Government s Agricultural Plan, with specific reference to the National Development Plan (NDP)

Transcription

1 Government s Agricultural Plan, with specific reference to the National Development Plan (NDP) John Purchase 12 February 2015

2 New Growth Path (NGP) MTSF ( ) of 14 Outcomes Outcome 4 Decent Employment through inclusive growth 6 Job Drivers Outcome 7 - Comprehensive rural development and food security NDP: Chapter 6 Outcome 10 - Protect and enhance our environmental assets and natural resources National Development Plan (NDP) IGDP (Policy Framework) Agriculture Productive Sector Forum Agric Policy Action Plan (APAP 5 yr iterative plan) Infrastr. Pres. Infra. Co. Comm. (PICC) oury SIP 11 Mining (Mining Policy Action Plan) Manufacturing Industrial Policy Action Plan (IPAP) Tourism Green Economy Source: DAFF, 2014

3 National Development Plan - Developed by the National Planning Commission - Originates from 2009 ANC election Manifesto: The developmental state will play a central and strategic role in the economy. We will ensure a more effective government; improve the coordination and planning efforts of the developmental state by means of a planning entity to ensure faster change. - Medium Term Strategic Framework (MTSF) for , the first fiveyear building block of the National Development Plan. - The MTSF will also include key targets from the New Growth Path, the Industrial Policy Action Plan, the Agricultural Policy Action Plan, and the national infrastructure plan.

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11 1. Expand irrigated agriculture 2. Convert under-used land in communal areas and land reform projects to commercial production 3. Pick and support sectors with highest potential for growth and jobs 4. Support job creation in up- and downstream industries 5. Find creative combinations between opportunities 6. Develop strategies that give access to product value chains

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14 Recommendations To expand agriculture and create 1 million jobs in the sector, the Commission makes the following recommendations: 1. Substantially increase investment in water and irrigation infrastructure 2. Invest in market linkages for small-scale farmers 3. Preferential procurement mechanisms to allow market access to new entrants 4. Create tenure security for communal farmers 5. Investigate different forms of financing and vesting of property rights for land reform beneficiaries 6. Greater support for Public-Private Partnerships 7. Increase and refocus investment in R&D in sector 8. Improve and extend skills development and training 9. Innovative means of extension and training in partnership with industries

15 IGDP Fundamentals: Development IGDP takes its cue from 14 outcomes in the MTSF ( ) to address key challenges: - Outcome 4: Decent employment through inclusive economic growth - Outcome 7: Vibrant, equitable and sustainable rural communities contributing towards food security for all - Outcome 10: Protect and enhance our environmental assets and natural resources IGDP National Reference Group established (Agbiz involvement) Alignment with other key government processes (Land Reform Green Paper, NGP, NPC, etc.) Not yet officially adopted by Cabinet.

16 Structure of IGDP: Situation Analysis - Sector profile - Policy Framework Current Realities and Challenges: 4 key pillars - Equity and Transformation - Equitable growth and competitiveness - Ecological sustainability - Governance IGDP Implementation Plan Costs and financing Monitoring and evaluation

17 Agricultural Policy Action Plan A detailed analysis of challenges is given in the IGDP. Based on this analysis, the IGDP also outlines appropriate responses. APAP seeks to translate the high-level responses offered in the IGDP, into tangible, concrete steps. However, this first iteration of APAP is not offered as a fully comprehensive plan. The APAP, for its medium to long term goal as set out in the IGDP, is planned over a five year period, and will be updated on an annual basis. Over-arching objectives of APAP are to - promote labour absorption and - broaden market participation. Value Chain approach, but still to be finalized.

18 Medium Term Strategic Framework (MTSF) The MTSF for the rural sector will focus primarily on 7 imperatives that are a core foundation for an inclusive and integrated rural economy, and are as follows: 1. Improved land administration and spatial planning for integrated development, with a bias towards rural areas (SPLUMA). 2. Improved and sustainable agrarian reform and food security. 3. Smallholder farmer development and support (technical, financial, infrastructure). 4. Increased access to quality basic infrastructure and services, particularly in education, healthcare and public transport. 5. Sustainable rural enterprises and industries characterised by strong rural-urban linkages, increased investment in agro-processing, trade development and access to markets and financial services 6. Reduce rural unemployment. 7. Improved integration and coordination of rural development across all spheres of government and between government departments as a result of implementation of synchronised rural development strategies.

19 Agribusiness Agri-business comprises largely agricultural input suppliers and the agro-processing sector. Trend data for agro-processors suggests that over the past two decades it has followed a similar pattern to primary agriculture modest real growth coupled with declines in formal sector jobs. The development trajectory of both input suppliers and agro-processors resembles that of many other countries, namely a trend towards higher levels of industry concentration. Concentration ratios by total income for top 5 and top 10 enterprises, 2008 CR5 CR10 Agro-processors Food products and beverages 30% 40% Prodn, processing & preserving of meat, fish, fruit, vegetables, oils & fats 30% 43% Dairy products 71% 81% Grain mill products, starches, starch products and prepared animal feeds 70% 79% Bakery products, sugar, chocolate, etc. 58% 84% Beverages 80% 86% Textiles, clothing, leather and footwear 17% 23% Wood, wood products, paper, publishing and printing 30% 41% Agro-input manufacturers Fertilisers, nitrogen compounds, plastics and synthetic rubber 87% 92% Agricultural and forestry machinery 23% 33%

20 Trends in formal and informal employment in agro-processing,

21 Poultry/Soybeans/Maize Integrated Value Chain Poultry/soybeans/maize integrated value chain: The broiler industry is South Africa s largest agricultural subsector in terms of value of production. The industry is also a complex integrated industry with different commodities (soya beans and yellow maize) feeding into it. The industry is seen as a medium performer in terms of labour absorption. Although the industry grew above inflation for the past decade, for the past several years it has been in distress due to high feed cost and imports. Broilers Soybeans Product Labour indicator Real average growth (10 years) Yellow maize Medium Performer Medium Performer Medium Performer Main challenges and constraints: Medium growth industry High growth industry Middle 15 Low growth industry Top 15 Market share Volatility index Trade balance Import substitution Top 15 Low volatility Net importer Yes Moderate volatility Moderate volatility The increasing cost of production, especially feed and energy The increasing cost of day old chicks, and variable quality of day old chick supply in the market Oversupply of imports from the EU & South America Variable control of poultry diseases Underdevelopment of consumption in neighbouring countries High initial investment for start up Need for R&D to improve production systems and feed conversion ratio Undependable electricity supply Monopolistic behaviour of processors and retailers Lack of official information in the market, stock population etc. Inadequate market access for small-scale producers Net importer Net exporter Yes NA

22 COMPLETION DATE Quarter Year Q2 2014/15 Q4 2015/16 Q4 2014/15 Q4 2015/16 Q2 2014/15 Q3 2014/15 Q1 2015/16 Q1 2015/16 Q4 2015/16 KEY MILESTONES Develop a R&D programme on energy efficiency in poultry production Partner with private sector seed companies in order to develop higher yielding soybean varieties Amend soybean grading regulations to align with industry requirements Develop and implement regulations on retention of protected soybean seeds Develop and implement a National Management Plan for Sclerotinia (a fungal pathogen affecting soybean, sunflower) Refine and expand smallholder training programmes on primary production and post-harvest practices for soybean and yellow maize Develop and deliver standardised and targeted input supply package for smallholder soybean and maize producers by means of reprioritisation of the Ilima/Letsema programme Develop and implement a national Poultry support programme inclusive of: communication system to support extension staff with technical and advisory support services for plant production; training programmes in production systems and farm management Support smallholder and mixed-size farmer coops establish off-take agreements with feed companies ARC LEAD DEPT./AGENCY DAFF (CD Plant Production and Health) DAFF (CD Inspections and Quarantine Services) DAFF (CD Plant Production and Health) SUPPORTING DEPTS./AGENCIES DAFF ARC, universities, Protein Research Trust, private seed comp s Grain SA Grain SA DAFF (CD Plant Production and Health) ARC DAFF (CD Sector Capacity Dev; CD Extension Support) DAFF (CD Plant Production and Health) DAFF (CD Plant Production and Health) DAFF (CD Agroprocessing and Marketing) Provincial departments of agriculture, ARC, Grain SA Provincial departments of agriculture, ARC SAPA, Provincial departments of agriculture, ARC, Grain SA dti, SAPA, Provincial departments of agriculture, Grain SA

23 Others Dairy Red meat Wheat Horticulture (including wine industry) Biofuels Forestry Aquaculture Small Scale Fisheries

24 Transversal interventions Fetsa Tlala Research and Innovation Promoting Climate Smart Agriculture Trade, Agribusiness Development and Support Strategic Infrastructure Projects (SIP 11) Biosecurity Land Reform

25 APAP Planning, Monitoring and Evaluation 2 / MTSF SITUATIONAL ANALYSIS + ANNUAL KAP PERFORMANCE REPORTS SEPTEMBER PROPOSED OR REVIEWED KAPSSUBMITTED FOR INCLUSION INTO APAP B General research questions formulated to guide a national situational Participating in providing information to answering formulated research questions Performance reports per KAP e.g. food security i.t.o projected deliverables - PA Provin cial Commi Performance ttees reports per KAP e.g. food security i.t.o projected deliverable - QT Performance reports per project related to provincial programmes e.g. food security projects i.t.o projected deliverable - MO Local multi stakehol der forum Annual KAP performance reports 2 / MTSF period Nat. situational Analysis/ Policy Review Qtly KAP performance reports D D 2 / MTSF period Prov. situational Analysis/ Policy Review Project Support Services must be in plan at local level Provin cial C5 AUGUST Commi Provincial Committees ttees approves projects submitted by districts, based on approved selection criteria per programme; and situational analysis. Cater for strategic projects by other departments, internally etc.) + farmers with strategic partnerships / initiatives etc. CONT Spatial Development Frameworks (SDPFs) District Committees further recommends projects C4 through a provincially determined selection criteria of projects. Commodity -based project management coordinating interventions along a value chain. CONT Extension offices receives applications and Business Cases for Candidate Projects (clients, farmers, other departments etc.) District Commi ttees C1 JUNE Formulate new, or Review existing KAPs. Relevant directorates to interact with provinces on proposed KAP e.g. Livestock Development JULY Provincial KAPs formulated or reviewed Formulated selection criteria for projects per KAP CONT Local multi-stakeholder forums receives and recommends (LM, commodity groups, Land Reform) projects based on recommendations by extension offices in turn; Project teams are set per project approved by province. CONT Extension offices screens applications based on compliance i.e. completed business cases and application forms. Pre-feasibility studies are completed on applications ; and the rest receives regret letters A C3 C2 A Comm odity Forum s

26 Two other major policy areas impacting on Agriculture & Agribusiness 1. Land Reform 2. National Water Policy Review (NWPR) 3. Minor policy areas: - Labour - Energy - B-BBEE - MAPA, etc.

27 On Land Reform, for today.. Acknowledgement that Land Reform in South Africa is necessary, even though a complex and emotive subject. The question is: How do we do it? In effect two approaches/models by government: 1. DRDLR Green Paper and National Reference Group (NAREG) Process. 2. National Development Plan (NDP) model on Land Reform.

28 1. DRDLR Green Paper and National Reference Group (NAREG) Process.

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30 GP: Principles underlying Land Reform (a) De-racialising the rural economy; (b) Democratic and equitable land allocation and use across race, gender and class; and, (c) Sustained production discipline for food security The Goal is to promote social cohesion and development, based on shared growth and prosperity, relative income equality, full employment and cultural progress.

31 NAREG Process National Reference Group established, and Agbiz part thereof 6 NAREG Workstreams established for consultation: - Group 1: Land Management Commission (LMC) - Group 2: Land Rights Management Board (LRMB) - Group 3: Office of the Valuer General (OVG) - Group 4: 3-Tier Land Tenure System - Group 5: Communal Tenure - Group 6: Legislation Considerable interaction over past 2-year period 14 policy positions developed

32 Strategic Correlation amongst the various Policy Instruments and Institutions Policy Type Foundation Redistributive Development and Support Actual Policies 1. Spatial Planning and Land Use Management (SPLUM Act finalized) 2. Rural Development Policy Framework CRDP approach 3. Agricultural Land Holdings Framework Policy Private land with limited extent + Regulation of Foreign Ownership of Land 4. Land Management Commission (Draft Bill to Parliament soon?) 5. Property valuations - Just and equitable compensation - Property Valuation Act assented 6. Pro-active land acquisition policy (PLAS) 7. Re-opening of Restitution - Restitution of Land Rights Amendment Act assented 8. Land tenure reform in commercial farming areas (Strengthening the relative rights of those that work the land) 9. Communal land tenure policy and redistributive arm to decongest communal areas 10. Rural Development Framework (RDA, RIDFF, AVMP, etc.) 11. Recapitalisation and Development Policy 12. State Land Lease and Disposal Policy 13. Communal Property Associations Policy 14. MTSF developed between DRDLR and DAFF

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34 New Land Reform Legislation Spatial Planning and Land Use Management Act (SPLUMA) Property Valuation Act assented 1 July 2014 Restitution of Land Rights Amendment Act assented 1 July 2014 Land Commission Bill (With DRDLR after gazetted for comment) Expropriation Bill (In Parliament now) Extension of Security of Tenure Amendment Bill (Signed off at NEDLAC in 2014, to Cabinet and Parliament in 2015).

35 Expected New Land Reform Legislation Electronic Deeds Registration Bill February Communal Property Associations Amendment Bill March 2015 Communal Land Tenure Bill February 2015 Regulation of Land Holdings Bill March 2015

36 Restitution of Land Rights Amendment Act

37 Agbiz alternatives in NAREG Process Conditional support for certain policies/legislation Right of First Refusal (RoFR) - Namibia model - Variation thereof with term conditions, etc. Farm Equity Schemes (FES) - Implemented, then suspended by DRDLR - Being reviewed - Considerable potential and in line with AgriBEE Sector Code

38 2. National Development Plan (NDP) model on Land Reform.

39 NDP Model on Land Reform Chapter 6: An Integrated and Inclusive Rural Economy NPC s proposed model for workable and pragmatic land reform based on following principles:

40 NDP Model on Land Reform Chapter 6: An Integrated and Inclusive Rural Economy NPC s proposed model for workable and pragmatic land reform based on following principles:

41 NDP Model on Land Reform Chapter 6: An Integrated and Inclusive Rural Economy NPC s proposed model :

42 NDP Model on Land Reform Chapter 6: An Integrated and Inclusive Rural Economy District land committees stakeholders important! Identify 20% of commercial agricultural land in district Funding model critical (WG by Agbiz and Banking Assoc) Stepped programme of financing + new financing instruments ( Land Bank role NB additional mandate from government?) Commercial financing model needs to be developed. Protection from uncertainty for farmers, if participating.

43 Developments Agbiz/BASA initiative Government adoption of NDP and its Land Reform model Agbiz endorsement Financing deficiencies lack of technical detail major shortcoming Implementation capacity at 3 rd -Tier Government a major concern 14 July Workshop with NPC and key financiers Working Group established Key principles of engagement and proposal developed

44 Commercial Financing Proposal Methodology Currently still an internal working document. It reflects the collective views of the Agbiz/BASA Task Team. It will serve as the basis for a submission to the NPC and the DRDLR. Following slides provide just basic outline of proposal.

45 Commercial Financing Proposal Rationale: Need to play an active and collaborative role in addressing land reform Agbiz/BASA Task Team response to NPC request. Commercial lenders have very strong credit and business case approval processes in order to protect their depositors funds from lending losses. Provide Government with a high level of comfort, esp. on viability and market value. Agbiz and BASA do not view these proposals as the answer to all land reform objectives.

46 The BASA/Agbiz Task Team proposal 1. This proposal suggests a mechanism and process for the commercial financing of the land reform model as detailed in chapter six of the NDP. 2. Tangible land reform results are the measure of success of the financing process. 3. In this proposal, the Task Team representing the South African banking and agricultural business sectors, offers a commercial banking solution for land reform. 4. Land reform as per NDP is a national imperative for ensuring the country s stability, food security, rural development and security of tenure via housing. The NDP model on Land Reform is essentially a proposed framework for land reform and not a one size fits all model or plan. It does however provide a number of principles for orderly land reform implementation.

47 The BASA/Agbiz Task Team proposal 5. The active participation of the commercial sector in the financing of land reform and establishment of a viable Black commercial farming sector is a critical success factor. This sector offers commercial acumen and skills to enable the financing process. Its client base will be used for originating normal credit processes to ensure viability. 6. Commercial farmers need to be incentivised to participate in these joint ventures with measures such as protection from risks i.e. land claims and exemption from further land reform obligation, and benefit from incentives such as access to grants and BEE rating and recognition. All existing and future land claims on projects in this financing scheme will have to be settled through financial restitution. 7. The proposal is premised on the retention of competition between lenders. 8. Farmers must have the right to choose or select partner beneficiaries demand driven, i.e. selection must be apolitical and voluntary. 10. Normal commercial lending criteria principles including business plans, market-related valuation of property, vetting of partners, etc will apply. Freedom of choice of financier is endorsed.

48 Proposal informed by following principles 1. Transfer of title into any legally accepted entity, for example a trust or company, which is no less than 50% + 1 Black-owned, is a prerequisite. 2. State-owned and communal land is excluded but a model for its management needs to be developed separately from this proposal. 3. A Land Audit is an imperative and all available knowledge on whom owns what, needs to be consolidated and maintained in one database by the Deeds Office. This includes State and Para-State entities, as well as municipalities. 4. All existing and future land claims on projects in this financing scheme will have to be settled through restitution. 5. Speed of decision-making relating to the grant approval process is critical and should happen within two weeks to allow funds to flow within 30 days.

49 Proposal informed by following principles 6. The grant allocation committee will operate according to its own terms of reference relating to funding decisions as well as membership which must be specified by BASA and Agbiz. 7. Incentivisation is required to ensure participation by a critical mass of commercial farmers. 8. A social benefit option such as security of tenure in various forms is also essential to the success of the land reform process, provided it is separately financed, monitored and managed. 9. Normal recovery processes under the Insolvency Act will apply. 10. Close co-operation between private sector and government technical task teams is essential.

50 Agbiz position on proposed limitations to ownership and use of agricultural landholdings. This Agbiz position is with specific reference to the Deparetment of Rural Development and Land Reform (DRDLR) policy document entitled: Agricultural Landholding Policy framework: Setting upper and lower bands for the ownership and use of agricultural landholdings. This policy postion was highlighted during the week with statements emanating from the ANC Lekgotla that land ownership would be limited to two farms per owner, as well as to a maximum of hectares. Agbiz does not support this policy as the imposition of limitations to landholdings in an open land market compromises the principle of a competitive and efficiency driven agro-food system that ensures food security for this country. If you compromise on this universally accepted economic principle, the setting of so-called bands or ceilings becomes arbitrary and such decisions are then ultimately taken by government with potentially dire consequences. But it is not just an important economic principle that would be compromised, the effective practical implementation thereof is highly questionable.

51 Gross Capital Formation and Net Farm Income: Graph: BFAP, 2014

52 Real value of agricultural assets: (2005 Constant prices) Graph: BFAP, 2013

53 Real agriculture debt Source: 11 th BFAP Baseline, 2014

54 SA economic growth: Tradable goods sectors lag the non-tradable goods sectors 250 Index of % GDP growth of economic sectors GDP Agric Mining Manuf Construction Trade Transport Finance = estimate Source: StatsSA Graph: Agbiz

55 Take home message. Land Reform necessary, but complex and emotive issue Still considerable policy uncertainty in terms of targets, timelines, processes to be followed, etc. Now an investment inhibitor in agricultural sector. Major progress on Agbiz/BASA Proposal for Commercial Financing of Land Reform, but will need government buy-in and support. Certainly not doom and gloom, but considerable policy pressure to bear on commercial agriculture. Be aware of changing circumstances.

56 Thank you