet have a structured system of dealing with food security disasters, such as
droughts or floods. These disasters, which occur at regular intervals, can substantially threaten the
food-security position of agriculture-based households. With few reserves to draw on, these households
are hit hard by crop failure and asset loss.
7.3.4.5 Inadequate and unstable household food production
Hunger and malnutrition in South Africa stem from insufficient, unstable food supplies, at the household
or intra-household level. The majority of producers in the former homelands are unable to feed their
families from their narrow production base. They are deficit producers, and hence, net consumers of
purchased food, and rely on non-farm income to meet most of their household needs. Even non-
catastrophic events such as seasonal, climatic variation are enough to push many of these households
onto the verge of a food crisis. Government assistance is often a major source of income for many of
these households, given the high level of rural unemployment and dwindling migrant income transfers.
As a result, many rural areas experience periodic bouts of hunger.
7.3.4.6 Low grain productivity in certain crops and declining production efficiencies in certain areas
An attributing factor to low productivity is the emergence of new entrants who still needs maximum
support as well as highly experienced farmers who are exiting the industry. The very problem is
aggravated by poor extension and support services offered to new entrants in the industry. Another
factor associated with lower productivity is unsustainable grain production practices such as growing
crops on economically marginal land and growing of crops on soils that are not suitable for the specific
crop. On the other hand, the commercial grain producing sector is experiencing low production
efficiencies resulting from degrading soil chemical and physical properties. Incorrect application of
synthetic chemicals and relatively high levels of improper mechanisation are gradually reducing the
capability of farmlands to produce grain.
7.3.4.7 Consequences of biotechnology
The utilisation of biotechnology and genetically modified crops in modern day grain production needs to
be monitored. Genetically modified crops have more benefits to both the emerging and established grain
producers. Besides, increasing the yield and therefore the profitability of farmers, it is a technique that
can potentially feed this ever increasing population. On the other hand if not properly managed and
regulated genetically modified crops can lead to unstable and degrading natural resource ecosystems.
However in South Africa the Genetically Modified Organisms Act allows for the controlled sustainable
utilisation of the technique.
32
7.3.5. Intervention measures to address the problems
The challenges facing the grain sector that are raised in Section 7.1.3.4 could be addressed through
various intervention measures that are discussed in this section. The intervention measures are
categorised in terms of those that are appropriate for the developing sector as well as those that would
benefit both developing and established commercial sector.
7.3.5.1 Emerging grain sector
7.3.5.1.1 Training programmes on grain production
Education forms the basis for human resource development to address skill shortage, to enhance
competitiveness and wealth creation and to ensure an improved quality of life of those involved in the
agricultural and agro-processing sector. Enhanced training of farmers is of critical importance for
improved production, natural resource management, and wealth creation for all agricultural
stakeholders. The training should cover all aspects of grain production from propagation until post-
harvest handling. The focus areas and level of training would be determined by the specific needs of the
targeted groups. The roles and responsibilities of various stakeholders are as follows:
Department of Agriculture (DoA): Develop training manuals, co-ordination at national level, as well
as funding.
Provincial departments of agriculture (PDAs): Training services through extension services and
funding.
ARC resource and training
Industry: Resource, training and funding
Training institutions: Basic training and training as part of community outreach programmes.
Non-governmental organisations (NGOs): Training and funding.
7.3.5.1.2 Community seed production programmes
Seed is one of the most expensive production inputs. Many poor farmers cannot afford to buy it and thus
resort to seed from previous harvest that might result in poor yields. The community seed production
programmes are aimed at empowering rural communities to produce seed for their own use and to sell
to other grain farmers in their area and other parts of the country. Some of the seed would be sold on
export markets.
The roles and responsibilities of various stakeholders are as follows:
Department of Agriculture (DoA): National co-ordination as well as funding.
Provincial departments of agriculture (PDAs): Training of communities in seed production and
funding.
Industry: Training and funding
Non-governmental organisations (NGOs): Training and funding.
33
7.3.5.1.3 Water harvesting technologies
South Africa is considered a water-deficient country. It is imperative, therefore, to develop appropriate
technologies to optimise water utilisation for grain production. Under rain-fed agriculture, optimising the
effectiveness of the limited amounts of water available through water harvesting techniques holds great
potential and needs to be studied and expanded. Sustainable use of water in agriculture should be
accompanied by better husbandry of soils, fertilisers, improved plant varieties, and other related matters.
The roles and responsibilities of various stakeholders are as follows:
Department of Agriculture (DoA): National co-ordination as well as funding.
Provincial departments of agriculture (PDAs): Training of communities in water harvesting
technologies as well as funding.
Industry: Training and funding
Non-governmental organisations (NGOs): Training and funding.
Research institutes: Development and transfer of technologies
7.3.5.2 Commercial and emerging grain sectors
7.3.5.2.1 Knowledge and Information Management Programme
Knowledge and information are vital strategic elements in enhancing global competitiveness. The South
African grain sector needs to be knowledge based in order to retain market share both locally and
internationally. Three important components of this programme are production guidelines, database and
the crop management calendars.
Where necessary, production guidelines for each crop should be reviewed, adapted and be made
available to all farmers in the sector. The production guidelines should include aspects like propagation,
climatic requirements, cultivation practices, disease and pest control and harvesting. The adoption of
appropriate production guidelines would translate into increased compliance with international standards
and thus increased global competitiveness by South African grain sector.
Where necessary, databases on the grain sector should also be reviewed and regularly updated. The
databases for the sector should include elements like crop profiles, crop choice, production areas,
production systems, and other related aspects. The databases should serve as the knowledge banks for
the grain sector. A crop management calendar of each grain crop should be developed for each
production region.
Awareness materials should also be developed to raise the awareness levels of farmers and other
stakeholders in the industry on various production related matters. These materials should be
disseminated through various channels like media (both print and electronic), extension services, farmer
organisations, and information days.
34
The roles and responsibilities of various stakeholders are as follows:
Department of Agriculture: Development of norms and standards, funding, national co-ordination as
well as serving as a central point of information on grain crops and the sector.
Provincial departments of agriculture: Funding and transfer of information to farmers and provision of
advisory services.
Industry: Inputs in the development of norms and standards, funding and transfer of information to
farmers.
SAGIS: To timely provide accurate grain market information.
7.3.5.2.2 Institutional Development Programme
The sustained development of the grain sector should be enhanced through a dedicated institutional
development programme. Three important elements of this programme are the formation of the Task
Team on Grain Production, the promotion of co-operatives and where necessary, the facilitation of
formation of farmer associations and study groups in grain production areas.
The Task Team on Grain Production should serve as a platform on which all stakeholders in the sector
should interact for the benefit of the industry and the country. Co-operatives should help farmers to farm
economically. There is also a need for strong local farmer associations and study groups in production
areas. These groups should make it easy for farmers to have direct contact with extension officers,
researchers and other experts in the sector.
The roles and responsibilities of various stakeholders are as follows:
Department of Agriculture: Development of norms and standards, funding, and national co-
ordination.
Provincial departments of agriculture: Funding, and advisory services.
Industry: Funding and promotion of buy in by stakeholders.
Non-governmental organisations: in the development of norms and standards and funding.
7.3.5.2.3 Breeding Programmes
Sustained development of the grain sector depends a great deal on development of new technologies.
The technologies range from new cultivars, innovative production technologies, technologies for
controlling pests and diseases, as well as agro-processing technologies, amongst others. Research is a
critical element in the development of new technologies.
35
Breeding programmes are aimed at developing cultivars with desirable characteristics suitable for both
export and local markets. Desirable characteristics include drought tolerance, pest and disease
resistance as well good production potential. The emphasis is placed on research designed to allow the
South African grain sector to remain competitive by means of newly developed cultivars.
Department of Agriculture: Co-ordination of the research agenda, introduction of new technologies,
and funding of strategic research projects.
Provincial departments of agriculture: Transfer of new technologies to farmers.
Research institutes: Conducting research work and technology transfer.
Industry: Funding, identification of technology needs, and promoting adoption of new technologies
by stakeholders.
Non-governmental organisations: Technology transfer and funding.
7.3.5.2.4 Infrastructure Development Programme
The success of the grain sector depends on the availability and accessibility to both production and post-
harvest infrastructure. The production infrastructure includes, amongst others, to aspects like fencing,
irrigation equipment, boreholes and storage sheds. The post-harvest infrastructure refers to aspects like
processing infrastructure and storage facilities. The post-harvest infrastructure should be established in
production areas where there is none or insufficient.
Roles and responsibilities of various stakeholders are as follows:
Government. Funding the establishment of infrastructure in strategic production areas.
Industry. Funding, operations and management of infrastructure.
36
7.4 Grain storage and quality
7.4.1 Framework for the storers of grain and oilseeds to operate in: The storers of grains and oilseeds acknowledge the laws of the country and adhere to them.
The storers of grains and oilseeds endorse free market principles and apply them as basis in the
grain silo industry.
Storage and handling services are rendered in such a way to add value to the products of the
owners of grains and oilseeds.
Effective grain silo services are rendered at economic viable costs and on sound business principals
and are available to similar users of grain silos on an equal basis.
Products are, unless otherwise arranged, graded according to the grading regulations of the
Directorate Food Safety and Quality Assurance of the Department of Agriculture.
All products that comply with the standards of the National Department of Health, should be handled
and stored in any quantity subject to practical arrangements.
The quality and quantity of products are guaranteed during storage and agreed arrangements are
adhered to.
Market mechanisms that enhance the trading of products are supported and used.
Silo certificates are available to the users of grain silos for trading purposes.
A product specified on a silo certificate would on the presentation thereof be supplied to the holder
of the silo certificate when all relevant costs have been paid.
Grain silo tariffs are available at the start of a marketing period at head offices and grain silos.
7.4.2 Quality
The Department of Agriculture through the Directorate Food Safety and Quality Assurance standardize
quality norms for grains and other grain products as well as oilseeds by establishing in consultation with
industry stakeholders criteria for such norms. These criteria might include the quality, packaging,
marking and labelling of grains and grain products as well as oilseeds sold in local markets, and
exported to international markets. These norms are validated by publication in the Government Gazette
under the Agricultural Product Standards Act, 1990 (Act No. 119 of 1990).
The norms are developed based on the South African market needs and climatic conditions and are
further harmonized with international standards such as Codex Alimentarius and UN/ECE. This enables
South African grains an opportunity to compete on an equal footing with other grains from other
countries in a global trade.
The Department of Agriculture through the Directorate: South African Agricultural Food, Quarantine and
Inspections Services enforce the application and adherence to these norms through inspection on a
national level. The Assignee of the Department of Agriculture, Perishable Products Export Control Board
37
(PPECB) carries out inspection for grains intended for export while the South African Agricultural Food,
Quarantine and Inspection Services (SAAFQIS) audit their inspection activities.
7.4.2.1 Phytosanitary standards
Phytosanitary standards are determined by the Department of Agriculture (Division: Plant Health and
Quality) in consultation with the appropriate industries.
International standards are taken into consideration.
The Department of Agriculture ensures that the industries comply with the regulations.
7.4.2.2 Sanitary standards
The Department of Health is responsible for administering, compiling and publishing legislation relating
to food safety and other related matters in terms of the Foodstuff, Cosmetics and Disinfectants Act, 1972
(Act No. 54 of 1972). The scope of administration of these activities is only limited to locally sold and
imported grains.
The Department of Agriculture through the Directorate Food Safety and Quality Assurance also plays a
role in regulating and administering chemicals that are used in grain and oilseed industry thereby
ensuring food safety in terms of Fertilizers, Farm Feeds, Agricultural Remedies and Stock Remedies
Act, 1947 (Act No. 36 of 1947). Maximum Residue Limits for grains and oilseeds are also set and
harmonized at an international level by the Directorate Food Safety and Quality Assurance.
Standards regarding Food Hygiene and Food Safety of Regulated Agricultural Food Products of Plant
Origin intended for export developed under the Agricultural Product Standards Act, 1990 (119 of 1990)
have been promulgated. These standards would ensure that South African grains and oilseeds meet
requirements of its trading partners by ensuring that universal principles of trace ability, good agricultural
and manufacturing practices are observed. PPECB is the implementing agency appointed in order to
ensure adherence to these standards.
7.4.3 Previously disadvantaged individuals
The storers of grains and oilseeds provide means that enable previously disadvantaged individuals
access to mainstream marketing opportunities.
Any quantity of grains and oilseeds (how little it might be) delivered in bags or bulk would be received
and stored in silos and/or marketed through silos as long as it complies with the sanitary and phyto-
sanitary requirements.
38
A full range of marketing tools / possibilities are available from silo owners – from hedging contracts to
SAFEX derived cash prices.
Storers inform emerging producers on an ad hoc basis of quality regulations, prices, price structures,
marketing opportunities and storage services that are available.
Extension services are generally available to assist farmers in an advisory capacity.
7.4.4 General
Bottlenecks at harbours and the limited capacity of Spoornet could have a detrimental effect,
In the case of abnormally low production to supply the country timeously with sufficient staple food
and the need to import (maize and wheat), or
in the case of abnormally large production to export the grain timeously in order to make silo
capacity available for the following crops.
The impact of HIV Aids and the consequent decline in consumption could in future place the storage
capacity under pressure. Even more so, if the grains that are not utilised cannot be exported.
The storers of grains and oilseeds support the government’s policy that the grains and oilseeds
industries should function within a free market.
7.4.5 Targets
7.4.5.1 Grading Regulations of the Directorate Plant Health and Quality of the NDA
Role players: DoA /GSI/GSA/NCM
Target: Ongoing.
Are in place. Update when necessary.
7.4.5.2 Sanitary regulations of the NDH
Role players: DoH /GSI/GSA/NCM
Target: Ongoing.
Are in place. Update when necessary.
Policing done by DoH
39
7.4.5.3 Phytosanitary regulations of the DoA
Role players: DoA/GSI/GSA/NCM
Target: Ongoing.
Are in place. Update when necessary.
Policing done by DoA.
7.4.5.4 Monitoring of graders
Role players: DoA/GSI/NCM
Target: Ongoing.
Systems are partially in place.
7.4.5.5 Segregation of GM and non-GM grain during handling and storage
Role players: DoH /GSI/NCM/GSA SACOTA
Target: Ongoing.
Systems are in place in some silos.
7.4.5.6 Accommodation of deliveries by small- scale farmers
Role players: GSI/NCM/GSA
Target: Ongoing.
Any quantity of grain delivered in bags or bulk would be received and marketed
through silos as long as it complies with sanitary and phyto-sanitary regulations.
7.4.5.7 Information on deliveries/storage/imports
Role players: GSI/NCM/SACOTA/SAGIS
Target: Ongoing.
Adjust when necessary.
7.4.5.8 Convey quality and other minimum market requirements to farmers
Role players: PDA/GSI/NCM/GSA/SACOTA
Target: Ongoing.
40
7.4.5.9 Establish Directorate of Food Control within the DoA
Role players: DoA / DoH /GSI/NCM/GSA
Target: ASAP
Driver DoA (E van Rensburg)
7.4.5.10 Facilitate the process of black entrepreneurs entering the business of grain trading, storage, transport and processing
Role players: DoA/GSI/NCM/SACOTA
Role players are available to assist when required.
Driver: DoA
41
7.5 MARKET ACCESS 7.5.1 Background
Market access is a loaded term and can easily be considered a simple issue. When the problem of
market access is analysed it becomes clear that it is the result of a long list of difficulties faced by the
farmer ranging from producing a product of the right quality that is acceptable to the market to the
physical aspects such as access to marketing infrastructure and information. The concept of market
access cuts across vastly differing scales of markets, ranging from international trade (trade barriers,
subsidies etc.) to the marketing of a few bags of grain by new entrants to the market in previously
disadvantaged areas of production.
Government can tackle some of these problems while others might require an initiative by the farmer in
question. There are a number of strictly public interventions that can also assist in facilitating market
access. These include, provision of marketing information (on prices, markets, buyers, grades,
processors, transporters, etc.) extension advice (on technical production issues, quality requirements
and financial and market knowledge) and research. In case of South Africa where grain industry is not
regulated by government, the industry itself has a great role to play in terms of ensuring a sustainable
and competitive industry.
7.5.2 Improving market access
Several actions are required which could act together to alleviate the market access constraints.
Market information:
Lack of information is an entry barrier to both production and trade. Market information can be
particularly valuable where countries has changed from a state-controlled marketing system to a system
of private enterprise, in that farmers and traders are made aware of market and marketing opportunities.
At present almost all the Provincial Departments of Agriculture are aware of the importance to supply
market information, but it is generally felt that the systems in place, as well as the budgetary allowances
are by no means adequate to meet the need. A comprehensive Market Information System (MIS) is
under construction. At this stage of small scale farming development, information should be adapted to
the communication facilities available to small -scale farmers.
There is a considerable source of information in the private sector, co-operatives, government industry
organizations and specialist organizations like SAGIS, National Crop Estimate Committee, and GSI etc.
The organizations are encouraged to make arrangements to broaden their distribution techniques of the
relevant information to all role players in the grain industry.
42
Infrastructure provision: Market places (see item 7.5.3)
Providing market places by stakeholders in rural areas could limit the need for and cost of transport
of produce. A wide range of benefits might be expected to arise from a market project, e.g. reduced
crop losses and a positive impact on agricultural production.
Transport (see item 7.5.3)
The grain industry utilises mostly rail transport, Spoornet in this case is main provider of transport.
Spoornet to consider their policy on rail transport for historically disadvantaged farmer.
Although grain is rail friendly, the quantity of grain moved by Spoornet has fallen from 80%
approximately 50% in 2004/05. The balance is carried by road vehicles with consequent damage to
an overloaded road system.
Market access to historically disadvantaged farmers in rural areas is heavily dependant on
Spoornet’s network of rural and branch lines. It is imperative that Spoornet recognises their
responsibility in this regard when formulating their “Grain Rail Policy” and capacity.
Storage facilities (see item 7.5.3) The rural areas in South Africa are both producers and consumers of agricultural products. During
the harvesting season of a specific crop there are surplus areas, but outside the harvesting season
there are deficit areas, which have to import the required product from other areas. By storing
produce within the producing areas, considerable savings on transport might be achieved. Storage
depots can also serve as a source of raw material for rural based processing facilities. Farmers
themselves might also undertake on farm storage of mainly grain. Training in storage technology is
required to further expertise to users.
There is 16.9 million ton of storage capacity for grains in SA and 80% of this is in the hands of the
large commercial co-operatives. The Grain Silo Industry organization (GSI) has indicated that they
would like to be informed of how they can assist small-scale farmers in this regard. While these
facilities might in some instance be too far away, with co-operation of the silo operators a large part
of this problem could be overcome. Where specific problems occur, these could then be addressed
separately.
Telecommunication
Telecommunication infrastructure is a prerequisite for agricultural development and the provision
thereof has to be addressed at high level by the responsible Government Departments and private
organisations.
43
Training of farmers and extension officers (see item 7.5.4) Both small scale farmers and extension officers need training on several marketing related aspects,
such as the interpretation and use of market formation, budgeting for marketing costs, technical
aspects of the production of non-traditional crops, storage techniques, grading and packaging of
produce with the aim to increase the value thereof, small scale processing opportunities and
techniques for value adding.
Specific subject training via State and private enterprise associations such as Grain South Africa,
Grain Silo Industry, SA Cereal and Oilseed Trade Association, SAFEX and the product forums
financed joined by the Grain Trusts and the State should be initiated without delay.
7.5.3 Guidelines for developing infrastructure Market Places Identify existing and exploring new market places: Markets should be developed together with the
development of information. Information is a prerequisite to make markets work. A holistic approach
should be followed in order to ensure fair market access.
Market places have to be developed where a continuity of supply can be ensured which would also
ensure business viability.
Identify and use existing infrastructure, e.g. railway sidings. It was mentioned that railway lines are
more accessible for some communities.
Involve all stakeholders, e.g. local authorities, tribal authorities and local communities, in all stages
of the development of market places.
Identify the correct location for market places i.e. place where there is a deficit and therefore a
demand. Farmers should take their products to the consumers, not visa versa.
Market places should be developed in an integrated way and should provide shelter and storage
facilities. It should also be suitable for multipurpose use in order to address social needs.
The use of district shows, as a tool to educate farmers on e.g. packaging and grading should be
considered.
Identify and consider all sources of supply, such as small -scale farmers from neighbouring areas
and imports from other areas. Continuity of supply as well as a variety of products is required to
keep buyers interested.
Explore the possibility to use the retail stores in the rural areas as an outlet for produce. At present
these stores often import the produce they sell from other areas.
Develop a participatory approach to the funding of markets, e.g. on a matching grant basis, where
the community itself takes responsibility for part of the costs. This emphasizes their ownership of the
project. Also follow a participatory approach to find out what the community wants in a market place.
44
Roads and Rail At this point the existing network would have to be identified and revitalised.
The negative economic impact of the lack of roads and/or poor maintenance of roads has to be
quantified.
Quantify the costs of running a railway system versus the cost of maintaining a road network.
Any new roads must be based on a cost/benefit analysis. The Provincial Departments should
quantify multiplier effects for the rural areas and then approach the Department of Public- Works.
The continued maintenance of existing roads should be ensured. Agriculture seems not to have
strong enough lobbying power to ensure the maintenance of roads.
A multi-departmental approach should be followed when identifying needs for new roads and
approaching the Department of Public - Works with these. This could increase the lobbying of the
group requesting a road.
Research the possible use of animal transport.
Involve organised agriculture to increase lobbying power.
Consider the possibility of private maintenance of roads. A group of farmers could e.g. be provided
with a grader.
In order to facilitate the establishment of strong partnerships between various government
departments and agribusiness a Working Group on Agro logistics chaired by the Senior Manager
Marketing of the NDA and supported by the Agricultural Business Chamber and the relevant NDA
Directorate has been formed. (Freight logistics surveys recently commissioned by Government and
presented by the CSIR would be used as reference documents).
Storage Facilities Identify and address the training needs of farmers and storage operators. These could include
proper storage techniques, grading, management of storage operations, etc.
Establish consumer needs in terms of storage.
Identify existing and ongoing research. Do not duplicate research efforts.
With the implementation of storage projects, the private sector (such as co-operatives), public
sector and communities should be involved.
Collect information on existing storage facilities and disseminate this information amongst local
communities. In the Northern Province, e.g., households might store their maize at some local
shops, to be exchanged later for maize meal.
Identify and promote correct storage techniques.
Consider and improve on traditional ways of storage.
Ensure that storage facilities are fully accessible to the communities. Prevent situations in which
owners of storage facilities can abuse that ownership.
Adopt a step-by-step approach to the development of storage facilities.
Explore financing possibilities, e.g. matching grants.
45
7.5.4 Guidelines for providing training
Identify the existing pool of knowledge amongst (potential) trainers.
Identify and involve grain industry organisations, NGO’s, technical and academic institutions, etc.
Outside companies should work via the extension officers who already know the farmers and have
their trust.
Do not try to create a “super human” out of the extension officer. Rather develop a facilitating and
liaison capacity or network. Make contact with other Provincial Departments, grain industry
organizations, organized agriculture, commercial farmers, business, etc.
Develop a register of training institutions on specific matters like product distribution techniques of
agricultural produce, market research and consumer behaviour. This should be done on Provincial
basis to ensure inclusion and relevancy to particular provinces unless there are similarities identified.
Identify and develop different means of training. Provincial Departments have subject matter
specialists who can respond to requests from the extension officers. Training can also be a way of
disseminating information, e.g. through pamphlets, radio, etc.
Identify and develop different means to finance training. Involve private sector funding, public sector
funding, donor funding and community funding. All donors funding is channelled through the
Department of Finance. Donor funding is project-specific. A project has to be presented. NDA should
establish a close link with the Department of Finance.
Create evaluation and monitoring structures. Training must be result orientated.
46
7.6 Technical Standards
The technical task team is involved with all regulatory issues. For example, phytosanitary issues, and
quality standards of grain and grain products.
Strategic goal “To contribute to the production of high quality grain by ensuring that DOA’s legislation is accessible and
meets the requirements of the grain industry and their consumers”.
This can be achieved by the following objectives:
Implementing and enforcing legislation that is already in place
Adapting present legislation to fit the requirements of the grain industry and its consumers
Enhance accessibility of legislation including regulations and guidelines.
Drafting new legislation if required.
The following needs and expectations were identified by the various stake holders:
Industries’ Needs/ Expectations
Action Responsibility Time Frames
1. Act 36 of 1947 1. Finalise new Bill as a matter of
urgency
2. Finalise new regulations of the
Act as a matter of urgency
DoA
DoA
December 2005
December 2005
(If not already
finalised)
2. Policing of Act 36 of
1947
1. Regularly checks whether fertilise
and chemical industry adheres to
standards set in the Act's regulations.
Prosecute if necessary.
DoA Continuous
3.Input regulation (Act
no 36 of 1947) which
does not consider the
user for output
production **
Review regulation, taking the user of
inputs into consideration
DoA /Input
suppliers/Grain
Industry
December 2005
4. A clear structure of
SPS standards
needed to compete
internationally (in
specific markets
identified by industry)
Draw up such a list of requirements
(note must be taken of the importing
country requirements as this is a
dynamic situation, this is a
continuous action.
DoA /Industry As required and
identified by
industry as a
market.
47
5. Enforcement of
Acts/ regulations
regarding quality,
sanitary and
phytosanitary
measures
Enforcement of quality measures by
ensuring uniform interpretation and
application of grading regulations as
well as compliance of national sales,
exports and imports (including the
conduct of surveys in co-operation
with the industry to determine the
quality of imported regulated grains).
DoA /Industry On going
6. Policing of imported
grain into
phytosanitary
requirements
1. Properly check each imported
consignment of grain or oilseed crop.
DoA + DoH Continuous
7. Grading
regulations for all
grain commodities
Most in place. Wheat and groundnuts
being revised
Grain industries
+ DoA
Continuous
8. Updated export and
local grading, packing
and marking
legislation
Review current legislation at least
every five years or if required sooner
DoA On going
9. Health regulations
(e.g. chemical
residues) applicable to
local and imported
grain
Should be policed effectively by Dept
of Health
DoH Continuous
10. Export regulations Effective policing (Govt or private
sector)
DoA Continuous
11. A framework
explaining how to get
goods cleared for
export
Draw up and maintain such a
framework of requirements
DoA January 2006
12. In the case of
Exports , the
regulations of the
importing country
should be adhered to
Ongoing
48
13. Standards for
consumer goods, e.g.
fortification of maize,
cooking oil, bread
weights, etc.
Effective policing (Govt or private
sector)
DoH and others Continuous
14. Input Cost
Insurance Bill
(Should probably be a
focus point for the
Production sub-
committee)
Finalisation DoA July 2006
15. The establishment
of Food Control
Agency to oversee the
application of sanitary
and phytosanitary
regulations should be
investigated
DoA to investigate food control
agency
DoA March 2006
16. Availability of
information at a
central point
Develop a central point DoA /SAGIS May 2006
Recommendations:
1. To be inclusive, abovementioned issues should be liased with the official commodity forums for the
respective grain industries, i.e. Maize Forum, Wheat Forum, Sorghum Forum, Groundnut Forum,
Sunflower and Soybean Forum.
2. Quality standards co-ordinating body across various departments and disciplines should be established.
3. For quality comments, sufficient time should be allowed.
49
7.7 Trade & tariffs
SOUTH AFRICAN TARIFF POLICY DOCUMENT WITH REGARD TO AGRICULTURAL PRODUCTS
AUGUST 2003
7.7.1 Introduction
Since the signing of the Marrakesh Agreement quantitative import control on most agricultural
commodities has been replaced by tariffs. During the first tariffication process, the BTT followed the
guideline that the tariff should result in domestic production and consumption being more or less the
same as was the case under import control. Since then, tariff dispensations of a few agricultural
commodities have been reviewed.
During this process it was decided that the Minister for Agriculture be consulted when the BTT receives
customs tariff applications for agricultural products. The BTT does not inform the NAMC/DoA of
applications received, unless they investigate it fully. The Minister is advised by a working group of the
NAMC and DoA. The purpose of this document is to provide a policy for the NAMC and DoA on which
to base advice to the Minister for Agriculture.
The ultimate objective of agricultural tariff policy is a zero tariff dispensation in order to do justice to the
concept of international comparative advantage so that resources can be utilised in the most efficient
way to increase national wealth.
Although there should be movement towards the ultimate objective of a zero tariff policy, an important
factor that should be taken into account, is that the international trade environment (in particular the
agricultural sector) is characterised by numerous trade-distorting measures.
Agricultural tariff has to be consistent, compatible and complementary with primary economic objectives
of South Africa, Agricultural Sector Plan general agricultural policy, agricultural trade policy (copy
attached) and the objectives of the Marketing of Agricultural Products Act, 1996. All of these policies
and objectives imply that the viability of the agricultural sector should be secured and increased through
applying free-market principles. The measures implemented should also not be detrimental to food
security. In terms of agricultural trade policy, local agricultural industries should be protected against
unfair trade practices.
Although the way to take action against unfair trade practices is through instituting countervailing and
anti-dumping measures, some trade-distorting measures are non-countervailable subsidies in terms of
the WTO Agreement.
50
Viable agricultural industries should receive tariff protection against “normal competition” to allow for an
adjustment period in terms of the overall strategic plan for the industry.
The following tariff policy has been developed by the NAMC:
1. Tariff dispensations should be consistent with the requirements of the WTO Agreement and other
trade agreements entered into by South Africa. These agreements include the SACU Agreement,
future SADC Agreement and bilateral trade agreements with Zimbabwe, Malawi and the EU.
2. South African agricultural industries should be protected against abnormal competition resulting
from government interventions that distort cost and price structures, cause imbalances between
supply and demand and result in abnormally high or abnormally low world prices.
3. Tariff protection against “normal competition” should:
(i) Provide a modest and transparent and reasonably uniform level of protection to agricultural
activities;
(ii) Not introduce major distortions, which would result in sub-optimal resource allocation;
(iii) In time be reduced to moderate/low levels and ultimately zero in line with the improvement
of the agricultural sector’s competitive position and to challenge further improvement in its
international competitiveness.
(iv) The performance of an industry would be closely monitored. Protection would be
immediately reduced if industries do not perform towards achieving objectives set out in
their strategies. [The NAMC should be responsible for the monitoring.]
4. Where capacity for countervailing and anti-dumping action is limited, viable agricultural industries
faced with “abnormal competition” from trade distorting practices should be protected by ordinary
duties, provided that the level of duty does not exceed the bound level. Government should
regularly review the tariff level to ensure that tariffs are not being reduced too rapidly in relation to
the phasing out of other governments’ support measures. [No government body/department is
performing this function currently. The DoA should urgently evaluate whether the tariffs which
replaced the quantitative restrictions are still valid, given the changed circumstances
internationally.]
5. The capacity for implementing countervailing and anti-dumping duties against “abnormal
competition” should be further developed by the DTI in conjunction with the NAMC and DoA. The
following protection dispensation is recommended in terms of “abnormal competition”:
Anti-dumping and countervailing duties and not ordinary duties should be instituted against
prohibitive and countervailable subsidies.
Anti-dumping and countervailing duties should be instituted with the minimum degree of
delay.
If and when international rules are changed to allow action against non-countervailable
subsidised imports, which are trade distorting, countervailing and anti-dumping duties and
not ordinary duties should be instituted.
51
The absence of countervailing legislation limits South Africa’s ability to protect agriculture from
abnormal competition. DTI should urgently pay attention to this matter.
[Note:This document is based on the tariff policy approved by the NAMC.]
7.7.2 Grains tariff strategy and action plan
Recommendation Action responsibility
Time frame
Financial implication
Priority Index (High, Med, Low)
1. The strategy has to be the
policy that DTI / BTT implement
(DTI have to buy in)
DoA /DTI ASAP 0 High
2. The speed at which tariffs
changes occur must improve.
Capacity on implementation.
ITAC
SARS
DTI
ASAP 0 High
3. Tariffs protection has to be
regularly monitored in relation to
changes in international
subsidies
TIPS
NAMC
DoA
Ongoing
Dec ‘05
TIPS Budget
Outsource -R
In-house - O
Medium
4. South African Producer
Subsidy Equivalents has to be
measured each year and
compared with international
support.
DoA June ‘06
& every
2nd year
thereafter
Budget High
5. Unlawful tariffs and Non Tariff
Barriers from SACU countries
have to be dealt with.
DTI
DoA
ASAP 0 High
6. The allocation of Minimum
Market Access Quotas should
not be allocated to non-users.
DoA ASAP 0 Medium
7. Application of Article 521 and
its negative effect on
competitiveness has to change.
ITAC Jan ‘06 0 Medium
8. Government should be
against food aid that kills healthy
trade in grain.
DoA NCM
NAFU WFP
GSA ITAC
ASAP 0 Medium
52
7.7.3 Grain trade strategy and action plan
Recommendation Action responsibility
Time frame
Financial implication
Priority Index (High, Med, Low)
1. Creating the analytical and
research environment to do
opportunity research.
(Database)
DoA /
NAMC
ASAP GTA ±
R1 m/year
High
2. Infrastructure
a. Transport (Spoortnet, Roads,
Border posts)
b. Harbours capacity
Cluster @
Cabinet
ASAP Major budget High
3. Creating market access
opportunities through market
intelligence (Help-desk, foreign
reps.)
DoA Medium
term
Budget Medium
4. Non Tariff Barriers (Should
have networks to obtain
information on access
requirements)
DoA /
NAMC
ASAP Budget for
people
High
5. Geographical indications/
Intellectual property should be
protected.
Cluster @
Cabinet
ASAP Major budget High
6. Export incentives should be
friendly to primary and
secondary agriculture
DTI Medium
term
Zero Medium
7. Food assistance should be
proudly SA with local content.
(Provincial governments)
Welfare/ DTI ASAP Zero High
8. Trade and food aid policy
should be friendly towards value
addition
DTI/
DoA
ASAP Zero High
In summary, the South African agricultural policy regarding tariffs and trade should be as follows:
“Given the high level of distortion in the international grain sector, we should be protective via our tariff policy (regarding grain and grain products) and selectively seeking niche markets via
our trade policy for our grains and grain products”.
53
7.8 Information and communication
7.8.1 Introduction 7.8.1.1 Objective of task team
The Grain Information and Communication Task Team (GICTT) were appointed to submit a strategic
plan of how information and communication could make a contribution to the objectives of the overall
Strategic plan for the South African Agriculture.
7.8.1.2 Definition of grain
In this document, grain refers to oilseeds and grains. This includes the 9 commodities SAGIS is involved
in (maize, sorghum, sunflower, soybeans, groundnuts, canola, wheat, barley and oats) and dry beans
are also included.
7.8.1.3 Definition of “developing sector”
Different people have different ideas about emerging, developing, commercial, subsistence sector (or
farmers). This hampers discussions to a great extent. The developing sector includes all participants
(processors, storers, etc.) and is not only about farmers.
Recommendations: Develop definitions that can be used as guidelines as soon as possible to prevent further debates.
7.8.1.4 Who is responsible for Grain Information and Communication?
For now, it is accepted that Government (in this case the NDA) is primarily responsible for information
and communication (rendering and financing of the service). Government should:
As in the case of the USDA, pay for and make information available to the public free of charge;
and
Cater for the rest of the grains not included in SAGIS’s current services or contract the service out.
7.8.2 Report
This report is a set of recommendations developed:
From inputs received from 81 of the 116 people or organisations;
With very little inputs about the actual needs of the developing sector;
Without a competitive study or a strategic plan for each of the various sectors within the grain
sector;
54
As a base to initiate further actions; and
For the NDA and the bigger committee for consideration.
The contents of this report are not to criticise any person, institution or organisation. The GICTT trust
that the importance of participation of every party involved in the grain sector of SA, to make a difference
where it is needed, is carried over in this report.
Information and communication needs and recommendations
A list of information and communication needs as identified by some of the various grain market
participants is available in Schedule A. The needs are categorised as follows:
Category Needs A Grain – Generic market information
B Grain – Non-generic additional market information
C Communication needs
D Needs to be referred to other task teams of the Grain Sector.
Recommendations are made at the end of every item of this report as well as per need in Schedule A.
7.8.3 Strategic planning process
Standard procedures, when developing a strategic plan, would almost always include most of the
following steps:
A hierarchy of intent: Vision, Mission, Shared values, Objectives and plans to achieve the set
goals.
An analysis of the competitive advantage for the relevant business or sector: Competitiveness
(Differentiation, Cost leadership & Quick response) and Financial Performance.
Strategic program: Setting standards, time frames, budgets, implementation and evaluation.
The diagram speaks for itself. The greater the competitive advantage created for customers
(e.g. developing sector) the more value captured for the investors (rest of the SA).
Differentiation
Cost Leadership
Quick Response
Competitive Advantage
Economic Value Added
Market Value Added
Categories: Competitiveness Financial Performance
Value Created for Customers Value Captured for Investors
55
Although the GICTT touched some of the above aspects, the process was unfortunately been neglected
due to various reasons – refer item 7.8.4.1 of this report.
7.8.4 Hurdles in developing a strategic plan for grain – information and communication
The major hurdles this task team experienced (and we assume of the other task teams experienced the
same but perhaps to a different extent), were:
7.8.4.1 The span of the “clients” of the grain sector
The grain sector has:
A long value process (input suppliers, producers, storers, traders, transporters, traders, processors
and many more);
From the smallest (subsistence / one product) to the largest role-players (thousands employers /
variety of products); and
Role-players on various levels of commercial activities (from subsistence to highly commercial role-
players).
Role-players are active in different processes or on a different commercial level and, therefore, have
different needs. The strengths and weaknesses of the commercial sector are totally different from that of
the developing sector. It is, therefore, not possible to draw a meaningful strategic plan for the grain
industry without initially doing it for different value processes perhaps combined with the commercial
level of activity.
According to inputs received and the GICTT discussions, commercial role-players indicated that most of
their information and communication needs are fulfilled. When one considers the envisaged needs
(envisaged due to lack of inputs – see 7.8.4.2) of the developing sector one realises that a total different
set of needs are on the table.
To exploit the strengths and avoid the weaknesses of the South African Grain Industry, it would,
therefore acquire at least two totally different initial strategy plan processes (7.8.1.3 above). It would also
be more efficient to consider and develop separate strategic plans for various components of the grain
sector and then to develop an overall grain sector plan with objectives and plans to address actual and
prioritised needs.
A strategic plan for maize could also have totally different results than one for sorghum. The information
and communication needs could, however, be generic for different commodities but different for different
levels of commercial activities.
56
Recommendation:
It might be advantageous to have one or more competitive study done on the grain sector. The better
the selection of the commodity and the sector/s, the better the result would be of the total exercise for
information and communication.
If a competitive advantage analyses is conducted, the Resourced Based View method, where the
relation between assets, capabilities and competencies is considered, is recommended.
The NDA is in possession of a competitive intelligence study conducted for the mutton industry in the
Northern Cape that could be considered as an example.
7.8.4.2 The lack of inputs from people mostly involved and familiar with the needs of the developing
sector in the SA.
Outsiders cannot develop an efficient strategic plan when the most important parties involved in the
process or the recipients are not involved. The commercial participants involved in the developing
sector, have some experience and knowledge of the problems experienced in the developing sector. We
can only guess, but how can we know for sure that we are addressing the actual needs of the
developing sector?
Do we want to discover within 5 or 10 years from now that we have missed “our goal” to satisfy “our
envisaged needs” for the developing sector or that we have reached “our envisaged goal” but missed
the “actual needs / goal” of the participants of the developing sector? What if, after spending months and
fortunes, the developing sector claims that they were excluded in the planning process?
Recommendations:
The most suitable procedures, skilled facilitators and the involvement of the right people should be used
to identify the actual needs and achieve specific goals in order to make a difference in the grain industry
of South Africa!
7.8.5 Strategic plan / recommendations Although the GICTT has considered plans of action for some of the major recommendations and
solutions, it was excluded from this report. The reasons being, inter alia,
The bigger committee, for recommendation to the DoA, should accept the recommendations as
presented;
The owner / person responsible should develop a sustainable process and implementation within
acceptable time frames.
57
The following serves to illustrate the main issues in order to help as many as possible role-players in the
grain industry to either:
Help themselves to information as quickly as possible through effective information and
communication systems; or
To help others to information as quickly as possible through effective information and
communication systems;
Example:
Q1 Does an extension officer need to know by heart how maize (carrots, sorghum) should
be planted?
(No, not if he has access to ARC’s INFOTOONS.)
Q2 Does an extension officer have to carry the ARC’s INFOTOONS with him to help the
client in need?
(No, not if he can get by computer, telephone, fax, e-mail, etc. or at a Multi-Purpose Community
Centre (MPCC) access to a central Information Reference System (IRS) or a Information Help Desk
(IHD) that could lead him to the source with the most suitable information for his specific client’s
specific needs.)
Q3 Does a farmer only have access to planting methods through an extension officer?
(No, the answer is the same as in Q2.)
Most of the following recommendations would be precisely the same with or without conducting a
competitive advantage study per grain sector. For instance: An easy reference system for grain is a high
priority. The detail, contents or outlay of the reference system for assistance of the developing sector
could look different from the contents and outlay for the commercial sector.
It is, therefore, our recommendation that the basics for each of the following recommendations should be
established as soon as possible and then be expanded to cater for specific needs of the specific clients.
Objective Responsible Completed by:
1 Establish an effective and efficient Information Reference System – IRS.
DoA 30 Jun 2007
The system should not carry the actual information (prevent duplication and outdated
information). It should, by using buzz words, lead one in the fastest possible manner to the
various sources with the information / service in question. Refer example in Schedule B (AGIS
would demonstrate the potato model).
1.1 Establish access to information through media that could reach as many as possible role-players
/ participants, e.g.:
- A SABC / DSTV channel = fast, interactive, equal access, many can be reached
- An Internet website
58
1.2 Develop the framework of the IRS (consider linkage to the Gateway Project).
1.3 Negotiate with as many as possible role-players to join the system by linking and indexing their
products and services (ARC, GSA, SARB, SAGIS, PPECB, MIS, AGIS. …Etc.).
1.4 NDA develop simplified versions of market reports for usage of extension officers and people on
ground level.
1.5 Upgrade and expand Multi-Purpose Community Centres (MPCC) by providing the necessary
equipment and training.
1.6 Introduce the IRS to all role-players.
2 Develop an effective and efficient Information Help Desk - IHD.
NDA 30 June 2007
A service where questions could be raised in any format (post, telephone, fax, e-mail, etc.) and
the client could be directed to the right service provider/s or be provided with the required
information in the fastest possible manner.
2.1 Establish the IHD (infrastructure, equipment.).
2.2 Train the IHD staff, extension officers and staff of the MPCC.
2.3 Introduce the IHD to the role-players.
3 Establish a new lean and mean extension service DoA & PDAs 1 Dec 2006
The extension services are regarded as the most important link in helping the grain sector to fulfil
the objectives of the Strategic Plan for SA Agricultural. They should transfer all kinds of
information and services efficiently and effectively to and from the developing sector or else the
service is a waste of time and money.
3.1 Re-think service (WWWH) and add tasks (e.g. Crop estimates survey / IRS and IHD)
3.2 Get the right people for the right job
3.3 Establish relevant training and standards of compliance for training programs, extension officers
and their managers.
3.4 Performance measure system –measuring results against objectives.
4 Establish communication systems for the needs of participants on their activity level
DoA
1 Dec 2006
4.1 Commercial sector – status quo.
4.2 Remote areas, Emerging and Developing sector – PDA’s, Extension officers, Radio, Post, Other
publications, TV & DSTV channels where training and info could be found.
4.3 Subsistence sector – Multi-Purpose Community Centres
5 Establish training systems DoA 1 Dec 2006
Develop basic training for development in every sector of the grain value chain (to use
information to get market access, add growth & prosperity and become sustainable).
59
5.1 Develop and implement training systems (DoA Directorate Training & Education?).
5.2 Set standards for evaluation and measurements of training plans, trainees, students and training
objectives.
6 Train and settle at least 5 farmer settlements per
annum per province for the next 5 years and give
acquired assistance for at least 3 years after settlement
DoA 1 Jan 2006
7 Address grain information gaps as per Schedule A. DoA 30 Jun 2006
The basic needs of the commercial sector have been
addressed to a great extent. The needs of the
developing sector have not been addressed.
8 Progress reports – to GICTT and bigger committee
members DoA Quarterly as from
March 2006
7.8.6 Conclusion It is generally expected of Government (in this case the DoA) to have a vision for the Grain Industry and
to lead it towards that vision. The Strategic Plan for South African Agriculture (27 November 2001) is a
document nationally available including Government’s vision for the agriculture sector.
According to the diagram below the best power mechanisms and reasons to create value for a business
or sector, would be the sharing of infrastructure, increasing market power and capitalizing in core
competencies.
Power & reasons to create value and / or diversification
Reducing Risk
Maintaining Growth
Balancing Cash Flows
Sharing Infrastructure
Increasing Market Power
Capitalizing on Core Competencies
Least Power to Create Value
Most Power to Create Value
Not recommended as a Reason to
Diversify
Recommended as a Reason to
Diversify
60
The conclusions of the GICTT are, that:
7.8.6.1 Although it is regarded as the responsibility of the DoA to provide an effective and efficient
information and communication system, the DoA cannot do everything by itself;
7.8.6.2 An integrated approach should be followed where the DoA and grain industry could align
resources, functions and services to support the initiative of information and communication;
7.8.6.3 The DoA should take leadership to expedite the process of information and communication in
the grain sector;
7.8.6.4 Statutory measures should be used if necessary; and
7.8.6.5 The DoA must give progress feedback quarterly, starting 15 November 2003, to the GICTT and
members of the bigger committee.
Schedule A = List of individual information and communication needs.
Schedule B = Example of Information Reference System (IRS)
Schedule A SOUTH AFRICAN STRATEGIC PLAN FOR GRAIN & OILSEEDS Summary of inputs received on Information and communication needs A. GRAIN - Generic market information.
Topic Why needed Suggested sources (who give)
Suggested serviceProvider (who
distribute)
Suggested solution
A.1 Identify who is responsible for info:
1.1 collecting and collating
1.2 distribution
Proper functioning of
market, Market access.
Equal & simultaneous
info access
Government
(service & funding)
A.2 Maintain SAGIS current information:
2.1 Monthly bulletins (Stocks, imports,
exports, deliveries, consumption - 9
grains & oilseeds).
2.2 Weekly Bulletin (Local prices,
international prices, import tariff, import
parity prices, weather, economic
indicators, SADC info)
2.3 Weekly maize imports/exports
2.4 Database with historical info
2.5 Stats SA food prices
Policy making,
Strategy planning =
managing risks &
marketing decisions
Status Quo
SAGIS
2.5 Public info
(such as Stats SA)
should be free of
charge.
Status Quo
A.3 Grain import & export info:
3.1 Planned imports & exports
3.2 Realised imports
Market info / Supply &
demand
Planting decisions /
Statistics IGC
Importers & exporters.
SARS.
SAGIS
Per country of Origin/
destination. Per statutory
measure.
3.1 Monthly before planting
season
3.2 Weekly (Maize=√ )
62
Topic Why needed Suggested sources (who give)
Suggested serviceProvider (who
distribute)
Suggested solution
A.4 Stock (availability, etc.)
4.1 Whole grain – Nationally
4.2 Whole grain per silo
4.3 Seed (available & sales)
4.4 Storage capacity in SA
4.5 Realised retentions on farms
4.6 Regional S & D, imports, exports,
logistics
4.7 Actual deliveries/production by
developing sector / newly settled black
farmers
4.8 Number of newly settled black farmers
4.1 Supply & demand,
planning, CEC
4.2 Marketing &
purchases
4.3 CEC & planting
4.4 Strategic planning
4.5 Measure growth in
sector
4.1 Commercial
storers per statutory
measure, feedlots &
farmers with silos.
4.2 Store owner.
4.3 Pannar / Seed
traders / Seed breeders
4.4 Processors / Old
Co-ops, Harbour silo’s,
Spoornet, Portnet &
Farmers, etc.
4.5 Farmers / GSA
4.6 DoA
4.7 PDA, DoA and role-
players
DoA
4.1 SAGIS =
national stocks.
4.2 Each storer's
own stock per
silo/GSI.
4.3 SAGIS or
Pannar.
7.1 Associations/
SAGIS/
7.2 DoA
4.5 PDA and
interest groups
4.1 & 4.2Monthly.
4.3 Owner decides.
4.4 Every 2nd year.
4.5 Monthly or at end of
production season.
A.5 Crop estimates maintain but improved
- Crop conditions.
- Area, tonnage, hectares.
- Show separately:
Emerging sector estimate (√ )
Dry land & irrigation
Policymaking. Strategy
planning = Risk
management &
Marketing decisions.
Train & make use of
extension officers to
participate in surveys?
(see extension C.6)
CEC but more
accurate
Frequently.
A.6 Climatic info:
- Rainfall
- Temperature, hail, frost, wind, etc.
SAWS
ARC
DoA
AGIS
Weekly, continuously.
63
A.7 Other grain commodities info-generic:
Dry bean deliveries & prices per type
Supply & demand/Crop
estimates/ Advice to
farmers/GDP
7.1 All dry bean role-players
DoA
SAGIS, DPO
A.8 More price information
8.1 Input prices – Retail prices of inputs used in the
production of grains.
8.2 Production cost – Total cost of production (p/ha
or p/ton) including management and
depreciation.
8.3 Producer price – received by farmer (farmgate).
8.4 Marketing cost – Difference between Mill door
and producer price.
8.5 Mill door price – delivered price to processor /
miller.
8.6 Local market prices (SAFEX & other) for grains.
8.7 Import parity prices (not in SAGIS’s current info).
8.8 Retail prices – consumer price at retail
outlet of basic food stuffs.
Market info.
Negotiations (e.g. import
parity and trade
agreements).
Decision-making
Studies (food price monitoring
Comm.)
Value added per industry.
Calculate average weighted
prices.
Better GDP per province,
industry, grain, etc.
Forecasts.
CPI
Various role-players:
Producers, GSA, Storers,
GSI, Buyers & sellers of
grain, NDA, truckers,
Spoornet, Portnet, Seed
traders, Seed breeders
Stats SA & various role-
players, Customs and
Excise/SARS.
DoA
SAGIS
SAFEX
GSA
Associations
Stats SA
ACE Dept
8.7 SAGIS – for formula of
import parity
A.9 Access to info in government departments when
industry needs info more than govt, e.g.:
- International info (IGC, FAO)
- Local info (SARS imports & exports, Portnet info)
- Outsourced functions (PPECB)
Saving cost to industry. State departments
Outsourced organisations.
DoA
Government
Departments.
64
B GRAIN - Non-generic additional marketing information:
B.1 Other commodities/products:
1.1 Potato prices
1.2 Vegetable prices
1.3 Sugar cane prices
1.4 Tobacco stocks &
prices (baled & green)
1.5 Wool stocks & prices
1.6 Products (not specified)
1.7 Peanut contracts
Supply & demand
Crop estimates
Advice to farmers
GDP
Change in inventory
1.6 Marketing
1.7 Marketing/Pre-contracting
Relevant market
players
1.6 Manufacturers,
traders
1.7 Processors/
traders/ Co-ops
DoA
1.6 Individual firms
1.7 Co-ops/owners
Spot & futures prices separately
1.6 Owner decides
1.7 During plant season
B.2 Overseas market reports on
demand in grain and milling
products (not day to day
info).
Expand supply by exports in a
demand driven way
D:ITR and foreign
offices
Available at USDA
DoA
Outsourced to market
research organisations
Quarterly report
B.3 Potential buyers for
products:
- local
- international
Market decisions
Market opportunities
Market access
Potential buyers
Extension officers
Associations
Help desk
DoA & PDA’s
Continuously
Names & location
Market segment
Contact details
65
C. Communication needs
C.1 Information index / reference
system (on a website or
satellite system - something
like DSTV channel 1 where
person can interactively help
himself to find what he is
looking for) with specific help
to the emerging sector.
Self-help & easy access
to available info.
Uplifting.
Equitable access to
markets & info.
Profitability.
Owners of public and private
grain information (e.g.
SAGIS, AGIS, DoA, Stats
SA, Port Authorities…).
Establish national index
site that could be
reached through as
many as possible
households (TV, DSTV,
Web...):
- DoA (MIS?)
Update site:
- links to other sites
- contact details of
info providers
Service free of charge
for users.
Extension officers help
those without electronic
equipment or TV access.
Establish as soon as
possible.
Reference to more than
usual market info:
- research reports,
referates;
- financial aid schemes;
- contact details of
relevant institutes, etc.
Do not duplicate other
organisations’ database
here – just refer people to
them.
C.2 Information help desk For people without
internet or satellite
facilities.
Info index. DoA (MIS?).
SAGIS.
Telephonic, fax, e-mail or
postal service.
Direct client to right source,
or service through central
reference system. Or
print info & forward
requested info to client.
66
C.3 Interpretation of info:
3.1 Interpret released
reports
3.2 Analyse / discuss
factors influencing local
& international prices
Policymaking, Strategic
planning, Managing risks,
Marketing & planting
decisions.
Market access for
emerging farmers.
Tendencies & forecasts.
Training of PDI farmers.
Current sources (CEC,
SAGIS, Stats SA, SAFEX,
AGIS…)
DoA or outsourced by
DoA to specialists.
Independent service
provider.
Universities / Colleges.
ASAP when info becomes
available. Simplified for
emerging by NDA & PDA
for extension officers.
Nationally & per region /
district.
Develop on different levels
according to target
market’s need (scientific,
normal market decisions,
computer illiterate...).
C.4 Transfer market info to
emerging sector
Equal access &
opportunities.
Sustainability, growth…
NDA transform data
(SAGIS, SAFEX…) in
various formats.
DoA
PDA
Extension officers
Continuously, Timeously &
Frequently. DoA as fast as
possible submits to:
- PDA’s
- Extension officers
- Help desk
- Radios, magazines,
SABC
- MPCC’s (Multi Purpose
Community Centres)
- Associations
- Organisations involved in
training.
PDA’s & Extension officers
submit to people on
ground-level
67
C.5 Expand MPCC (Multi
Purpose Community
Centres) facilities &
functionalities (satellite
offices?)
Capitalise on existing
structures.
Reach more people
faster.
Equal access &
opportunities.
DoA:
- upgrade current facilities.
- expand number of centres.
- updates information
directly.
- DoA train - train MPCC
staff to give users of info a
competitive advantage.
MPCC staff.
PDA’s & extension
officers.
Organisations with
support services.
Continuously
Timeously
Frequently
As fast as possible
C.6 Reconsider whole extension
service!
For effective & efficient
extension.
To do job and not to sit in
an office.
To contribute towards
prosperous sector.
Uplifting of emerging
sector (more than
farmers).
DoA (BOLB) Every person who needs
guidance to participate in
a prosperous agricultural
sector.
ASAP.
DoA review, set standards,
manage & implement
process (process could be
outsourced):
- Objectives, standards.
- Skilled persons, training
& testing.
- Result driven strict
performance standards
- Use them in CEC
surveys.
PDA:
- Adhere to DoA’s
standards & guidelines
Extension officers:
- Do what is to do with
distinction.
68
D. Requests to be referred to other committees of the Grain Sector – should still be addressed in Information Reference System & Help Desk.
D.1 Maintain SAGL current services
and info
Status quo
Status quo
Status quo
D.2 Add to SAGL current services:
-quality of imported grains
Quality control Importers.
Harbour silo owners.
NDA outsource to
SAGL.
D.3 Resolve Spoornet / Customs
problems:
3.1 Meetings attended
3.2 Truck utilisation & logistics
3.3 Transparent allocation
Policymaking. Strategy planning =
Risk management & Marketing
decisions.
Spoornet Spoornet
TEC of SA Grains
Council
D.4 Transport information: tariffs, tons
per origin, destination & in transit:
4.1 Per road
4.2 Per rail
4.3 Per harbour cost item
Planning of infrastructure. Private.
Spoornet.
Portnet.
Each organisation
releases its own
tariffs.
D.5 Input suppliers (& cost):
E.g. herbicides, pesticides,
fungicides
Policymaking. Strategy planning =
Risk management & Marketing
decisions.
Manufacturers,
Suppliers, Co-ops, etc.
DoA
Farmers
Associations
ACE Dept
Monthly.
List of suppliers with
contact details,
products & process.
D.6 Grading issues:
- Regulations
- Quality control
DoA
Storers
Associations
DoA
Help desk
Continuously.
D.7 Producer and Consumer Support
equivalents of grains (subsidies).
Monitor & compare support
transfers due to governmental
intervention.
DTI, OECD, IGC,
USDA
DoA Annually.
69
Schedule B Information Task Team: Information Reference System (IRS) 1. Goal with IRS: To get as wide as possible information and training to as many as possible users on a wide variety of subjects and needs. People should have easy access to the system by means of a computer or a satellite self-help system, like DSTV. These should be available at Community Service Centres and every extension officer should be trained to understand it in order to help people without the required equipment, reading skills or the know-how, to get access to the required info. 2. Illustration of how the proposed IRS can work (a): Example A: Farmer in Northwest wants to plant sorghum. He wants to know: A1: Best planting methods for small scale farmer Key words for system to find the info: Planting methods + small scale + sorghum + Dry land + Illustration A2: Best cultivar for his region Key words for system to find the info: Sorghum + Cultivar + sorghum + dry land + Northwest? A3: To replace the current electric broken plug of his electric kettle with a new one Key words: Plug + Electric + Install + Illustration+? A4: How his wife can learn to read and write Learn + Write + Tswana + Illustrations + Beginner + ? Database: The system does not carry the data of all the firms that joins the IRS, it should, however, - identify the sources with the information in request - help the user to retrieve the data in request
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Information Task Team: Information Reference System (IRS) (continues)
List of firms joining List of firms with information in request the IRS: Example A1 Example A2 Example A3 Example A4 ABSA AEG Pty Ltd AEG Pty Ltd AFGRI AGIS AGIS AGIS AGIS ARC ARC ARC ARC BOKOMO Cargill Carnia Seed Carnia Seed CSIR CSIR GSA GSA GSA Landbank DoA DoA PDA - Gauteng PDA - Gauteng PDA - Gauteng SAGIS SAGL SARS SANSOR Technikon, Pta Technikon, Pta …. many more Technikon, Pta User's choice for each of his needs: AGIS ARC AEG PDA - Gauteng 3. Notes: (a) A hypothetical example. The organisations and firms used above are used for illustration purposes only. They were not contacted and therefore we do not have an agreement with them to operate in this manner. The initiative of the developers of the system and the participants would eventually determine how wide the system could be applied to give people "in-home" training and information. (b) This system could be used in the same manner for the Information Help Desk (IHD)
7. 9 Research Research Report Sub-committee – Grain Imbizo Dr Jan Dreyer (ARC-GCI)
7.9.1 Introduction
The acceptance of the “Strategic Plan for South African Agriculture” set the stage for agriculture at large
to build on the three cornerstones of this policy.
The first strategy, “Equitable access and participation strategy” is mainly focussed on aspects, such as
land reform, support services and the structures to make sure that new entrants would be successful. In
this case research plays a pivotal role in supplying the basic knowledge on, amongst others, the
cultivation of crops and the planning of production with minimum risk.
The second strategy, namely “Global competitiveness and profitability” brings research to the fore. It is
imperative that research should lead the way to offset the adverse economic and production conditions
in South Africa, enabling the sector to maintain its competitive edge in a global economy. Research
should also be put to work in devising methods to manage production risks and still maintain food
security. It is also of paramount importance to supply the market with a basic product which can be
upgraded in the chain leading to the end users. Thus, high quality produce is as important as yield for
profitability and global competitiveness. In the international trade, as in local consumption, aspects such
as food safety and nutritional value would have to be highlighted.
The third strategy, “Sustainable resource management” involves all aspects of research. Any research
application would have a bearing on how the environment would react on this and thus, whether the
practices devised by research would be environmentally and economically sustainable. This aspect also
calls for retention of genetic biodiversity and the best use of technologies, such as biotechnology, to
mention but one, for long term sustainability in agriculture.
These three core strategies cannot easily be split into compartments, since research findings would
encompass a variety of aspects, thus integrating the three strategies.
7.9.2 Scope of this document
The Imbizo on grains (including oil and protein crops) formed a few sub-committees of which research
was one. In an effort to involve people from outside, the participants attending the Imbizo, were asked to
send a request to a large number of organisations, asking for inputs. The list included in this report is by
no means complete, but it accounts for at least a large number of major role-players in this arena.
72
This document can only serve as the starting point for a strategy on research, since this field is so vast
that it would take at least a thorough discussion with researchers, but particularly industry in order to
present a working document for future use. The interaction between this Imbizo the NARF should still be
sorted out. It would indeed be counter-productive to go different directions and priorities via the Imbizo’s
and the NARF-initiatives.
A challenge facing a sub-committee like this is to stay within the boundaries and not generalize, but also
to shy away from detail. It is also imperative to note that external factors and especially policy matters
might change the entire approach or at least priorities in research. An example is policy change towards
renewable energy, such as bio-diesel and alcohol production from sorghum.
7.9.3 Research imperatives
Irrespective of the grain crops planted, a few basic aspects should be researched to enable economic
and environmentally sustainable production. The major disciplines involved in primary production are
briefly discussed. These disciplines and the result of their research are applicable for all scales of
agricultural operations.
Breeding (including biotechnology) The start of a commercial concern is with the seeds planted. Included in the seed is the technology,
which would enable the crop to produce a given quality, yield, with resistance to some adverse
conditions, such as drought, as well as constraints, including pests and diseases.
There are still some misconceptions that biotechnology could completely replace conventional
breeding. Fact is that this new technology might vastly enhance conventional breeding and speed-
up of new developments, with traits, which are not possible with conventional breeding, but it still
won’t replace conventional breeding.
Agronomy
This discipline encompasses the entire aspect of how the seed and the crop would be handled up to
maturity. In the case of most cereals, but especially wheat, this discipline can out-perform breeding
as major contributor to yield. This area of research might include fertility studies and might
sometimes be lumped together with soil sciences, irrigation research, modelling and aspects such
as physiology, where it is not included in biotechnology, etc.
73
Plant protection Any given crop should be protected against the adverse effects of damage from pathogens, insects,
nematodes and weeds, where this aspect is not covered under agronomy. The annual impact
varies, but when a pest strikes (such as cob rot in the 80's) it might caused complete disaster. The
effect of disease on yield cannot be easily traced or quantified. Add to this the sanitary and
phytosanitary effect of crops for the export market, then it is clear that this field is of prime
importance for sustainable production.
7.9.4 Aspects highlighted in responses received
In response to the letter sent out to different role-players with the request to answer a few questions, it
was clear that a profitable and sustainable agricultural sector is not possible without research, which is
on par with international standards.
A summary of some of the responses on the five questions received in writing and verbally, revealed a
few common denominators. The documents received are attached for reference.
7.9.4.1 Research to be conducted in order to enable a profitable and sustainable grain crop production
sector
Plant breeding (including biotechnology)
Soil science (soil management, soil nutrition and plant feeding)
Crop science (agronomy) including cultivar evaluation, soil cultivation guidelines for different soil types,
crop rotation and minimum tillage)
Crop protection.
Research geared towards sustainable rural livelihood (Comments also clearly indicate that emerging
farmers need the same research as commercial operators, but the application of the science should be
tailor-made for this sector). The application of research should enhance food security and community
empowerment.
Crop modelling (for crop estimates, yield potential planning).
Evaluation of alternative crops.
Stress the need for fundamental, as well as practical research.
Pre- and post-harvest research.
Research should be conducted in such a way that it serves as an early warning system.
Priority setting should focus on need-driven research.
Research on quality of products, as well as he further upgrading of such products.
Economic research to evaluate changes in the economic environment deemed necessary.
74
7.9.4.2 Strategy to implement research findings
The implementation of the research findings to a large extent in the hands of the producers. There are,
however, many aids that might be put to use to enhance the dissemination of research findings.
Proper collaboration with Provincial Departments of Agriculture through their extension services.
Comments on the extension services vary, but it is clear that training and refocusing of this sector should
go a long way to carry research results to the end users in a form applicable to a particular group.
Farmer’s days (including field visits, information days).
Publications (including pictograms, popular, semi-scientific, scientific publications, manuals, etc.)
Radio and TV talks.
Interactive TV and computer links are also suggested.
It’s being suggested that researchers should carry their own message to the end user.
Research results should have a back-up system whereby well equipped labs are available to serve as
quick reference points to implement results of research. Examples of such labs are disease identification,
soil fertility especially nitrogen levels, etc.
7.9.4.3 Research funding
The response is as close as can be to consensus. Research especially on staple and essential foods
can be considered as part of public good and should thus be fully, or at least, partly funded by
government. The current situation where some research institutions are funded on a sub 50%-level is not
sustainable and would inevitably lead to a decline in research outputs.
The general comments indicated that full funding by Government is preferable, although industry and
overseas grants should also be included in the funding formula.
It was pointed out that the current tendency is towards short term funding and a lack of funds for basic
research. The short term nature of funding also lead to the premature termination of research where
especially field studies need to go through a wet and dry cycle to adequately supply reliable answers to
pressing industrial questions.
7.9.4.4 Technical skills required
The general comments indicated that there is almost no discipline that is not in scarce supply. It was also
suggested that a Chair: Agricultural Sciences should be established to aid in the dwelling supply of
suitable trained agricultural scientists.
The skills needed include:-
Agronomists (Crop scientists)
Breeders (including biotechnologists)
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Soil scientists
Physiologists
Entomologists
Plant Pathologists
Microbiologists
Biotechnologists
Crop modellers
Extension scientists
Economics (agricultural)
Marketing specialists
Agricultural engineers/Technologists
Food processor experts
Climatologists/GIS experts
It needs to be stressed that it is even more important to maintain existing personnel than the acquisition
of new staff, since the mentorship role of the experienced members of the research community can
hardly be over emphasized.
7.9.4.5 Research and development (long and short term)
The issues were partially discussed under previous headings.
A major constraint remains with the current funding formulas, which are inherently short term. It also
appears that the short term issues are better addressed, than long term issues that need attention. This
include -
Thorough investigation in alternative crops, including production requirements, constraints and the
economic possibilities of such crops.
A study is needed on alternative utilization of current crops, such as bio-diesel and alcohol
production from sorghum.
Research over the long term is required into a change in the composition of current crops such as
gluten-free grain products, longer shelf life of groundnuts, high quality protein maize, etc.
7.9.5 Summary of research activities
CORE STRATEGY RESEARCH ACTIVITY KEY PERFORMANCE INDICATORS
TIME FRAME WHO ARE INVOLVED
7.9.5.1
ENCHANCEMENT OF EQUITABLE ACCESS AND PARTICIPATION IN THE AGRICULTURAL SECTOR This would enable
agriculture to be more
diverse and would cover
the entire spectrum of
enterprises and farm
sizes.
It implies that partnerships
are important.
Food safety and
environmental
sustainability might not be
compromised.
This core strategy would
enable black South
Africans to become
successful commercial
farming and agribusiness
Technology development and
transfer for emerging farmers
To improve cereal production
including oil and protein crops in
all needed communities of
developing farmers
Develop environmentally
friendly and cost-effective
disease and pest control
practices.
On-farm demonstrations, trials,
courses and presentations.
Tailor-made and sustainable
cereal food production systems.
Optimise pest and disease
control systems for the spectrum
of farm operations.
Annually
ARC, Higher
Education
instit., Prov.
Dept., NGO’s
77
CORE STRATEGY RESEARCH ACTIVITY KEY PERFORMANCE INDICATORS
TIME FRAME WHO ARE INVOLVED
entrepreneurs.
It implies better co-
operation between all
people involved especially
Provincial Departments of
Agric.
The aspect of training and
information distribution is
of prime importance.
Implement training courses for
emerging farmers.
Implement training courses for
extension officers.
Participatory, development and
evaluation of maize, wheat,
sorghum, groundnuts, dry bean,
cowpea cultivars, sorghum land
races and genotypes for
emerging farmers and
communities.
Database on soil fertility status
of resource limited production
environments.
Device a system of optimisation
of fertilizer inputs with limited
finances.
Need-driven and routinely run
courses.
Need-driven and routinely run
courses.
Test adaptability of cultivars for
different environments and
levels of inputs.
Adequate database.
Develop a model to deal with low
inputs.
2005
2004
Ongoing
Extension
personnel
Researchers at
ARC,
Universities,
Technicons
ARC, Dept. of
Agriculture
78
CORE STRATEGY RESEARCH ACTIVITY KEY PERFORMANCE INDICATORS
TIME FRAME WHO ARE INVOLVED
Availability of tilling seeding,
crop protection harvesting and
milling equipment for resource-
poor areas.
Upliftment of new emerging
farmers to become
commercially efficient.
Educating emerging farmers in
cereal contract production,
signing of marketing contracts
and financial management.
Test alternative crops to
enhance diversification of
production and the reduction of
risk.
Effective equipment.
Increasing number of new
commercial farmers.
Successful new commercial
farmers.
Evaluate new and alternative
crops.
Ongoing
Ongoing
2004
Ongoing
ARC, NGO’s
Prov. Dept. of
Agric.,
Commodity Org.
NGO’s
Private sector,
Commodity
Org.
Dept. Agric.
ARC,
Universities,
Technicons,
NGO’s
79
CORE STRATEGY RESEARCH ACTIVITY KEY PERFORMANCE INDICATORS
TIME FRAME WHO ARE INVOLVED
7.9.5.2
7.9.5.2.1
IMPROVEMENT OF GLOBAL COMPETITIVENESS AND PROFITIBALITY Optimal production systems Development of
economically and
agronomically optimal
crop production systems
and practices for each of
the homogeneous agro-
ecological production
areas.
Management guidelines for
optimum input levels in terms of :
- Cultivars
Management guidelines for
optimum input levels in terms of:
- fertilisation
Clear guidelines on wheat, maize,
sorghum, groundnuts, dry beans,
soybeans and sunflower cultivar
performance in all the production
areas of South Africa
Results of research programmes
reported at scientific congresses
and commercial farmers’ days and
through production manuals.
Production guidelines and articles
on cereal grain genotype x
environmental interactions
published.
Guidelines for maize, sorghum,
wheat, groundnuts, dry beans,
soybeans , sunflower, etc
Annually
Continuous
Annually
Continuous
ARC in
collaboration of
private
companies
ARC
80
CORE STRATEGY RESEARCH ACTIVITY KEY PERFORMANCE INDICATORS
TIME FRAME WHO ARE INVOLVED
Management guidelines for
optimum input levels in terms of:
- Chemical control of diseases
Pre- and post-harvest integrated
pest and disease control
strategies (IPM)
Optimal crop rotation and soil
tillage strategies to optimise net
Clear guidelines on the necessity
of micro-nutrient applications in
dryland Free State and irrigation
areas (wheat).
Cultivar response to applied micro-
nutrients under irrigation (wheat).
Profitability of micro-nutrient
application (wheat)
Fertilizer guidelines for maize.
Updated guidelines for the
effective use of fungicides against
most relevant diseases.
Determine the effectivity of
fungicidal groups for the different
diseases.
Published and communicated
guidelines and reports.
Generation of information on the
performance of wheat planted in
2005
2005
2005
2003
Continuous
Continuous
Continuous
2006
ARC
ARC
ARC
ARC
Industry, ARC,
Univ., Tech.,
ARC
81
CORE STRATEGY RESEARCH ACTIVITY KEY PERFORMANCE INDICATORS
TIME FRAME WHO ARE INVOLVED
income per unit area and to
reduce risk
Integrated weed control systems
Improved quality of products.
rotation with other crops such as
maize, canola, sorghum and
soybeans) in the summer rainfall
area.
Development and fine-tuning of
guidelines with regard to
cultivation practises through the
assimilation and processing of
currently available data.
Publication of these guidelines in
manuals and scientific and popular
articles.
Develop adjuvants to optimise
sulfonylurea herbicides
Optimise the combined use of
sulfonylurea and foliar feeds
Preventative and management
strategies for herbicide resistance.
Increase the quality and integrity
of South African maize, sorghum,
2006
Annually
Continuous
Continuous
Continuous
Continuous
ARC in
collaboration
with private
companies
ARC, Private
Companies
ARC, Private
Companies
ARC, Private
Companies
ARC, Private
Companies
82
CORE STRATEGY RESEARCH ACTIVITY KEY PERFORMANCE INDICATORS
TIME FRAME WHO ARE INVOLVED
Regulatory support of Act 36 of
1947 (Testing capacity).
Decision-making models
determining potential risk and
return per crop.
Pre- and post-harvest integrated
pest and disease control
strategies (IPM)
Improved grain yields and
especially higher nett income per
unit area with reduced risk.
Genotype x environmental
information and production
guidelines for the full spectrum of
farmers.
wheat, groundnut, dry bean,
sorghum and sunflower cultivars to
match end-use requirements.
Annual Reports
Decision-making model per crop.
Percentage strategies i.t.o.
important diseases and pests
Increased yield per unit area over
time (Agric. Stats)
Annually published cultivar choice
guidelines in manuals and popular
press for the different crops
Annually
2006
2005
Continuous
Continuous
ARC
ARC
ARC, Univ.,
Technikons
Private
companies,
ARC
ARC with aid of
Dept. and
Private
Companies
83
CORE STRATEGY RESEARCH ACTIVITY KEY PERFORMANCE INDICATORS
TIME FRAME WHO ARE INVOLVED
7.9.5.2.2
Plant Breeding and Biotechnology Breeding and developing
new cultivars, both
through conventional
plant breeding,
introductions from abroad
and through
biotechnology, for higher
grain yield, better
adaptation, improved pest
and disease resistance
and superior quality
attributes.
New varieties with improved
yields and quality and thus
greater net income
To apply molecular marker
assisted systems to speed up
disease, insect resistance and
grain quality
Shorten breeding process
New varieties for niche markets
On-going supply of improved
winter wheat, dryland spring
wheat, spring irrigation wheat,
barley, durum, oats, maize,
sorghum, groundnuts, dry beans
and soybean cultivars.
Breeding populations, inbred lines
and hybrids
Development of maize genotypes
tolerant to drought.
Functional marker assisted
systems
A functional double haploid system
for wheat and barley. Embrio
rescue techniques for oil seeds.
Released varieties
Continuous
Make available
to industry,
continuously
Continuous
Continuous
Continuous
Continuous
Private
Companies,
ARC
ARC
ARC, Private
Companies
ARC, Private
Companies
ARC, Private
Companies
ARC, Private
Companies
84
CORE STRATEGY RESEARCH ACTIVITY KEY PERFORMANCE INDICATORS
TIME FRAME WHO ARE INVOLVED
Breeder seed of new varieties
Generating royalty income from
cereal, oil and protein seeds
germplasm and cultivars
Adequate supply of breeder seed
Optimise royalty income
Continuous
ARC
7.9.5.2.3 Quality improvement Improvement of grain
quality for improved
processing and end-use
purposes, as well as
improvement of quality
attributes of industrial
crops.
To tailor cereal cultivars and
germplasm to the changing and
increasingly precise needs of
discriminating buyers
Breeding of groundnuts with
longer shelf life.
Adequate quantity of high quality
cereal cultivars
Satisfied clientele
Proof ability in practice.
Continuous
Continuous
2005
ARC, Private
Companies
ARC
7.9.5.3
7.9.5.3.1
NATURAL RESOURCE USE AND MANAGEMENT Natural resource management in crop production This involves the
management and use of
natural resources, viz.
soil, water and climate, in
Optimal soil tillage systems for
different natural resources and
crop rotation situations
Research activities that address
the needs of farmers engaged with
cereal production under direct
seeding
New guidelines on best practises
regarding, row spacing, seeding
rate, seed and fertiliser
2006
2006
ARC, Private
Companies
ARC, Private
Companies
85
CORE STRATEGY RESEARCH ACTIVITY KEY PERFORMANCE INDICATORS
TIME FRAME WHO ARE INVOLVED
an economically,
agronomically and
environmentally
sustainable manner in the
crop production process.
Optimal land-use options for
sustainable crop production in
different agro-ecological regions
Development of decision-
making models to ensure
optimal use of inputs according
to yield potential
Fertilisation guidelines that are
economically, agronomically and
environmentally sound
placement and rates especially
developed for direct seeding
conditions.
Cultivars with different tillering
ability tested for suitability with
direct seeding.
Practical demonstrations of direct
seeding in place in the main
production areas
Guidelines on land-use options
i.t.o. best crops and crop
production in different agro-
ecological regions
Number of computer based
decision-making models for
maize, sorghum, sunflower
Finalise fertilisation guidelines for
maize, sorghum and wheat based
on soil analyses and plant
2006
2006
Continuous
2008
Continuous
ARC
ARC
ARC, Private
Companies
ARC, Industry
86
CORE STRATEGY RESEARCH ACTIVITY KEY PERFORMANCE INDICATORS
TIME FRAME WHO ARE INVOLVED
Guidelines for soil amelioration
through liming to address the
major problem of soil acidification
Irrigation management guidelines
for different crops cultivated
under a range of irrigation and
production systems
Soil tillage strategies to optimise
conservation of soil water for
dryland crop production
reactions
Revised and updated models to
quantify optimal lime application
Revised and/or updated guidelines
per crop and production system
Revised tillage strategies
Continuous
Long term
development
Ongoing
ARC, Private
Companies
Univ., Tech.,
ARC, Private
companies
ARC, Private
Companies,
NGO’s
7.9.5.3.2 Management of genetic
resources
Conservation of the basic
germplasm collections
Identification and use of maize,
sorghum, wheat, groundnuts, dry
beans, soybeans and sunflower
germplasm with required
agronomic and quality attributes
On-going access to new genetic
resources and operative
germplasm banks
Continuous
ARC
87
CORE STRATEGY RESEARCH ACTIVITY KEY PERFORMANCE INDICATORS
TIME FRAME WHO ARE INVOLVED
Inventory of all accessions and
description in database for all
crops
Identification of genetic
resistance to pests and diseases
for maize, sorghum, wheat,
groundnuts, dry beans, soybeans
and sunflower.
Patenting of biotechnologically
identified, economically useful
and unique genes and markers
Up-to-date databases for all crops
in electronic form
Germplasm evaluated for
resistance to certain pests and
diseases
Patents of markers and/or genes
Continuous
Continuous
Continuous
ARC, Dept. of
Agriculture
ARC, Private
Companies
Univ., ARC,
Private
Companies
7.10 Food security
In addressing food security challenges, the grain industry players are taking the following steps:
7.10.1 Inputs suppliers:
are involved in the production process by supplying inputs such as fertiliser, seed and financing to
all commercial and emerging farmers/producers in the production process.
are directly involved in activities to bring emerging farmers and processors together, for example
the barley - and yellow maize projects in the Vaalharts Irrigation Scheme.
acts as an early warning system in crop production and forecasts to enable the industry to act
timeously on possible food shortages.
offers first world grain handling and storage facilities to all role-players i.e. big and small producers,
traders and end-users. Grain is handled and stored in accordance with applicable health
standards.
are supplying finance to both producers and processors in respect of the physical grain.
Offers through first world market information systems, a wide range of marketing
transactions/information to the produces/trader/processors, including transport logistics and
finance.
are committed to and supports the national BEE and Employment Equity strategies and actively
participates in setting goals in this regard.
7.10.2 Producers
From the producers’ point of view, it is important that a production and marketing environment be
created within which they can produce sufficiently for the local market and for the export market.
It is however important that this takes place within a market driven economy, which also strives to
compete internationally.
Strategies must therefore be in place to research and evaluate the critical aspects of the input
environment, production environment and marketing environment, and if necessary, find and implement
solutions.
89
7.10.3 Government.
Ensuring that sufficient food is available and affordable to all, now and in the future
SA grain producers would remain capable of producing sufficient basic food for the population if the
following remains in place and are further developed.
- Current production capacity and knowledge base of farmers are allowed to continue farming
activities without hindrance.
- New capacity (developing farmers) is created in such a manner that the existing capacity is not
destroyed or disadvantaged. (Land reform, BEE, etc.).
- Technological development (research) remains in place and is expanded to ensure that SA
producers remain internationally competitive.
- Support services and infrastructure are maintained and expanded.
- Information systems, basic to the functioning of a free market, must be in place and provide
timely and relevant information for correct decision- making.
- Protection from unfair competition as a result of subsidies and dumping must rather be seen as
a positive step to attaining food security and not be seen as a cause for making food more
expensive or unaffordable.
- General growth of the economy, which includes the agricultural economy, leads to employment
and rising incomes. It therefore forms part of the Government’s total economic strategy.
- Supplementing incomes by means of welfare programmes is supported, and that locally
produced food gets priority in food support programs.
Empowering citizens to make optimal choices for nutritious and safe food
- It is a Government function, in conjunction with consumer organisations and educational
programs, to inform and educate consumers about this aspect.
- Concerning food safety, it is necessary that a central agency that monitors food quality, be
established. Certain Industries (wheat and maize) have already started tests on local and
imported grain at own cost and published the results.
- The Act on Agricultural Product Standards is in place but must be applied.
Ensuring that there are safety nets and food emergency systems
- Apart from a possible sustained drought, SA is not known for catastrophically natural disasters
such as cyclones, floods, etc., which make a strategic reserve a necessity.
- The capacity of the economy to import basic food during times of shortages and carry normal
pipeline requirements is sufficient more than adequate to bridge short term disasters.
90
Capacity building to ensure sufficient food for every citizen
The vulnerable communities must be empowered and capacitated in all aspects of production. This
must be a responsibility of both the government and the South African Grain industry at coordinated
efforts. The government at this stage already has policies and programmes that are being
implemented to fulfil this responsibility. The South African Grain industry needs to come onboard
and assist the Government in the successful implementation of the following programs:
- Comprehensive agricultural assistance program;
- Integrated food security and nutrition program;
- Foodstamps program; and
- Food insecurity and vulnerability information system
through sharing the expertise on production, marketing and processing techniques.
This could be accomplished through a joint venture as a means of achieving capacity building by:
- More economic and sustainable utilisation of resources by the poor.
- By introducing the poor in a more commercialised production and marketing mechanisms.
Adequate and relevant information of food security programmes
- Control and management can only be based on good information.
7.10.4 Traders The traders of grain would service the market requirements by procuring domestic or imported grain
supplies.
7.10.5 Silo Industry
Safe storage of unprocessed grains over time.
7.10.6 Processors
Ensuring easy market access for the produce in South Africa.
Need adequate, affordable and efficient harbour facilities.
Need a reliable and affordable public system.
Use of good quality and safe grain through negotiating with producers.
Procuring an adequate supply of inputs (grain) to maintain the level of food availability.
Procuring grain at reasonable prices to ensure food affordability.
Processors support the fortification process, but it is essential for government to ensure compliance
by all role players.
91
Processors support the permanent targeted schemes for poverty alleviation. Processors see these
efforts as essential in addressing pockets of malnutrition.
Ensuring capacity to mill enough to supply the population.
Ensuring continuous food distribution to consumers.
Ensuring food affordability through: Stable production environment.
Little or no shock on processing sector (e.g. Exchange rates, trade and tariff policies).
Low prices.
Employment creation.
Low-cost transport.
Ensuring food availability through: Free market system.
Reliable transport.
7.10.7 Transport
Grain industry current challenges - Old rail equipment and inadequate capacity facilities.
- Inadequate loading and offloading capabilities.
- Too many small facilities spread all over the country.
- Unpredictable demand.
- Poor service delivery.
- Industry perception of Spoornet as “Common carrier “.
- Future of branch-lines.
- SAFEX trading resulting to poor planning affecting rail operations.
- To meet the block requirements policy.
Pricing philosophy In order to ensure sustainability of Spoornet business, Spoornet-Grain Industry co-operation is
required to address the current inefficiencies within the industry’s supply chain. Spoornet is
committed to be the transport provider of choice to the Grain Industry and ensure that food remains
affordable to the majority of South Africans. This would be achieved through affordable rail tariffs
for the grain commodities.
Recommendations - To ensure proper investment to equipment and facilities to create a cost effective grain
industry.
- Establish Grain Industry co-operation.
92
- Establish alignment between DPE , DOT and DoA with regard to regulations relating to
conveyance of grain commodities.
7.10.8 Research
Agricultural Research and Development Strategy for Cereals
7.10.8.1 Global Cereal Demand
Fundamental changes are occurring in the international demand for food due to globalisation,
significantly impacting on South African cereal production and marketing. Changes are driven by
economic growth, consumer preferences, and environmental changes, rising incomes and significant
urbanisation in the developing world.
Global scenarios show that international trade, price, demand and productivity are the major areas
where changes are expected. It is anticipated that:
World cereal markets would strengthen in the medium to long term. Greater regional disparities
would result in more cereal food trade, with developing countries playing a significant role in global
food markets.
Real international cereal prices are expected to decline slowly due to the rising productivity in the
developed world. The lower cereal price would result in a benefit to the poor cereal consumers, but
a net income decline for the rural cereal producers.
By 2020 the demand for maize and wheat would increase by 45% and 30% respectively.
For maize, 80% of this increase would be from the developing world. The increased demand for
maize and coarse grains is due to a strong growth in meat consumption and ensuing increased use
of cereals for feed. A per capita decline in the consumption of maize and coarse grains for food, is
expected.
For wheat, 87% of this increase would be from the developing world. Food maize and course
grains per capita consumption would decline as rising incomes lead consumers to shift to rice and
wheat.
The developing world is expected to drive the food demand growth higher than the production
growth. Apart from Sub-Sahara Africa, there would be a gradual slowdown in growth of crop yields.
Yield growth would be instrumental to food security of wheat and wheat products. Improved
irrigation, agricultural research and rural roads are seen as the main drivers for agricultural
production growth.
Notwithstanding the foreseen drop in real food prices and increased international trade, food-
security for the poor would improve slowly with yield growth being the main driver in ensuring
affordable food to the world’s poor.
Intense concern exists over the future food insecurity for Sub-Saharan Africa because of
deteriorating natural resources, stagnant technologies and rising population densities.
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Notwithstanding relatively abundant food and declining real food prices, food security and
malnutrition in Sub-Saharan Africa would not improve.
Cognisance should be taken of the impact of these international realities on South African future cereal
food-security.
7.10.8.2 South African Sector Strategy
In his “State of the Nation” address on 9 February 2001, President Thabo Mbeki reiterated the
importance of the agricultural sector in the South African economy. Primary agriculture accounts for
4,5% of the GDP, while the larger agri-food industries add another 9% and is therefore regarded as a
principle driver of the economy.
The Strategic Plan for South African Agriculture emphasize that all the role-players in agriculture and it’s
related fields should strive for “a united and prosperous agricultural sector” in South Africa and that our
strategy should focus on the following strategic goal, namely:
“To generate equitable access and participation in a globally competitive, profitable and sustainable
agricultural sector contributing to a better life for all".
In addition the following core strategies were identified:
Enhancement of equitable access and participation in the agricultural sector.
Improvement of global competitiveness and profitability.
To ensure the sustainable management of our resources.
These well-defined core strategies should serve as the focus and departure point for the agricultural
research and development strategy for cereals.
7.10.8.3 Research, Development and Technology Infrastructure
South Africa has to its disposal a spectrum of service providers devoted to support its related grain
industry. These providers include the ARC with its dedicated need-driven Grain Crops Institute (maize,
field beans, field peas, sunflower, soybeans, groundnuts, canola and safflower) and Small Grain
Institute (wheat, barley, rye, oats, durum and rice).
In addition, various universities are significant contributors of much-needed new technologies, products
and services. As for the development of well-adapted and competitive cultivars the grain industry has to
its disposal a spectrum of private seed companies and parastatal programmes.
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The research, development and technology transfer activities are coordinated and co-funded by an
array of statutory commodity trusts viz., Maize Trust, Winter Cereal Trust, Sorghum Trust, Oil and
Protein Seeds Development Trust. In an era of the commercialisation of agricultural research and the
dwindling financial support of the Government, these co-funding institutions fulfil a most needed role.
7.10.8.4 Research and Technology Interventions needed to uphold the South African sector strategy
Provide a continuous stream of well-adapted, disease and pest resistant cultivars with grain quality
on par with national needs.
Optimising conventional and biotechnological plant breeding techniques to shorten the releasing
frequency.
Maintain National Cultivar Evaluation Programmes for all major crops.
Develop cost-effective disease and pest management programmes, including bio-control.
Evaluate and recommend precision farming where applicable.
Verify applicability and financial benefits of GM technology.
Invest in the development of resource-conserving technology.
Develop production practices to lower inputs/ha.
Develop innovative technological solutions for low management and severe stress environments.
Maintain support services such as analytical laboratories, grain quality and seed quality laboratories.
Keep abreast of global research and development trends and introduce the applicable.
Maintain South African germplasm collections and increase access to the renowned international
collections.
Develop sustainable rotation systems.
Increase crop diversity for both winter and summer grain production areas.
Develop research and development programmes for all grain crops to enhance access and
participation by emerging as well as new commercial producers.
The above-mentioned are generic interventions needed for all the mentioned grain crops and should be
precisely defined for each of the major crops.
In conclusion the R&D Programme should be tailor made, totally need-driven and fully compliant to the
Strategic Plan for the South African Grain Industry.
For a more detailed Business Plan see the Dr Jan Dreyer report (7.1.9).
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7.10.9 Information suppliers Information should be easily accessible for purposes such as:
The Food Price Monitoring Statistics.
Reliable statistics of people in need of food (where, number, organizations involved, etc.).
Database of people willing to help with food supply, distribution of it, etc. to get hold of them when
needed.
Basic information on imports and exports for stock positioning.
All the required information should be accessible through the Information Reference System and the
Information Help Desk.
Information already available:
Crop estimates and SAGIS’s stock position for planning purposes in times of droughts and low local
stock positions. This is, however, on a national basis and not on a region basis (rural areas, etc).
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8. GENERAL INFORMATION 8.1 GSA Development Programme
INDEX
PAGE
1. Organisational Services: Project 1 – Creation of study group structures 96
2. Structure Creation: Project 2 – Regional Services 97
3. Structure Creation: Project 3 – Representivity at different forums 97
4. Structure Creation: Project 4 – Farmer of the Year Award 98
5. Production: Project 1 – Input resources 98
6. Production: Project 2 – Technology transfers 99
7. Production: Project 3 – Research 100
8. Production: Project 4 – Manuals, Training videos 100
9. Production: Project 5 – General Services Liaison 101
10. Production: Project 6 – Training of extension officers 101
11. Marketplace: Project 1 – Analyses of production opportunities 102
12. Marketplace: Project 2 – Price guideline/market information 102
13. Marketplace: Project 3 – Brokers/advisory services 103
14. Marketplace: Project 4 – Market Access 103
15. Liaison/Communication: Project 1 – Road services 104
16. Liaison/Communication: Project 2 – Monthly Publication: Grain SA 104
17. Liaison/Communication: Project 3 – Development of web page 105
18. Partnerships: Project 1 – ARC Institutes 105
19. Partnerships: Project 2 – Department of Agriculture 106
20. Partnerships: Project 3 – Input Suppliers 106
21. Partnerships: Project 4 – Commodity Trusts 106
ORGANISATIONAL SERVICES: PROJECT 1
CREATION OF STUDY GROUP STRUCTURES
Aim: To get communities involved in the development programme, thereby establishing a liaison
structure through which development actions could be managed.
Method of work:
Opportunities for participation introduced to communities through study group structures.
The compilation of a study group register per region.
Establishing regulations for study group structures.
Head office: Involvement through mentor system.
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Monitoring and evaluation:
Register with comprehensive data from both members and study group structures.
Annual growth in study group structures.
Responsible body: Grain SA.
STRUCTURE CREATION: PROJECT 2
REGIONAL SERVICES
Aim: To identify service areas with common needs, culture and language, thereby promoting
effectiveness of development actions.
Method of work:
The mapping of service areas with an indication of language preferences, culture, chiefs, special
arrangements which should be made in a specific area, etc.
The identification of liaison persons in the various regions to advise communities and also refer the
problems experienced by the communities to the head office.
Monitoring and evaluation:
The establishment of a frame of reference for liaison.
Responsible body: Grain SA and Provincial Departments of Agriculture.
STRUCTURE CREATION: PROJECT 3
REPRESENTIVITY AT DIFFERENT FORUMS Aim: To ensure that elected leaders have direct access to policy processes.
Method of work:
Facilitation of leadership elections in Northern and
Southern regions.
The establishment of liaison structures/study groups in
Regions to address needs at grass roots levels.
To ensure access of elected leadership in:
- Small farmer working group
- Industry forums
- Grain SA Head office.
Monitoring and evaluation:
Democratically elected leadership.
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Participation of emerging farmers in policy structures in the various grain industries.
Responsible body: Grain SA
STRUCTURE CREATION: PROJECT 4 FARMER OF THE YEAR AWARD
Aim: To promote outstanding achievements of emerging grain producers.
Method of work:
To identify parameters of a competition for “Farmer of the Year” for the Northern and Southern
regions.
The nomination of a selection panel.
The introduction of the competition to study groups.
Ensuring the involvement of sponsors.
Establishing this award as the prestige award for the emerging agricultural sector in South Africa.
Monitoring and evaluation:
Participation of communities.
Involvement of sponsors
Recognition in South Africa as the national award for emerging grain producers.
Responsible body: Grain SA and selection panel.
PRODUCTION: PROJECT 1
INPUTS RESOURCES
Aim: To monitor the quality, availability and prices of inputs to the emerging grain producers and to
address problems/needs identified.
Method of work:
a) Quality
Continuous monitoring of the quality of inputs and appropriate action in those cases where poor
quality inputs were supplied to producers.
b) Availability
In cases of remote areas where inputs are not readily available continue with the establishment
of depots or alternatively the coordination of collection points within the community in
consultation with agri-businesses and/or input providers.
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The design of user-friendly packaging in consultation with input providers which complies with
the needs of:
- Illiterate persons
- Small scale packaging for people who cannot afford to buy in bulk.
c) Prices of inputs
The monitoring of prices of inputs and the publication of these price trends.
Monitoring and evaluation:
a) Quality:
The addressing of identified problems without delay.
b) Availability:
The timeous delivery of inputs through either collection points or depots.
User-friendly packaging.
c) Prices:
The regular publication of price trends for the purchasing of inputs.
Responsible body: Grain SA Inputs Working Group.
PRODUCTION: PROJECT 2 TECHNOLOGY TRANSFER
Aim: The transfer of the latest research results and technology to emerging producers, thereby
improving expertise and production ability of producers.
Method of work:
Identification of needs of the respective communities in the various regions.
Compilation of annual calendar in consultation with all persons involved.
Decisions on format and frequency of training with regard to:
- Information and farmers’ days
- Training courses.
- Decide on a combination of trail plots and information days in consultation with all persons
involved in order to provide practical demonstrations as part of the training package.
- Co-ordination of activities of annual programme through study group structures, newsletter and
circulars.
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Monitoring and evaluation:
Completion of information days, study groups and other activities according to the schedule in the
annual programme.
Involvement of communities in farmers’ days and other activities.
Responsible body: Grain SA, ARC Institutes, Department of Agriculture and input providers.
PRODUCTION: PROJECT 3
RESEARCH
Aim: To address specific production needs of emerging producers.
Method of work:
Identification of problems at grass roots level.
Prioritisation of possible research projects.
Evaluation in order to ensure that proposed project application has not yet been completed by
means of a project to the commercial agriculture.
Recommendations to the respective Industry Trusts for the funding of such projects.
Evaluation of progress reports by researcher.
Transfer of technology and results achieved by the project.
Monitoring and evaluation:
The successful transfer of new technology to emerging grain producers.
Responsible body: Grain SA and ARC institutes/service providers.
PRODUCTION: PROJECT 4 MANUALS, TRAINING VIDEOS
Aim: To provide production manuals and training videos that can be used as study material for study
groups.
Method of work:
a) Development
Nomination of a Development Committee for the
investigation into such study material. (GSA and ARC)
Identification of framework for a syllabus and subjects according to the concept of “Key to
successful farming”.
The printing, distribution and selling of such training material.
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b) Provision of material
Introduction of study material to study group structures.
Training courses for agricultural extension officers.
Responsible body: Grain SA, ARC and Department of Agriculture.
PRODUCTION: PROJECT 5
GENERAL SERVICES LIAISON
Aim: a) To refer general services inquiries by individual producers to experts for answers (e.g.
livestock, wool farming, horticulture etc.).
b) To address the needs of groups on a formal basis.
Method of work:
a) Referral of individual inquiries: Establishment of a network of liaison officers and institutions.
Upgrading of network information on an annual basis.
b) Group needs
When groups approach the organisation with problems, to formally address these problems
through liaison with the relevant institution/department/input provider.
Monitoring and evaluation:
a) Individual inquiries
Activation of reference list.
Annual upgrading of list.
b) Group needs
Ad hoc handling of identified needs of members.
Responsible body: Grain SA.
PRODUCTION: PROJECT 6
TRAINING OF EXTENSION OFFICERS
Aim: The training of selected extension officers to get involved per region in consultation with Grain
SA and the ARC.
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Method of work :
The conclusion of co-operation agreements with the respective Provincial Departments of
Agriculture.
The selection of extension officers for training. The designation of extension officers to regions in the respective communities.
The presentation of a joint training course for extension officers from the various provinces by Grain
SA and the ARC-IGC.
Monitoring and evaluation:
The involvement of Provincial Departments of Agriculture.
Effective provision of service on grass roots level.
Responsible body: Grain SA / ARC-IGC
MARKETPLACE: PROJECT 1
ANALYSES OF PRODUCTION OPPORTUNITIES
Aim: To identify the market opportunities for the production of the respective grain industries and
inform producers accordingly.
Method of work:
The analysis of production, consumption and imports per commodity branch in South Africa.
The estimation of the needs of the respective industries for the coming season for South and
Southern Africa.
Advising producers to produce according to the market needs within the framework of the analysis
mentioned above.
Monitoring and evaluation:
The communication of findings of the Production Working Group to the respective study group
structures.
Responsible body: Grain SA.
MARKETPLACE: PROJECT 2
PRICE GUIDELINE/MARKET INFORMATION
Aim: The announcement of prices at which grain is traded in order to promote transparency in the
marketplace and prevent exploitation.
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Method of work:
The monitoring of price levels at which grain is traded.
The weekly publication/communication of price guidelines through liaison activities focused on
emerging producers.
Monitoring and evaluation:
Regular publication of market information through liaison methods focused on emerging farmers.
Responsible body: Grain SA
MARKETPLACE: PROJECT 3 BROKERS/ADVISORY SERVICES
Aim: To put market opportunities within reach of emerging producers.
Method of work:
The publication of contracts and market opportunities to producers.
Co-ordination of actions by study group structures.
Monitoring and evaluation:
Identification of market opportunities and contracts.
Participation in market at market related prices.
Responsible body: Grain SA.
MARKETPLACE: PROJECT 4
MARKET ACCESS Aim: To enhance market access for emerging grain producers.
Method of work:
To identify problems restricting market participation in consultation with emerging grain producers.
To act as facilitator in order to handle identified problems in consultation with agri-
businesses/traders/processors/input providers or other institutions on behalf of producers.
Liaison with communities to introduce new opportunities emanating from discussions with role-
players.
Monitoring and evaluation:
Participation in market by emerging producers.
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Responsible body: Grain SA and agri-businesses.
LIAISON/COMMUNICATION: PROJECT 1 RADIO SERVICES
Aim: To utilize a communication medium that is available to all communities in South Africa.
Method of work:
Identification of regional radio stations for the various service areas.
Collection of quotations for weekly grain information programmes.
Informing communities of the existence of such radio broadcasts.
Weekly supply of information for broadcasting.
Monitoring and evaluation:
Activation of programmes.
Community participation in programmes.
Responsible body: Grain SA/input providers/ARC/Departments of Agriculture
LIAISON/COMMUNICATION: PROJECT 2 MONTHLY PUBLICATION: GRAIN SA
Aim: To circulate a newsletter containing the latest industry and market information to all study group
structures every month.
Method of work:
Monthly Editorial Committee meeting.
Collection of info from collaborators.
Translation.
Printing.
Distribution.
Monitoring and evaluation:
Publication and distribution of newsletter within due dates.
Feedback from producers that monthly magazine/newsletter is used by communities.
Responsible body: Grain SA/ARC/Collaborators
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LIAISON AND COMMUNICATION: PROJECT 3 DEVELOPMENT OF WEB PAGE
Aim: To use the Grain SA web page as training and communication medium.
Method of work:
Promotion of the web page as training and communicating facility at Departments of Agriculture,
ARC, study groups etc.
Liaison with the Departments of Agriculture to utilise this medium to inform/train extension officers
on a regular basis to provide services to producers at grass roots level.
Monitoring and evaluation:
User friendly web page for developing agricultural needs.
Participation by ARC and Departments of Agriculture.
Responsible body: Grain SA.
PARTNERSHIPS: PROJECT 1
ARC INSTITUTES
Aim: A partnership with ARC for a coordinated and integrated development programme.
Method of work:
Annual strategic planning sessions.
Role definition during which responsibilities and obligations are outlined.
Internal evaluation of progress among role-players.
Monitoring and evaluation:
Co-ordinated co-operation with the ARC with regard to:
Research
Technology transfer
Editorials for monthly magazine
Support for production manuals and training videos
Other co-operation as agreed
Responsible body: Grain SA/ARC
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PARTNERSHIPS: PROJECT 2 DEPARTMENT OF AGRICULTURE
Aim: To obtain the co-operation and support of provincial and national Departments of Agriculture for
a coordinated development programme of Grain SA and the ARC in the respective provinces.
Method of work:
Discussion with ministries of the respective Departments of Agriculture in order to obtain co-
operation.
Monitoring and evaluation:
Continued co-operation with the respective Departments of Agriculture.
Responsible body: Grain SA and Departments of Agriculture.
PARTNERSHIPS: PROJECT 3 INPUT SUPPLIERS
Aim: To ensure the participation of input suppliers within a coordinated development programme.
Method of work:
Co-ordination of development projects with input and service providers.
Monitoring and evaluation:
Support of input /service providers for a co-ordinated development programme.
Responsible body: Grain SA and input providers.
PARTNERSHIPS: PROJECT 4
COMMODITY TRUSTS
Aim: To enlist support of the respective Commodity Trusts for development projects of Grain SA.
Method of work:
Project submissions to Commodity Trusts.
Annual report of activities.
Monitoring and evaluation:
Allocation of funds by Industry Trusts to coordinated development action.
Responsible body: Grain SA.
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8.2 Comprehensive Trade Strategy
Introduction
1. Trade is a significant component of South Africa’s agricultural economy and is essential to South
Africa’s prosperity. In the last decade agricultural exports have grown strongly in importance and
now represent 40% of the total value of production. Imports have also grown sharply since the mid
nineties and now compare to 20% of the value of production. South Africa is on balance an
agricultural exporting country.
2. While the dramatic growth in trade partially reflects the decline in the Rand over recent years it also
is a response to an economic policy environment that has moved rapidly from protectionist statutory
intervention and support of agriculture prior to the mid nineties to deregulation and global
competitiveness in the current economy.
Problem Statement
3. The agricultural trade environment has undergone dramatic changes over the last decade.
Deregulation, global and domestic societal, policy and trade flows and the imperatives flowing from
the Strategic Plan for South African Agriculture1 have resulted in a multitude of uncoordinated
initiatives, opportunities and challenges that require the articulation of a new strategy for agricultural
trade to maximise the contribution of trade to the growth, employment and income in the
agricultural sector.
4. This strategy will align and focus government actions and the stakeholder expectations with respect
to multi- and bilateral trade diplomacy, domestic policy and instruments with respect to trade.
Vision And Objective
5. The overall vision of this agricultural trade strategy is: A globally competitive and profitable sector
with equitable access and participation in the opportunities offered by agricultural trade.
6. The strategy should lead to an environment in which the sector can exploit comparative and
competitive advantages on local and expanding regional and global markets leading to growth in
export volumes and income, domestic value addition and fairly competing imports.
7. The strategic objective is directed at eventual multilateral free trade in agricultural goods on the
basis of fairness and equity taking our development needs into account. 1 Strategic Plan for South African Agriculture, National Department of Agriculture, 27 November 2001, developed jointly between the Government and the commercial farmers unions, AgriSA and NAFU.
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8. Until multilateral free trade can be achieved, Government will provide a balance of protection and
support of domestic agriculture in the light of subsidies and unfair trade practices applied by others.
Background
9. This strategy draws upon the Government’s Global Economic Strategy2 and emanates from the
Strategic Plan for South African Agriculture1. It will be pursued along a number of axes, namely
domestically and in bilateral, regional and multilateral arenas. Global Economic Strategy 10. South Africa’s economy is in a transitional and developing phase. To facilitate access to
sustainable economic activity and employment of all its citizens the Global Economic Strategy
notes that the challenges are to:
enhance job creation;
achieve sustainable integration into the global economy;
increase opportunities for black economic empowerment and SMMEs;
contribute to poverty alleviation; and
contribute to the development of Africa
11. These issues need to be addressed in the context of globalisation, i.e. increasing investment and
trade flows; global production and networks; and rapid information exchange, communications and
technical advances. Africa finds itself increasingly marginalized in this process.
12. The essential requirements identified by Government to compete in this dynamic and evolving
global environment are stable macro-economic policies, access to key markets and the main poles
of economic growth, the development of technical capacities in partnership with the private sector,
sufficient human capital, low cost, and transparent economic governance.
The Strategic Plan for South African Agriculture1
13. The approach followed in the Strategic Plan for South African Agriculture, seeks to end the divisive,
ineffective historic agricultural dualism in policy and service delivery through three inextricably
linked core strategies that aim to:
enhance equitable access and participation;
improve global competitiveness and profitability; and
ensure sustainable resource management in the sector
2 Global Economic Strategy, 2000, DTI
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14. Global competitiveness and profitability in the sector is only sustainable if its benefits also result in
greater access and participation and sustainable resource management in the sector.
15. The Sector Plan recognises that the agriculture sector has generally responded positively to the
deregulated and competitive environment that has been created in the last decade. However in the
move away from self-sufficiency to international trade certain sub-sectors remain uncompetitive due
to a combination of high input costs, low productivity and unfair trade practices by others.
16. In line with government policy the approach echoed by the Sector Plan is to enhance profitability
through sustained global competitiveness and the development of new and better products and
expanding markets. These are issues to be addressed by this strategy by seeking greater market
access for South Africa’s products through bilateral and multilateral engagements, by addressing
distorting subsidies, unfair practices and technical barriers to trade, and by advocacy for our own
development imperatives and those of Africa.
Trends in South African Agricultural Trade3
17. Since 1994, the political changes in South Africa and the policy changes in agriculture have
contributed to a dramatic increase in the role of trade in the agricultural economy. Consumer
preferences, food safety considerations, social and technical conditions and intellectual property
rights have taken on a new importance in the light of globalisation.
Exports
18. Agricultural exports contribute on average a steady 8,5% of total South African exports. Edible fruit,
wine and beer, sugars, preserved food and tobacco are currently the main exports making up 70%
of the total.
19. Over the last decade to 2001 agricultural exports increased fourfold from R5 billion to R20 billion,
representing a 40% increase in US Dollar terms. Export volumes increased 50%. Over the most
recent five-year period there was a slightly decreasing trend in US Dollar terms.
20. The importance of exports in the overall agricultural income has increased markedly over the last
decade, partially as a result of the decline in the Rand. The share of agricultural exports in the total
value of agricultural production has made a strong recovery and increased steadily since the mid
nineties from 20% to almost 40% in 2001.
3 See Annexure: Tables and Graphs
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21. Value addition was the largest contributor to export growth over the past five years and the
composition of agricultural exports has shifted remarkably towards processed products, now
making up 64% of the export value, up from 33% in 1995.
22. The European Union remains South Africa’s largest single export market for agricultural products
although its share of exports has dropped from 61% in 1988 to 38% in 2001. South Africa’s second
largest agricultural export market is SADC, accounting for 19% of exports.
23. Agricultural export markets have diversified, particularly since the mid-Nineties, to new faster
growing developing markets of Africa, in particular SADC and West Africa, certain Asian
destinations, the Middle East and to the market of North America.
24. SA agricultural exports continue to be under-represented in fast-growing priority markets.
Imports
25. While South Africa is predominantly an exporter of horticultural products it has structural deficits in
cereals, fats & oils, animal feed, meat, miscellaneous food and dairy products. Beverages, tobacco,
cotton, spices, tea & coffee are other principal imports.
26. Agricultural imports increased over the decade, from R2 billion in 1991 to R10 billion in 2001 while
doubling in volume terms. A greater variety of imported products is available to the consumer.
Agricultural imports for 2001 accounted for 5% of total imports.
27. The principal suppliers are the European Union, Argentina, Australia, Zimbabwe, Thailand, United
States, Brazil, Malaysia, Indonesia, India, China, Canada and New Zealand.
28. African suppliers are underrepresented in the SA market.
Trends, Opportunities and Strategic commitments
29. The greater integration in the world economy underscores the need for South Africa to be globally
competitive, failure to do so will led to marginalization.
This imperative leads to policies favouring greater competition; support to SMMEs, less
government intervention but effective market intelligence, legal, intellectual property, identity
preservation and promotion, SPS and other technical standards support systems.
30. World trade has accelerated over the last decade, growing far faster than world gross domestic
product. This means that growth opportunities are typically greater for exports and imports than
they are for domestic sales, a trend that could be exploited by developing countries.
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Government will promote an export orientation in the sector, and continue to provide support
and leadership through export councils and joint action groups.
It recognises the importance of both exports and imports and will advocate with African
counterparts growth through agricultural trade liberalization.
It will continue to facilitate access for economic operators to and encourage the use of trade
analysis databases and tools and market intelligence.
It will provide protection to industries, through tariff policy, defensive measures and trade
diplomacy, against distortions caused by subsidies and unfair trade practices by others.
It will encourage the greater participation in trade by SMMEs and previously disadvantaged
individuals through preferential trade licences, human resource development and through
encouraging suitable niche product exports.
Government will promote a market focus, including the development of new profitable export
products, in the research agenda of the Agricultural Research Council.
31. The trend in South African exports underscores the need to focus attention on new markets and
products that show potential for growth in the future. Changing social and economic conditions are
driving significant shifts in global food markets. In particular the world’s affluent consumers are
forecast to increase by 850 million by 2010. These consumers will be demanding more specialised
high quality products and services. Currently 65 per cent of affluent consumers live in the
developed world but by 2010, it is estimated that around 60-70 per cent will live outside the United
States, the European Union and Japan4.
Priority attention will be given to identified growth markets of the US, Middle East and Far East
in which South Africa is under-represented.
Government will take a lead in this respect and continue to work with stakeholders through the
Export Councils/Joint Action Groups (JAG) in compiling sub-sector specific strategies and
Agricultural Trade Forum (ATF) as a vehicle for consultation and information sharing regarding
trade policy and negotiations;
Growth will be sought in the development of profitable export value-added products
32. The South African agricultural import pattern offers opportunities to African suppliers.
The NDA will provide leadership and capacity in harmonization of SPS standards and
equivalence of SPS measures in SADC and through NEPAD to facilitate this trade and
strengthen the regional capacity to participate in global markets.
33. Changes in consumption patterns are increasingly driven by quality, evolution of taste due to
lifestyle and health considerations in developed markets and by improved incomes in fast growing
developing countries. Rapid industrialisation in developing economies, rising incomes and several
social trends have led to significant changes in diet and eating habits towards western style foods,
4 Outlook 99, Australia
112
high-value and high-protein foods and convenience and health products. Generally consumer
demands have gravitated to more convenient and nutritious foods at lower cost. From a marketing
perspective non-product values, like image, service, corporate identity, are increasingly important to
the consumer.
Government will continue to work with the Agricultural Trade Forum/ export Councils/ JAGs to
ensure that policies and measures are responsive to these trends.
Government will promote South African products of quality and provide support systems to
enhance this quality, e.g. Proudly South African, HACCP, ISO and other standards and
certification
The Department will continue to collaborate with DTI and the industry to provide and encourage
appropriate data, information, market intelligence, infrastructure and research to support
increased exports and an up-to-date export orientation.
34. Globalisation is not limited to governments or multinationals. Small and medium sized companies
are creating global networks of customers and they use the latest technology to overcome
geographic and cultural barriers. For many small and medium sized operators co-manufacturing
and strategic alliances with overseas companies offer a preferred strategic option for market entry.
Foreign-direct investment, the formation of strategic international partnerships and supply chain
management are becoming more important drivers of export growth.
Government support and services will promote strategic alliances of value to South African
operators.
35. The trade liberalization process that accelerated with the conclusion of the Uruguay Round in 1994
led to the replacement of all non-tariff measures with more transparent import duties. However,
access has become more difficult due to an increasing number and more complex regulations and
market requirements in the field of safety, health and the environment.
Following a number of highly publicised major food related incidents, e.g. mad cow disease, foot-
and–mouth disease outbreaks, hormone and chemical additives and the debate around genetically
modified foods, the global food system has responded by placing increasing demands regarding
safety and product traceability.
Furthermore, foreign companies and retailers are increasingly through their commercial
engagement insisting on safety assurances, specific and certified product, production, stock
keeping, delivery and social responsibility characteristics. Concentration in supermarket chains and
marketing distribution channels are shifting the balance of power in their favour to increasingly
higher demands that are shifted down the value chain towards the producer.
Modern day consumers are more explicitly concerned about such issues as the environment,
animal welfare and social conditions than those of the past. Concerned Governments project these
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considerations through multilateral and bilateral negotiations, while supermarket chains reflect them
in their buying conditions and sales strategies. These trends, which impact on trade, are often not
predicated on scientific evidence.
Government recognises this trend and will continue to base its approach on verifiable scientific
evidence in dealing with these matters and advocate this approach internationally.
The NDA will ensure that the required capacity exists in government and is coordinated between
different government role players to manage the increased demands on authorities dealing with
veterinary, plant health, food safety and quality of agricultural products.
Differentiated capacity to deal with identity preservation in GM, non-GM and organic products
will be considered if cost- benefit considerations warrant it.
Government will participate and defend South Africa’s interests in international standard setting
bodies, the WTO and in other international forums.
36. High levels of domestic support paid by developed countries to their agricultural sectors are a major
concern for the development of agriculture in developing countries. This support, estimated at US
$1 billion a day, distorts markets and production and makes it impossible to compete fairly in
affected markets. Export subsidies continue to negatively influence international competition and
world prices.
Tariff peaks and tariff escalation impede the export of value added agricultural products and a
higher general import duty levels in developing countries impact on market access opportunities,
including in important trading partners in Africa.
Government will follow an approach aimed at achieving structural changes in world production
in favour of developing countries through substantial reductions in distorting subsidies and
improved market access, particularly the removal of escalation of tariffs on higher levels of value
addition on products of export interest.
37. Intellectual property rights are being usurped by the developed world and in some cases used as
trade barriers.
Government will promote the identity of quality products of South African origin and defend the
legitimate intellectual property rights of South African economic operators against unjustified
trade barriers in appropriate multilateral forums, e.g. WIPO and WTO, and in bilateral
engagements. Special attention will be given to the beneficiation of indigenous knowledge.
38. The trend towards regional free trade agreements continues, e.g. FTAA, APEC etc.
Government will pursue further bilateral trade liberalisation, including South-South trade links,
based on an analysis of priority markets, fair trade principles and cost-benefit analysis.
114
39. Distribution infrastructure and services have come under pressure in South Africa. Agricultural
exports rely strongly on port facilities, the cold chain, airfreight and rail transport. The agricultural
sector is particularly concerned about the availability and cost of rail transport and port facilities.
Government recognises the value of agricultural trade in the economy and its reliance on rail
and port facilities; and
will make special efforts towards improved availability of rail transport for agricultural trade
purposes.
Regional Integration
40. The renegotiated SACU and the SADC Trade Protocol is at the forefront of regional integration.
South Africa will in future negotiate trade agreements in collaboration with other SACU members.
The implementation of NEPAD forms a further line of activity.
The NDA will take a lead in trans-boundary cooperation in SADC to promote agricultural export
processing and efficient distribution networks, possibly through the development of an
industrialization strategy in terms of the SADC Trade Protocol.
The NDA will ensure that trade negotiations continue to consider and promote South Africa’s
agricultural interests.
Given the freer trade flows that will emanate from these agreements Government will actively
encourage the harmonisation of regional SPS and technical standards that will enhance
regional trade and not impact negatively on South Africa’s trade interests outside of Africa.
Government will jointly engage with SADC partners in international standard setting bodies with
a view to maintaining manageable but scientifically-based international standards
Border control service delivery will be pro-actively stepped up to meet these challenges.
Bilateral trade diplomacy
41. Government works closely with individual partners to encourage bilateral trade and a more open
and equitable trade relationship. Analysis of current and potential trade suggests that improved
bilateral trade with North America, the Middle East and certain Far Eastern countries would be
particularly beneficial to the agricultural sector.
Government will actively pursue the objective of increased and equitable trade, particularly also
encouraging trade between developing countries, in accordance with the criteria and identified
priorities contained in the Global Economic Strategy and Sector Plan.
It will give focused attention to developing the US, Far Eastern and Middle Eastern markets.
It will not accept free trade in products subject to distorting subsidies.
Economic cost-benefit of trade deals will be a key consideration.
Government will launch a trade-related priority campaign to proactively engage and establish
relationships with the SPS authorities in current major and potential export markets to ensure
115
measures are science based, harmonised on international standards and that mutual
recognition is applied.
Multilateral trade diplomacy
42. The Government’s objective is eventual multilateral free trade in agricultural goods on the basis of
fairness and equity. Analysis of the current trading environment indicate that the achievement of
this objective remains remote in the medium term due to the high levels of support and protection
that continue in world agriculture. South Africa’s core thrust in the multilateral context is the
substantial reduction and elimination of trade and production distorting support and protection by
the major developed economies and protecting our rights to support our developing sector, as may
be required and appropriate.
Government will seek an outcome of the Doha WTO negotiations that is conducive to the
development of Africa and other developing countries. This should lead to better market access
for developing country value added products.
This objective translates into structural reductions in the support for and protection of agricultural
production in developed countries accompanied by binding WTO rules and commitments in this
regard.
In pursuing this goal it will call upon appropriate alliances with key countries such as in the G-
South, NEPAD members, the Cairns Group and the Africa Group.
Governance
43. Different government institutions support the promotion of the objectives of this strategy.
The NDA will take a lead in ensuring that regular and effective coordination exists, e.g. with DTI,
Dept of Foreign Affairs etc, in dealing with the trade agenda.
It will ensure coordination between the Department of Agriculture and DTI and transparency on
trade issues through the existing consultative mechanisms.
The Agricultural Trade Forum will in conjunction with NEDLAC continue as a key instrument of
government, industry and labour collaboration on agricultural trade policy and negotiations.
Export Councils and Joint Action Groups will be utilized as the key instrument of collaboration
regarding export promotion.
Semi annual reports will be made to the ATF and Sector Plan Implementation Committee in
terms of this strategy
PRETORIA
28 February 2003
116
Annexure: Tables and Graphs
Graph 1: SA agricultural trade and currency depreciation
0,0
5,0
10,0
15,0
20,0
25,0
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
Billi
on R
and
0,0
2,0
4,0
6,0
8,0
10,0
Rand
per
US$
ExportsImportsR/US$
sharp depreciations of the Rand since199692-94Period of-deregulation- tariffication- lifting of sanctions
Graph 2: SA agricultural exports in US$
0,0
0,5
1,0
1,5
2,0
2,5
3,0
1985
1987
1989
1991
1993
1995
1997
1999
2001
years
Billi
on U
S$
agric imports $
agric exports $
Linear (agric exports $)
Power (agric imports $)
117
Graph 3: South African agricultural trade by Volume (Kg)
0123456789
1988
1990
1992
1994
1996
1998
2000
Billi
on K
g
Imports (Billionkg)Exports (Billionkg)Linear (Exports(Billion kg))Linear (Imports(Billion kg))
Graph 4: Processed and Primary Exports & Percentage of the Value of Agriculture Production
05
101520253035404550
1965
1967
1969 19
7119
7319
7519
7719
79 1981
1983
1985
1987
1989 19
9119
9319
9519
9719
9920
01
Perc
enta
ge o
f pr
oduc
tion
va
lue
02468101214161820
Expo
rt V
alue
R b
il
Primary exports Processed exports Exports as % of Total prod value
118
Graph 5: SACU EXPORTS TO REGIONS
1%
61%
22%
5%2%
8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1988 2001
Americas mainly USA (8%)
SADC (19%)
Rest of Africa (6%)
Middle East (6%)
Asia & Pacific (20%)
European Union (38%)
Eastern Europe & Central Asia (3%)
Graph 6 Export products2001
Fruit25%
Beverages17%
Sugars15%
Preserved food8%
Tobacco6%
Cereals5%
Other24%
119
Graph 8
Import Suppliers 2001Total R10,5 billion
United States 6%
Thailand 6%
Zimbabwe 7%
Australia 7%
United Kingdom 7%
Argent ina 15%
Brazil 5%
Malaysia 4%
France 3%
Netherlands 3%
Germany 3%
Indonesia 3%
India 3%
China 2%
Canada 2%
Others24%
Graph 7 Imports 2001Total R10,5 billion
Spices, coffee & tea4%
Wool4%
Miscellaneous food5%
Tobacco5% Meat
6%Beverages
8%
Animal feed, food waste11%
Fats & oils14%
Cereals15%Others
28%
120
Graph 9 Terms of agricultural trade 1965-2001
0,0
10,0
20,0
30,0
40,0
50,0
60,0
1965 1970 1975 1980 1985 1990 1995 2000
R billion
0,020,040,060,080,0100,0120,0140,0160,0180,0
Terms of Agricultural trade
(Index)
Gross Value of production (000 R) Terms of Trade (1995=100)
Table 1 Value of Imports and Exports
Years
Agricultural Imports R billion
Agricultural Exports R billion
% of total
Imports
% of total
Exports 1994 4,487 7,995 6,1 8,9 1995 6,790 8,029 6,9 7,9 1996 7,697 11,640 6,7 9,2 1997 8,602 12,258 6,6 8,5 1998 9,345 13,394 6,4 8,5 1999 8,930 14,373 6,1 8,7
2000 9,536 15,430 5,1 7,6 2001 10,536 19,739 4,9 8,6 Average 6,1 8,5
Table 2 Agricultural Exports to Various Regions
Percentage Share R million Region 1988 2001 1988 2001
EC 61% 38% 1 860 7 631Eastern Europe and Central Asia 2% 3% 47 619Asia & Pacific 22% 20% 681 3 919Middle East 5% 6% 160 1 177Americas mainly USA 1% 8% 44 1 574
SADC 8% 19% 231 3 817Rest of Africa 1% 6% 29 1 274
100% 100% 3 052 20 010
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Table 3
Rank Agricultural Export Destinations 1999 2000 2001 Cum 2001 Cum % 2001
1 United Kingdom 1 830 1 849 2 116 2 116 11% 2 Netherlands 1 218 1 498 2 051 4 167 21% 3 Japan 678 894 1 526 5 693 29% 4 Mozambique 726 961 1 109 6 802 34% 5 United States 521 807 1 038 7 841 40% 6 Angola 502 481 947 8 788 45% 7 Germany 660 587 759 9 547 48% 8 Belgium 1 050 895 698 10 245 52% 9 France 316 377 499 10 743 54% 10 Zambia 260 314 485 11 228 57% 11 Korea, South 221 306 424 11 652 59% 12 Saudi Arabia 549 557 419 12 071 61% 13 Zimbabwe 595 300 390 12 460 63% 14 Malawi 209 294 386 12 846 65% 15 Italy 238 290 357 13 204 67% 16 Canada 313 371 352 13 555 69% 17 Hong Kong 377 320 348 13 903 70% 18 Spain 197 189 304 14 207 72% 19 Iran 173 357 283 14 490 73% 20 Mauritius 290 289 275 14 766 75% 21 Kenya 215 449 272 15 038 76% 22 United Arab Emirates 180 185 264 15 302 78% 23 Malaysia 127 92 248 15 549 79% 24 Congo, Dem. Rep. of 257 252 243 15 793 80% 25 Philippines 50 63 228 16 021 81% 26 Nigeria 77 132 227 16 247 82% 27 Singapore 130 110 219 16 467 83% 28 Switzerland 143 163 205 16 671 84% 29 Pakistan 10 58 190 16 862 85% 30 Russian Federation 179 47 186 17 047 86% 31 Israel 70 79 138 17 186 87% 32 Ghana 64 82 131 17 317 88% 33 Tanzania 232 147 124 17 440 88% 34 Madagascar 54 41 120 17 561 89% 35 Australia 80 99 119 17 680 90% 36 China 56 58 108 17 787 90% 37 Egypt 12 6 108 17 895 91% 38 Indonesia 34 17 103 17 997 91% 39 Denmark 46 73 92 18 090 92% 40 Sweden 80 97 89 18 179 92% 41 Taiwan 106 76 78 18 256 92% 42 Thailand 56 23 73 18 330 93% 43 Bulgaria 29 9 63 18 393 93%
122
Table 4
Agricultural Export Products (R Mil) 1999 2000 2001 Cum 2001 Cum % 2001Edible Fruit And Nuts 4 560 4 049 4 723 4 723 24% Beverages 1 903 2 616 3 414 8 137 41% Sugars 1 597 2 030 2 930 11 067 56% Preserved Food 1 386 1 543 1 675 12 742 65% Tobacco 624 750 1 196 13 938 71% Cereals 608 662 1 026 14 964 76% Meat 236 294 545 15 509 79% Misc Grain, Seed, Fruit 333 334 491 16 000 81% Miscellaneous Food 280 357 473 16 473 83% Wool, Not Carded/Combed 383 353 419 16 892 86% Milling; Malt; Starch 365 311 374 17 267 87% Fats And Oils 284 291 313 17 580 89% Spices, Coffee and Tea 165 230 265 17 845 90% Dairy, Eggs, Honey, Etc 396 258 260 18 105 92% Live Trees And Plants 223 223 248 18 353 93% Vegetables 201 154 201 18 554 94% Cocoa 168 134 173 18 727 95% Total All Products 14 416 15 430 19 739
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Table 5
Rank Agricultural Import Supliers 1999 2000 2001 cum 2001 %cum 2001
1 Argentina 958 1 119 1 600 1 600 15% 2 United Kingdom 808 959 783 2 383 23% 3 Australia 666 799 709 3 092 29% 4 Zimbabwe 506 539 706 3 798 36% 5 Thailand 473 429 681 4 479 43% 6 USA 938 978 665 5 144 49% 7 Brazil 135 199 530 5 674 54% 8 Malaysia 580 405 460 6 134 58% 9 France 332 302 330 6 464 61% 10 Netherlands 243 278 325 6 789 64% 11 Germany 253 268 285 7 074 67% 12 Indonesia 179 262 268 7 342 70% 13 India 298 254 267 7 609 72% 14 China 230 247 255 7 864 75% 15 Canada 242 367 235 8 099 77% 16 Italy 203 187 194 8 293 79% 17 New Zealand 127 190 189 8 482 80% 18 Ireland 68 84 145 8 627 82% 19 Zambia 89 84 126 8 753 83% 20 Malawi 104 112 117 8 870 84% 21 Austria 100 111 116 8 986 85% 22 Spain 80 89 96 9 082 86% 23 Belgium 133 121 96 9 178 87% 24 Switzerland 51 75 93 9 271 88% 25 Uruguay 18 71 88 9 358 89% 26 Cote d'Ivoire 86 63 86 9 444 90% 27 Philippines 82 66 81 9 525 90% 28 Denmark 81 76 71 9 596 91% 29 Singapore 91 75 71 9 667 92% 30 Israel 29 42 59 9 726 92% 31 Poland 9 25 42 9 768 93% 32 Turkey 35 29 41 9 808 93% 33 United Arab Emirates 18 26 38 9 846 93% 34 South Africa 26 28 34 9 880 94% 35 Jamaica 21 29 34 9 914 94% 36 Sri Lanka 28 28 32 9 946 94% 37 Mozambique 53 44 28 9 974 95% 38 Greece 12 20 28 10 001 95% 39 Chile 6 25 25 10 026 95% 40 Croatia 0 0 24 10 050 95%
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Table 6
Agricultural Import Products (R mil) 1999 2000 2001 Cum 2001 Cum % 2001Cereals 1 560 1 925 1 568 1 568 15%Fats And Oils 1 351 1 109 1 429 2 997 28%Food Waste; Animal Feed 660 838 1 168 4 165 40%Beverages 850 694 795 4 960 47%Meat 540 671 636 5 597 53%Miscellaneous Food 384 464 570 6 167 59%Tobacco 462 336 504 6 671 63%Cotton 227 220 399 7 069 67%Spices, Coffee and Tea 405 423 397 7 467 71%Misc Grain, Seed, Fruit 183 351 290 7 757 74%Baking Related 136 163 269 8 026 76%Cocoa 188 212 264 8 290 79%Dairy, Eggs, Honey, Etc 132 307 256 8 545 81%Raw Bovine, Equine 120 172 216 8 761 83%Milling; Malt; Starch 213 192 215 8 976 85%Prepared Meat, Fish, Etc 159 163 209 9 185 87%Other Of Animal Origin 193 159 188 9 373 89%Edible Fruit And Nuts 165 173 169 9 542 91%Vegetables 201 198 165 9 706 92%Preserved Food 157 174 162 9 868 94%Sugars 97 130 150 10 019 95%Total 8 787 9 536 10 536
125
Table 7
Average Duties on RSA Exports1
Exports 2001
Applied Average
Bound Average HS
Code Description Rand million % % 1701 Cane Or Beet Sugar 2 623 43.4 70.12204 Wine Of Fresh Grapes 1 975 21.1 47.60805 Citrus Fruit, Fresh Or Dried 1 812 17.8 28.20806 Grapes, Fresh Or Dried 1 336 13.6 30.32008 Canned fruit 916 19.2 30.80808 Apples, Pears And Quinces, Fresh 829 18.0 28.41005 Corn (Maize) 670 65.5 97.72009 Fruit Juice 657 22.6 49.52402 Cigars, Cigarettes Etc. 655 18.6 39.12207 Ethyl Alcohol, Undenatured 532 22.0 45.52401 Tobacco, Unmanufactured 522 10.8 31.05101 Wool, Not Carded Or Combed 419 4.0 18.40208 Meat & Edible Offal 333 8.8 19.12208 Ethyl Alcohol, Undenatured, 304 81.4 35.11001 Wheat And Meslin 298 81.4 95.32106 Food Preparations 296 18.8 91.54102 Raw Skins Of Sheep Or Lamb 281 2.4 18.40809 Apricots, Peaches, Plums 257 14.5 28.42203 Beer Made From Malt 247 21.7 30.11202 Peanuts (Ground-Nuts), Raw 195 108.9 109.5
Source: Tariffs: WTO Integrated Database Exports: World Trade Atlas based on SARS statistics
1 Major products Exported, incorporating SADC, EU and AGOA (USA) preferences.
126
Table 8 SACU IMPORTS1 2001 AND TARIFFS (Imports excluding from EU and SADC)
BOUNDRATE
Applied TARIFF EQUIV.
ImportsRoW2
% of total
imports Cumulative TARIFF LINE
DESCRIPTION OF PRODUCT % %
Rands million % %
10063000 Semi-milled or wholly milled rice, 0 0 861 13.34 13.34
23040000 Oil-Cake and Other Solid Residues 33 0.8 692 10.73 24.07
15119000 Other: Palm oil 81 10 392 6.08 30.15
15121100 Sunflower, Cotton :Crude oil 61 40 257 3.98 34.13
10019000 Wheat and Meslin 72 25 214 3.32 37.45
15071000 Soya: -Crude oil,whether or not degummed 81 10 205 3.17 40.62
35040000 Peptones and Their Derivatives; 5 0 143 2.22 42.84
10030000 Barley 41 0 133 2.07 44.91
21069090 =Other Food preparations 37 11 131 2.03 46.94
24012000 Tobacco,partly or wholly stemmed or 44 15 120 1.85 48.80
10059000 Other Maize (not seed) 50 1 95 1.48 50.2741012900 Other Hides and Skins 0 0 93 1.44 51.71
02044200 =Other cuts with bone in: Sheep and Goats 66 40 88 1.36 53.08
41012100 = Whole Hides and skins 0 0 76 1.18 54.2502071410 -Boneless cuts: Poultry 82 5 75 1.16 55.41
05040010 -Sausage casings of animals 0 0 73 1.13 56.54
15122900 -Other Sunflower, Cotton oil 61 10 72 1.11 57.65
11071020 =Of barley: Malt, not roasted 41 0 69 1.06 58.72
15132900 =Other: Coconut, Palm oil 81 0 68 1.06 59.78
52010020 Cotton -Ginned but not further processed 60 0 64 0.99 60.77
Total 3 924 SIMPLE AVERAGE:3 44.80 8.40
TRADE WEIGHTED AVERAGE4 38.74 7.68
Total imports (exc. EU and SADC) 6 457
1 Source: World Trade Atlas based on SARS trade statistics 2 RoW: Imports from the rest of the world (excluding SADC and EU) 3 of listed products 4 of listed products
127
Table 9
Subsidies1 vs RSA Import duties Total
Amber Support
Total Export
Subsidy
Average RSA
Tariffs Tariff Item Product Description (US $m) (US $m) % 0401-06 Dairy 13 302 79 904 38 0201 Beef 13 025 72 40 1701 Cane or beet sugar 6 956 313 60 1001 Wheat and meslin 3 868 339 25 1005 Maize (corn). 3 111 0 21 0808 Apples, pears and quinces, fresh. 2 370 13 5 2204 Wine of fresh grapes, 1 715 18 25
2402 Cigars, cheroots, cigarillos and cigarettes 870 0 45
0805 Citrus fruit, fresh or dried. 690 0 5
0809 Apricots, cherries, peaches, plums 647 0 5
0806 Grapes, fresh or dried. 209 0 10 0208 Other meat and edible meat 81 0 0.2
0804 Dates, pineapples, avocados, guavas, mangoes 12 0 11
2207 Undenatured ethyl alcohol 0 146 50
1 Domestic Support and Export Subsidies: USA, Canada, EU, Switzerland and Japan- Source: WTO Notifications
128
Table 10
RSA Exports and Tariffs Charged on Major Export Products
(11 countries, 60% of total exports)
Applied Tariff Equivalent
Bound Tariff Equivalent
Exports2001 Export
Destination TARIFF LINE Description % % R mil
EU 220421 Not sparkng <2liter 0.0 0.0 1 382 EU 80610 Grapes, fresh 0.0 0.0 956 EU 80510 Oranges 0.0 0.0 622 SADC 240220 Cigarettes 0.0 0.0 456 Japan 100590 Not seed 18.0 50.0 398 EU 80810 Apples 3.7 3.7 358 Korea 170111 Cane,raw,solid form 6.4 18 357 Japan 170111 Cane,raw,solid form 19.0 450.0 318 EU 20890 Other 0.0 0.0 285 SADC 170111 Cane,raw,solid form 0.0 0.0 263 SADC 220300 Beer made from malt 0.0 0.0 216 EU 510111 Shorn,greasy 0 0 211 EU 80820 Pears and quinces 3.7 3.7 178 EU 220429 Other wine 0.0 0.0 177 EU 80520 Mandarins 0.0 0.0 163 SADC 100590 Not seed 0.0 0.0 163 Japan 100110 Durum wheat 210.0 235.0 161 SADC 170199 Ot pure sucrose,ref 0.0 0.0 157 EU 80940 Plums and sloes 0.0 0.0 155 SADC 210690 Other 2106 0.0 0.0 149 EU 410221 No wool on,pickled 0 0 149
Source: Tariffs: WTO Integrated Database Exports: World Trade Atlas based on SARS statistics
129
8.3 Key note address by the Minister – Grain SA congress
Speech by the Minister for Agriculture and Land Affairs Ms Thoko Didiza at the Grain SA congress at Bothaville - 10 March 2004
Programme director, respected leadership of Grain SA and its esteemed members, invited guests,
sector stakeholders and members of the press.
It gives me a great pleasure, honour and indeed privilege to stand before you in my capacity as
Agriculture and Land Affairs Minister on the eve of celebrating our first decade of democracy.
One of the greatest triumphs of the new South Africa is the collective acknowledgement by all of us,
black and white, that South Africa belongs to us. But one of the clearer excitements about our transition
in this fledgling democracy is the explicit commitment by organised agriculture to ensure that our entire
nation is food secured. Above all, the country owes - to a large extent - its sustainable food security
measures, among others, to none other than Grain SA itself.
Meneer die Voorsitter, baie dankie vir die geleentheid om by u kongres op te tree tydens die tien-jarige
herdenking van Suid-Afrika se demokrasie.
Within these ten years of democracy, Government has implemented various policies and programmes in
its drive to remedy the past ills.
Our guiding policy document is the “Strategic Plan for South African Agriculture”. As part of the plan, we
have embarked on an initiative to facilitate the development of plans for the different industries that
reflect the key pillars of the Sector Plan. These plans are meant to enhance equitable access and
participation in the sector, to improve global competitiveness and profitability and to ensure sustainable
management of resources.
The Strategic Plan for the Grain Industry, the development of which started in 2002, is in pole position.
Building on the vision and mission of the Sector Plan this document provides an implementable set of
long-term strategic initiatives at all levels of the value chain to bring about a united and prosperous grain
industry. These strategic initiatives would be implemented through a partnership—and I want to
emphasise the word partnership—between government and the private sector from a market-orientated
perspective.
130
This plan encompasses all stakeholders in the grain industry: from the many producers of the major
grain crops up to the processors of a wide range of end products and the consumer as well as
government, input suppliers, insurers, financiers, silo owners, grain traders, bakers and research
organisations. There is a shared commitment to improve dialogue and to ensure greater collaboration in
working towards establishing trustworthy and long standing relationships and partnerships between all
stakeholders and to ensure that we move forward together in implementing the strategic tasks that have
been jointly agreed upon.
The grain industry is one of the largest industries in South African agriculture and also a very strategic
one. It is therefore fitting that it is the second industry with which we, as a Department, commenced
collaboration to develop a strategic plan in terms of our Sector Plan commitment to a partnership for
unity and prosperity. We have taking a commodity approach towards implementing the Sector Plan and
other industries that have also progressed well with strategic plans are cotton, wine and livestock.
The Grain strategy has some very interesting things to say about your industry. Your industry produces
between 25 and 33% of the total gross value of agricultural production. The gross value of grain
production was usually around R12 billion, but in the 2001/2002 season this sky-rocketed to R22 billion
as a result of higher prices, among other factors. Although the crop would not be as large this season
and the prices are lower, the grain industry still remains a major player in the agricultural arena.
I am informed that Grain South Africa represents a total of 17 000 grain producers of whom 11 000 are
from disadvantaged communities. These farmers represent roughly 90% of all grains produced in South
Africa.
Other major role players include the silo industry, the milling industry, the baking industry and the animal
feed industry, all of whom have undergone a number of changes following the deregulation of the
industry.
I think you would recall that while there is a commitment and broad agreement to addressing the issue
of food security in the region, the precise means to do so have yet not been fully agreed upon and the
matter should be fully investigated soonest. While at the regional and continental levels we have agreed
to the creation of a food reserve system, highlighted again last week at the FAO conference in
Johannesburg, it should be well understood that the particular concerns and the most appropriate
solutions at a domestic level are not the same for all countries in the region. What we are striving for is
that a regional solution should form a coordinated and symbiotic system, taking into account the needs
of all its members.
131
The supply and availability of food continues this year to be a concern for some SADC countries.
However, while South Africa has a large food insecure population that places a responsibility on
government and civil society, we do not have an overall shortage of grains, even with the reduced crop
forecast this year. Another aspect of the food security challenge that is not always understood is the
negative impact of food aid on South African commercial sales of grain in those markets. This element
would have to be taken into account in considering a regional food security system.
In this respect and in accordance with the World Food Summit commitment to address hunger, SADC
has agreed to investigate the establishment of a regional food security facility. The nature, viability and
feasibility of such a facility are now being investigated by the World Bank and would be debated in detail
once its report to SADC has been concluded. The keeping of limited strategic stocks might be one
element of such a facility in the region. Other possible options should be investigated and these must be
considered together in reaching a workable solution.
Broadening participation in the grain industry is one of the key objectives of the Grain Strategy. This
strategy should not be just about empowering black farmers. It should take place at all levels throughout
the whole value chain. It is also important that this strategic focus aligns with the government’s BEE
strategy and the Department’s AgriBEE strategy, which we would soon publish for public comment.
I take this opportunity to appreciate that there is a number of other initiatives developed in the spirit of
partnerships and mentoring of farmers. Some of these by Grain SA, have been launched to assist black
grain farmers across the country. These initiatives involve provision of farmer training programmes,
supplying and inputs, financing sharing experience and machinery. All initiatives, albeit undertaken
independently, are running concurrently. Frustration among some black farmers over poor access to
finance, poor services and support mechanisms in general, is a cause for concern. However, we are
confident that the grain strategy would provide the guidance, impetus and synergy for resolving some of
these pertinent challenges.
The implementation of the Strategy would result in a number of actions such as support by Government
for the formation of study groups to develop emerging farmers and assistance to the costs of mentorship
by commercial farming members. Government is also revitalising the LRAD programme by ensuring
that funds are available to assist land purchases by aspirant farmers.
To further facilitate these farmers’ entrance into the sector, Government would consider a programme of
support for on-farm infrastructure on newly established and targeted black-owned farms. In the context
of grain farming the most important aspects would include fencing, renovation of farm buildings and in
some cases irrigation infrastructure. These are elements that Government is considering in terms of the
132
design of the Comprehensive Agricultural Support Programme.
In an endeavour to improve market access of black farmers the stakeholders in the grain industry
Government is also relying on its partners, including Grain SA to commit themselves to expand existing
training programmes to improve production skills and knowledge.
Silo owners (and buyers of grain) should in turn accept their responsibility to ensure credible,
transparent and non-discriminatory practices in grading, handling, storage and pricing in accordance
with the existing code of ethics adopted by all grain silo owners. A comprehensive system of market
information, tailor-made for the needs and circumstances of black farmers, would be introduced in a
collaborative effort between Government and a number of partners. Although SAGIS provides a very
good service, the information should be interpreted and disseminated to all farmers. We should know
what the information needs for disadvantaged communities are and ensure that information is
disseminated in a form they need.
The quality of key information, such as crop estimates, should be further improved. Government has
accepted its major role in this respect and has already invested in a new system and funding to improve
crop estimates. I would appeal to Grain SA members to participate in greater numbers in the crop
estimate programme as you would surely agree that the role that uncertainty plays in propagating huge
short term fluctuations in the price of grains is certainly not in the interest of farmers who need to plan
their activities over a longer period. Substantial expansion by more farmers in the crop estimate panel
would improve the quality and reliability of the crop estimate. As you would agree, without a reliable crop
estimate the market would be at the mercy of the pronouncements of those who have a vested, ulterior
interest.
The long term survival and financial viability of the grain industry depends on its ability to expand market
opportunities in the local grain market for both current farmers and new entrants into the industry.
Surplus grain production locally and internationally has a negative impact on the profitability and
sustainability of grain industries worldwide. Expanding the market for grain milling products in SADC
would be one avenue of increasing the market. In addition, alternative uses for oilseeds and maize such
as biodiesel and bio-ethanol might provide other important opportunities to expand the domestic market
for grains.
Government also acknowledges the critical importance of infrastructure, and specifically rail and harbour
infrastructure, to the international trading position of the grain industry. To this effect the Department of
Agriculture and the grain industry would continue to engage with Spoornet on its ability to serve the
grain industry. I believe the intended recapitalisation of Transnet and Spoornet has already provided
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some indication of Government’s commitment to this challenge. The Department is working with other
Government bodies to ensure that the restructuring and upgrading of transport and logistics
infrastructure takes into account the needs of the agriculture sector.
The long-term global competitiveness of the South African grain industry depends on its ability to learn
and innovative faster than its competitors. This requires a well-designed, well-financed and well-
executed programme of research and technology development.
The critical role of grain crops in both commercial and food security considerations justifies a strong
investment by government in research.
These are just some of the ideas contained within the Grain Industry Strategy. What now is needed is
for the Strategy to be implemented and this is where I must again emphasise the partnership between
the industry and the Department. You must now come together to take decisions on the allocation of
responsibilities.
I understand that some of the issues are already being implemented. Government has an interest in
ensuring that the grain industry remains competitive and viable in ensuring sustainable food supply.
Jointly we must work together to find mutually benefiting solutions that address diverse needs of South
Africans. I wish you well in your deliberations. Thank you.
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9. Abbreviations AFMA – Animal Feed Manufacturers Association
AGIS – Agricultural Geo Information Services
ARC – Agricultural Research Council
BED – Directorate Business and Entrepreneurial Development
CAADP – Comprehensive African Agriculture development Programme
CASP- Comprehensive Agricultural Support Programme
CPI – Consumer Price Index
CSIR – Centre for science and Industrial Research
DEAT – Department of Environmental Affairs and Tourism
DoA – Department of Agriculture
DoH – Department of Health
DoL – Department of Land Affairs
DPE – Department of Public Enterprise
DST – Department of science and Technology
DTI – Department of Trade and Industry
DoT – Department of Transport
FANR – Food, Agriculture and Nature Resources (Unit of SADC)
FAO – Food and Agriculture Organisation
FRD – Foundation for Research Development
GEAR – Growth, Employment and Redistribution
GMO – Genetically Modified Organisms
GSA – Grain South Africa
GSI – Grain Silo Industry (PTY) LTD
ICT- Information, Communication Technology
IFFS – Integrated Food Security Strategy
IPR – Intellectual Property Rights
IRDP – Integrated Rural Development Programme
ISFNSP – Integrated Strategy on Food Security and Nutrition Programme
JSE- Johannesburg Securities Exchange (formerly SAFEX)
LRAD – Land Redistribution and agricultural Development
ITAC – International Trade Administration Commission
NAFU – National African Farmers Union
NAMC – National Agricultural Marketing Council
NARF – National Agriculture Research Forum
NARS – National Agriculture Research System
NCM – National Chamber of Milling
NEPAD – New Partnership for Africa’s Development
NGO – Non- Governmental Organisation
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NRM – Natural Resource Management
PDA – Provincial Departments of Agriculture
PPECB - Perishable Products Export Control Board
PPI – Production Price Index
R & D – Research and Development
RDP – Rural Development Programme
SAAFQIS - South African Agricultural Food, Quarantine and Inspection Services
SACOTA – South African Cereal and Oilseed Traders Association
SADC – Southern African Development Community
SAFEX – South African Futures Exchange
SAGIS – South African Grain Information Service
SAPO – South African Port Operations
SARS - South African Revenue services
SMME – Small, Medium and Micro- enterprises
SPS- Sanitary and Phytosanitary Measures
STANSA- Standards of South Africa (formerly SABS)
TIPS – Trade and Industry Policy Strategies