S A Fruit & Vegetable Canning Industry

Transcription

1 S A Fruit & Vegetable Canning Industry Presentation: Parliamentary Portfolio Committee: Trade & Industry - Revised IPAP: 2010/11 to 2012/13-05 March 2010

2 Introduction: Opening & Welcome Industry Delegation: Rudi Richards Representative Jill Atwood-Palm Representative Gafieldien Benjamin Nassos Martalas Gerhard Kotze : SAFVCA / PPP : SAFVCA / PPP : FAWU / PPP Representative : Langeberg & Ashton Foods : Rhodes Foods Open to Questions Request to reserve these to end of presentation

3 Industry: General Profile Vegetables Tomatoes National Body - Agro-Processing Other Fruit Geographically spread, but mostly up North - Rurally-based Deciduous Pineapples

4 Industry Size Size of Industry: Fruit: Export Value: R 5.0 bn R 1.5 bn Strongly export-driven: Especially fruit, 85% of SA production exported SA accounts for approx. 7% of World Export Fruit

5 Our Competitive Advantage Well-established Industry Reliable Supply & Quality of Fruit & Vegetables Strong Manufacturing Capability/World Class Standards Experienced Exporters with proven track record Premium Quality Products Highly Nutritional Products (fully backed by scientific research) Partnership with Stakeholders across Value Chain

6 PPP Fruit Canning Initiative to create a sustainable platform for the long-term growth and competitiveness of the industry

7 PPP Fruit Canning Initiative Origin: DTI commissioned independent Value Chain Study (NPI) Recommendations to address hardships in industry Formed basis of PPP Business Plan Under the guidance of Minister Dr Rob Davies & DTI Officials, evolved into PPP Fruit Canning Initiative

8 PPP Main Pillars. Transformation Market Access Fruit Canning Initiative Business Plan Marketing Competitiveness Address the shaping for appropriate Industrial Policy

9 Our Basis for IPAP Inclusion Research Basis: UCT Study: Prof. Don Ross + On-going interaction between DTI/Industry Inclusion on initial & revised IPAP: Key Research Findings: Concrete basis with sound proposals: Viewed as a good starting point to addressing Agro- Processing as a whole within IPAP Worthy recipient for industrial policy intervention

10 Our Basis for IPAP Inclusion BUT trapped in a timing accident by major temporary macro-economic challenges Unfavourable market conditions as a result of global crisis Export-unfriendly Exchange Rate: Strong & Volatile Uneven Playing fields: Inequitable market access / unfair subsidies Adverse Input Cost pressures Impact: Waiting-to-Build climate Under-investment Short-Term trap could result in negative long-term effects NEED: Industrial Policy intervention Positive signal to stakeholders & potential investors = Growth indicator

11 The Industry Partnership Government: - the dti -Provincial Representative of all key stakeholders within the Value Chain Leadership Group Business: - Canners -Growers -Can Makers SAFVCA Labour: -FAWU Leadership Group Role of Labour and Community within PPP and IPAP Community -Formal Structures -Informal Structures

12 Supports more than 120,000 dependants Socio-Economic Profile Key Indicators: 11,000 factory workers (with a wage Bill of close to R 500m) > 500 administrative employees Employed at more than 30 factories situated in rural areas 17,000 farm workers Employed at more than 1,500 farms supplying the industry

13 Socio-Economic Profile Role of the Industry in the Socio-Economic context: Main employer in most rural areas (in small towns/surrounds) Labour intensive environment Creating Jobs & Employment Opportunities Uplifting Skills: Higher Skills level required within factories Beneficiated Agriculture Providing Value-Added Products in Agro-Processing Sector Providing Food Security Contributing significantly to Rural Development Providing Community Upliftment Contributing to Transformation Objectives

14 Socio-Economic Profile Impact: Absence of an enabling environment could result in job losses & impact adversely on the already flailing agricultural sector and struggling rural communities NEED: Industrial Policy intervention: Stimulate job creation and uplift rural communities (including interim relief to protect jobs in the short term) Role of Labour: Avoid impact & support industry s drive for Industrial Policy Intervention

15 Enabling Environment Current State: Disabling Environment Under serious threat Benefit of IPAP to the Industry Geared to create an Enabling Environme nt Sustainable Platform Short Term GROWTH Long Term

16 IPAP Interventions Critical!!! Market Access Uneven Playing Fields Improvement of access into key established markets i.e. EU (TDCA / EPA) SA product into EU Non-reciprocal treatment EU products duty-free into SA Improvement of access ito EFTA (Mid-Term Review) Urgency & action of competitors (e.g. Chile) into major trading blocs & key markets Unfair Practices Elimination of subsidies of competitors

17 IPAP Interventions Critical!!! Market Access Other Opportunities Preferential access into emerging geographies i.e. China / India Other key geographies e.g. Japan, Korea, AGOA, Mercusor, SADC Protection of Domestic Market Block uncontrolled, illegal and subsidised imports from entering the domestic market Improved import controls and inspections

18 IPAP Interventions Critical!!! Exchange Rate: Strength & Volatility: Uncompetitive exports Forex levels does not reflect the inflation differential NEED: Appropriate Rate of Exchange Policy to support the growth of exports for existing and new exporters

19 IPAP Interventions Other Improving the Regulatory Framework Establishment of National Food Control Agency Overcome fragmented structure (including obsolete regulations) Improve controls over both exports and imports Consolidation of Food Safety, Ethical and Quality Audits Zero-Rating of VAT on Canned Fruit & Vegetable Products Eliminate unfair treatment of canned fruit & vegetables Fresh produce (incl. Frozen Vegetables) currently zero-rated Special case for Baked Beans: Highly nutritional product; Rich source of protein; Purchased largely by lower income groups Same argument for Canned Pilchards currently zero-rated Sugar Industry Sugar Act: Unintended consequences on downstream users Uncompetitive disadvantage to industry

20 IPAP Interventions Other Tinplate / Can Manufacturing Industry 17 Structure of Industry: Negative Impact on downstream users Tinplate = Monopolistic (100%); Can Maker = Super-Dominant Player (88%) Unfair pricing structure : DTI referral to Competitions Commission ROE Can Inflation

21 IPAP Interventions Other Improving Competitiveness / Reducing Costs Cost of Services Reliable supply & competitively priced services e.g. electricity, water, effluent disposal Improved Logistics & Infrastructure Reduction of costs: Land / Rail Appropriate Industrial Upgrading Assistance Scheme Improve factory efficiencies, competitiveness & technologies Tree Pull & Plant Scheme Planting of more profitable fruit varieties with better yields & volumes

22 IPAP Interventions Other Support Measures Support for Agri-Research: R&D for new Varieties suitable for processing More profitable with better yields / volumes Capital Investment Support Programmes Resumption of Pine Canning in EC; Upgrading of Vegetable manufacturing Constraints of Working Capital: Seasonal Relief Scheme to overcome the impact of the constraint of Working Capital on Growth National Feeding Schemes Promote & increase consumption of products Benefits of highly nutritional product Inclusion of products on Government Feeding Schemes i.e. Schools, hospitals, etc

23 Scenarios: High & Low Road No Intervention LOW ROAD Bridging: Interim Support Industrial Policy Support HIGH ROAD Long Term Negative Impact Factory Closures De-industrialization Job Losses Impact on Rural Communities Supply Chain knockon Protect employment levels & supply chain Urgent Stabilisation Possible Interventions: Minimum Pricing to Farmers Surplus Removal Scheme Working Capital Support Long Term GROWTH Job Creation/Employment Opportunities / Skills Upgrading Industrial Upgrading Rural Development Community Upliftment Protect & Grow Markets Increase Exports, esp. new markets Accelerate Transformation Protect Supply Chain Increase Govt. Fiscal Coffers

24 Conclusion Short-Term Crisis AVOID Long Term negative Impact Industry is a worthy recipient for Industrial Policy support (Based on sound, well-researched economic & consumer studies) Presented concrete proposals for intervention Our expectations are THUS: Inclusion of proposals Industrial Policy action for future With a Sense of Urgency and a Focus on Delivery Appropriate Industrial Policy (including interim support to address short term crisis Sustainable platform for long-term growth

25 QUESTIONS??? THANK YOU