CENTANE AND MBASHE AGRICULTURAL INITIATIVE JULY 2017

Transcription

1 CENTANE AND MBASHE AGRICULTURAL INITIATIVE JULY 2017

2 centane and mbashe agricutura initiative BACKGROUND The Centane and Mbashe Agricutura Initiative focuses on the deveopment of a mode for the profitabe and sustainabe farming of communay owned and. It is both a commercia and deveopmenta mode designed to have high socia impact, with particuar emphasis on income generation and food security for the participating communities. The initiative was started by Women Investment Portfoio Hodings Limited (WIPHOLD) in 2012/13 as a corporate socia investment mode. It was commerciaised in 2014, and WIPHOLD began injecting working capita oans into the initiative. It aso set up WipEquipment, which providesthe initiative with most of its mechanisation services. WIPHOLD s objectives are primariy to: encourage the deveopment of viabe smascae commercia agricuture in South Africa, particuary but not excusivey on communay owned and; chaenge financia and other agri-finance institutions to make finance more readiy and easiy accessibe to sma-scae and emerging farmers; and chaenge input suppiers to rethink their approach to and reationship with farmers and farming in rura communities. WIPHOLD s motivation for doing this incudes the knowedge that: food security and sustainabe economic empowerment go hand in hand, and that the proper use of and resources in South Africa by sma-scae farmers can pay a significant roe in enhancing food security, particuary in poor communities; Sma-scae commercia agricuture can have a significant impact on creating empoyment, improving income and generating weath; and finance and other investments are not easiy or readiy accessibe to sma-scae and emerging farmers. In 2015, Od Mutua and Nedbank became partners to the initiative and provided oans for working capita. The oans from a three parties are free of interest, with repayment schedued to begin in 2020/21. Since 2014, government has provided the initiative with grant subsidies. As of 2016/17, andowners and project members from 34 viages are participating in the initiative, with hectares of and being cutivated. WIPHOLD beieves the success of this initiative rests as much in effective community mobiisation as it does in the success of the farming operation. 2 3

3 centane and mbashe agricutura initiative GEOGRAPHIC CONTEXT EASTERN CAPE MAIZE PRODUCTION MNQUMA/MBASHE, WITH CENTANE AS ANCHOR Maize is the most important grain crop in South Africa. It is a major feed and the stape food source for the majority of the country s popuation. Lower-income groups spend a higher proportion of their disposabe income for food on grain products (36.5%), meat products (15.1%) and vegetabes (12%) than those with higher incomes. Eastern Cape is the third-most popuous province in South Africa with an estimated 6.6 miion inhabitants, comprising 12.5% of the country s popuation. About 65% of Eastern Cape s popuation is rura. 6% 14% 5% 2% MAIZE CROP DISTRIBUTION 2013/14 26% 1% 5% The Mnquma and Mbashe oca municipaities form part of Eastern Cape s Amathoe District Municipaity. Both municipaities are deepy rura and very poor. Eastern Cape has one of the country s owest eves of food security despite having a great dea of arabe and capabe, for exampe, of maize yieds of 8 tons/hectare of dryand maize farming. The region has the potentia to be a breadbasket for South Africa. Despite having a high-potentia maize bet on vast tracts of communay owned and, with associated high rainfa, particuary aong the Wid Coast, the province accounts for ony 1% of South Africa s maize production. The buk of maize production in the province is for noncommercia and subsistence purposes. As a resut, maize is mosty brought into the province, increasing the vaue chain and the accompanying costs, such as ong trave distances and the cost of taxis from viages to towns in the provinces rura areas. 41% The Mnquma/Mbashe area has an average annua rainfa of between 750mm and 850mm. The two municipaities have a combined popuation of about peope. Mnquma comprises the three towns of Centane, Butterworth and Ngqamakwe, and its popuation is about Mbashe comprises the three towns of Dutwya, Wiowvae and Eiotdae, and has a popuation of about

4 ORGANISATIONAL MODEL centane and mbashe agricutura initiative The initiative is run through a company caed the Centane Agricutura Deveopment Company. WIPHOLD has a 40% sharehoding, with the remaining 60% hed by community participants. WIPHOLD runs the farming operation. Community members contribute by: erecting and maintaining the fencing (provided by WIPHOLD); guarding the fieds against ivestock intrusion and theft; monitoring crops for diseases, insects, and other things; assisting with harvest pickups and ensuring harvest security; recruiting tractor drivers and other workers from participating viages; and nominating individuas to be trained and mentored by WIPHOLD as farm managers. Each participating viage estabishes an executive committee that coordinates that viage s participation. Participating andowners and project members benefit through: a and-use fee, which the community has eected to receive in the form of ten 40kg bags of maize per andowner per season; dividend distribution; and training and empoyment. We are empoying our youth on the project and paying them a saary from our income so that they can see they don t need to go to the city to ook for a job 6 I worked in the mines, where it is hard to get a job these days. Now I can stay here and farm. I don t need to work in the city any more 7

5 FINANCING MODEL The initiative is funded through: working capita oans from WIPHOLD, Od Mutua and Nedbank; government grants; and revenue from the sae of maize and soy beans. The working-capita oans accumuate zero interest. Repayment begins five years after disbursement. This assists the project during the initia and expensive set-up years. The eary years of starting up a commercia farm are, more often than not, not profitabe. However, these are aso the years when it is vita in an initiative such as the Centane initiative to secure the buy-in and commitment of We no onger have to trave from our viage to town to buy food we have a fu pate FROM COASTAL COMMUNITY WHERE MAIZE AND VEGETABLES ARE GROWN 8 centane and mbashe agricutura initiative community members. Years of deep poverty and subsistence existence, as we as faied promises from government and other private-sector initiatives, means that eves of trust are ow, which can transate into high crop theft through extractive thinking. For this reason, the initiative s financia mode is designed in a way that ensures that some funds are set aside each year for dividend distribution whie the farming operation buids towards profitabiity. In 2014, there was a reativey high eve of theft. This was sti substantiay ower than comparabe initiatives (past and present) in Eastern Cape, but sti, in our opinion, too high. Since then, theft has dropped dramaticay. It is aso rare these days to find ivestock in the fieds. WIPHOLD beieves this is the resut of a combination of two things dividend distributions to participating andowners, and the profound effect intense community mobiisation and training have had on ensuring that the community buys into the initiative and takes ownership of it. A database is maintained of each participating andowner. Dividend distributions are paid directy into each individua s bank account. In addition, each viage receives R a year to be used for maintenance and other necessities. Dividends are distributed according to a formua that takes account of the proportionate size of each farming bock reative to the tota hectares, as we as penaties for poor performance (such as theft and ivestock in fieds) and bonuses for good performance. 9

6 centane and mbashe agricutura initiative FARMING OPERATIONS LAND UNDER CULTIVATION FARMING AND FINANCIAL RESULTS There has been rapid growth in farm size since WIPHOLD commerciaised operations in 2014 (227% in three years). The tota and cutivated in 2016/17 was hectares in 34 farming bocks, making this a sizabe farming operation. Farm management is made more compex by the rough terrain and the geographica spread of the farming bocks. To give the team a chance to consoidate and sette, it was decided that for 2017/18 there woud be no expansion in the number of hectares farmed. From 2018/19, farmand wi be increased by 500 hectares per season unti the goa of hectares is reached in 2021/ In the 2014/15 season, 616 hectares were panted. The average yied, incuding and-use fee, was tons, transating into 4.4 tons per hectare. A oss of R3.18 miion was incurred, which was anticipated in this start-up year. In 2015/16, hectares was panted. As a resut of the drought, the 2015/16 season was very disappointing in terms of crop yieds. The tota maize yied for the 2015/16 season was tons an average yied of just 2.2 tons per hectare. The country average (for dryand and irrigated maize) was 2.7 tons per hectare. However, considering that the and in Centane and Mbashe was sti in the eary stages of deveopment, it was encouraging that their yieds were just beow the nationa average and that the operation sti managed to record a profit of R1.4 miion. This was a resut of cost-saving measures and very high maize prices. The estimated yied for 2016/17 is tons, or 5 tons per hectare for maize and 2.5 tons per hectare for the 82 hectares of soybeans panted. Considering that amost a the and had not been worked in decades, the yieds from most bocks are very good. Hectares We had stopped working together as a community. Now we are doing that again on this project I have now been abe to move back from Cape Town and buid a house 10 11

7 SOCIOECONOMIC IMPACT PARTICIPATING VILLAGES, LANDOWNERS AND MEMBERS There are now 34 viages participating in the initiative, with a tota of andowners and project members. Of that number, (73%) are andowners and 547 are project members. The decision to maintain the hectares under cutivation at for 2017/18 wi aso assist the team to consoidate and deepen community mobiisation with the existing viages and community members. I used to work in Joburg and trave home past arge [commercia] farms in Free State that went on as far as the eye coud see. I never dreamt that this coud happen here in Centane Landowners and members Viages/Farming bocks PARTICIPATING VILLAGES: BLOCK NAME LANDOWNERS MEMBERS TOTAL HECTARES fsviages TUTURA Mangweni Bock 1 & Engcweba Mangweni Bock Adjacent Mangweni Bock bocks Teko Springs (incuding new extension) Teko Kona Teko Ntengu Mtonjeni Esigingqini Adjacent Esiginqini bocks Nkondwana (incuding new extension) Qoboqobo Ejojweni Ndebe Adjacent Ejojweni Tower bocks Mrhawuzei Komkhuu COASTAL Nombanjana Khobonqaba Nxaxo Nkente Dondashe Mai FENI Maxama fsviages Zimbaba Adjacent Zimbaba bocks Jamda fsviages Encwebeni fsviages Mjo fsviages MBASHE Ngcingwane fsviages Nqadu Pezuu fsviages Nqadu King fsviages CENTANE AND MBASHE TOTALS fsviages 12 13

8 centane and mbashe agricutura initiative Athough it is sti in its eary stages, the initiative has aready had noticeabe socioeconomic impact. This is seen particuary in terms of the enhancement of income and food security. Athough jobs have been and wi be created, the operations of the initiative remain fairy capita intensive. The numbers beow provide an indication of some of the impact to date. After three seasons, a tota of more than R18 miion wi have been distributed to the community sharehoders by way of the and-use fee and dividend distributions. COMMUNITY SOCIOECONOMIC BENEFIT TOTAL Number of direct beneficiaries as at Income enhancement: Cash distributions 2014/15 and 2015/16 R Income enhancement: Estimated cash distribution 2016/17 R Food security and income enhancement: 2014/15 and-use fee R Food security and income enhancement: 2015/16 and-use fee (418 tons of maize) R Food security and income enhancement: 2016/17 and-use fee (605 tons of maize estimate) R Permanent jobs created (directy from project) 12 Temporary jobs created (directy from project): Number of peope who have received training These numbers do not take account of the new economic activity and job creation resuting from spin-off ventures being started by the community with the income they have received. What the numbers aso do not take account of is the psychoogica and socia impact the project is having. Communities are engaging one another and are busy in a way that they never have been before, and, perhaps most importanty, they are being treated with dignity and are deveoping a sense that their economic and socia futures can be better than they had expected. There has been a rapid appreciation for the commercia nature of the venture that there is a oan to be repaid. Increasingy, community members have begun panting vegetabe gardens in their back yards. Some have said that their yard farming shoud provide food for their tabes, which woud aow the farming bocks to become purey commercia. Athough some sti articuate a dependence on WIPHOLD ( WIPHOLD must never eave, for instance), others are aready starting to imagine the day when they take over the initiative and end directy from Nedbank

9 centane and mbashe agricutura initiative SUSTAINABILITY ADDING VALUE ALONG THE AGRI CHAIN TRANSITIONING TO INDEPENDENCE We are working on a framework to aow the initiative to become independent over time. The first project in this regard is with Nombanjana, the first viage to join the initiative in In 2016, the Nombanjana community decided that instead of their dividend distribution being paid to individua members, they woud as a viage use We have been taken the dividend distribution to buy a tractor and equipment so that they coud start a out of poverty parae enterprise to the maize initiative, and, in time, aso take over the initiative in their viage from WIPHOLD. WIPHOLD provided an enterprise deveopment grant to suppement the funds required to buy the equipment, and is aso putting in pace training programmes in basic bookkeeping, enterprise deveopment, farming and equipment management for the Nombanjana community. Based on this piot, earnings wi be appied to other viages. Funding for enterprise deveopment wi need to be raised for this. AGRI VALUE CHAIN We are in the eary stages of deveoping a business pan for the estabishment of Crime has gone down a whoesae co-op inked to the initiative. This co-op woud se maize (bagged, semi-processed and perhaps eventuay fuy processed) as we as inputs such as chemicas, seeds and fertiiser. We are aso ooking at the introduction of cash crops. These deveopments wi require funding to be raised

10 CONTACT US CONTACT DETAILS PHYSICAL ADDRESS POSTAL ADDRESS MEDIA QUERIES Te: +27 (0) Fax: +27 (0) Emai: For more information, emai WIPHOLD House 29 Centra Street Houghton Johannesburg Gauteng South Africa PO Box Houghton Johannesburg Gauteng South Africa 2041 Debra Marsden Te: +27 (0) Emai: