Policy and Practice Note Conclusions of the Eastern Cape Agricultural Value Chains and Regional Economic Development Workshop September 2016

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1 Policy and Practice Note Conclusions of the Eastern Cape Agricultural Value Chains and Regional Economic Development Workshop September 2016 The Economies of Regions Learning Network (ERLN), the Eastern Cape Department of Economic Development, Environmental Affairs and Tourism (DEDEAT), the Eastern Cape Department of Rural Development and Agrarian Reform (DRDAR) and the Institute for Development Assistance Management (IDAM) based at Fort Hare University held a 3-day training workshop focused on agricultural value chains and regional economic development for stakeholders in the Eastern Cape from September 2016 at the East London IDZ Conference Centre. The purpose of the workshop was to assist public and private sector managers as well as professionals involved in agricultural development in the province to understand agricultural value chains and to explore opportunities for developing more inclusive and competitive value chains. The conclusions of the workshop can be summarized as the following ten points. Each point includes some suggestions that emerged during the workshop discussion focused on the action necessary to take forward agricultural value chain development. 1 Common Intent It was emphasized that agricultural development and agribusiness was a key economic priority for the Eastern Cape. The poor current performance of agriculture in the province relative to other provinces was noted. It was however pointed out that there was considerable potential to achieve major improvements in agricultural performance and that creating common intent amongst stakeholders to achieve such improvement was critical. Value chain development based on solid analysis and understanding of the underlying causes of under-performance was noted as a key element for such improvement. The new agricultural strategy for the Eastern Cape is widely communicated to help build a common intent amongst all stakeholders going forward. Government, the agricultural sector and support agencies adopt a practice of thorough value chain analysis as an important informant of interventions within the agricultural and agribusiness sector. 2 Intelligence and information It was noted that there was very limited information available regarding agricultural production, prices, employment and other trends. This made policy-making and monitoring the performance of support for the sector very difficult. It also meant that farmers lacked the information to respond proactively to changing market dynamics. 1

2 It was further noted that technology advances now made it possible to collect and disseminate agricultural information much more simply and quicly than before and that big data analytics also had the potential to improve understanding of value chains. An agricultural data project is established to collect, disseminate and analyse relevant agricultural data for the Eastern Cape. Such a project should include government, the agricultural sector and the universities in the province. A market intelligence application for programme/project planners and farmers is developed to provide up to date production and market information particularly for small-holder famers. The pilot currently being run for Ivili Loboya is a good example of the kind of applications that could be developed. 3 Market Intermediation The importance of ensuring that production was geared to serving what the market wanted was highlighted as critical. It was pointed out that many government-supported projects had failed because they focused on production first and only then went looking for markets for the produce. The Epol representative highlighted that the company sourced only a small percentage of the agricultural inputs for Epol s Berlin plant from the Eastern Cape because local agricultural producers had not organised themselves to provide a reliable supply of the these inputs at the required quality, quantity and price. It was suggested that there was an important role for agricultural support intermediaries who could help link smallholder producers to (viable) markets. This involved both helping small producers to become market ready and organizing markets so that they were more accessible to small producers. This task also involved understanding the value chain so that smallholder production and value chain participation could be positioned to maximise value and ensure sustainable operations. One particular issue highlighted during the event was the challenge of adding value to livestock within the province given the reality that feedlots and processing activities tended to be located outside the province and that a considerable percentage of livestock was not farmed in a commercially-oriented manner. The relevant provincial departments engage with major corporates requiring agricultural inputs (including RCL Foods and Famous Brands) to develop a supplier development plan that seeks to substantially increase Eastern Cape production geared to supplying the needs of such corporates, particularly by smallholder farmers. 4 Institutional and skills development It was emphasised that agricultural value chain development required a concerted on-going skills development programme that recognised the importance of on-going mentorship. It was noted that there was a strategic necessity to attract young people into farming given the average age profile of current farmers. 2

3 It was further noted that small-scale farmers needed to be supported to work with each and to consolidate efforts in order to access markets at the required scale or to secure bulk purchases of their inputs. Value chain development needed to support this through investments in multi-user facilities and producer organisations. An agricultural and agribusiness skills development partnership involving government, universities in the province and industry role-players is established to ensure the training of extension officers and farmers to create the skills base necessary for value chain transformation. This partnership includes an organisational development component to facilitate and incentivise co-operative and agglomeration action amongst smallholder farmers to ehance their ability to meet market demands and to improve economies of scale. A customised programme is developed focused on attracting young people into agriculture through providing on-going support and training and making available promising opportunities. 5 Innovation acceleration It was pointed out that research and development was a critical task within value chain development. The pineapple industry turnaround case study demonstrated how important innovation was in creating a sustainable high value niche in a value chain. Similarly, the presentation from CSIR highlighted the huge potential of fibre innovation for livestock and crop production in the province as well as Eastern Cape s innovation potential given the range of crops and livestock and the location of four universities and the CSIR in the province. The importance of government funding and support in sustaining innovation and turn-around was highlighted as was the gap in funding the commercialisation of innovative products and processes. A provincial entity/platform is established in collaboration with academic institutions to promote innovation in agricultural value chains and to function as a clearing house for research and development and as a promoter of innovation in the sector. The relevant national and provincial development agencies explore how to better address the current funding/investment gap between concept development and commercialisation in priority agricultural sectors. 6 Infrastructure It was noted that infrastructure could play a critical role in unlocking potential opportunities. Lack of infrastructure often was a major factor preventing smallholder farmers to supply the market at the required cost and quality. Infrastructure challenges included storage facilities (such as silos and cooling plants), roads and transport infrastructure and irrigation. A schedule of priority infrastructure projects to support agriculture value chains in the province is developed for inclusion in relevant budgets and funding proposals. 3

4 7 Integrated approach It was emphasized that agricultural value chain interventions required an integrated multi-level and multi-sectoral approach that broke down the silos between relevant government departments and agencies, the private sector and research organisations and promoted communication. The inter-departmental agricultural forum at provincial level, Eastern Cape Provincial Agro Industry Development Forum, is used to facilitate a more integrated approach across government and to advise how a common integrated approach with the private sector, universities and research organisations and other agricultural stakeholders can be facilitated. 8 Instruments The FAO presentation highlighted the importance of thinking through the package of instruments to support sustainable agricultural value chain developments particularly the need for government to design or redesign and implement specific instruments which catalyze and incentivize private sector as well as financial sector participation in smallholder farmer development. Examples of such instruments which align with those in the SADC Regional Agricultural Investment Plan include risk sharing in agricultural lending, clusters and producer organization instruments, input access facilities, farmer aggregation/organisation facilities, infrastructure development facilities, youth involvement facilities, women involvement facilities, a technology transfer and access window, an agricultural inputs window, research facilities and finance facilities. It was noted that there are a range of existing national and provincial instruments (including DTI and DAFF incentives and Land Bank, ECDC and IDC financing facilities) to support agricultural value chain development but that these were not necessarily packaged and aligned in a manner that made them easy to access. The relevant national and provincial departments and agencies convene a task team to integrate and customise a comprehensive set of instruments to support agricultural value chain development focused particularly on smallholder farmers in the Eastern Cape. 9 Investment ready platforms Coega IDZ presentation highlighted the potential for agro-processing investment using the facilities of the IDZs. It was noted that the two IDZs with their ports had considerable potential to attract export oriented agro-processing (and aquaculture) investments and to stimulate the local agricultural production required to sustain such processing. This would be enhanced by a focus on putting together investment ready proposals linked to priority agricultural value chains. The Coega and East London IDZs take the lead in developing a portfolio of investment ready agriprocessing packages to facilitate investment and to stimulate agricultural production across the province. This exercise should also integrate the range of trade and investments incentives available through the DTI and other departments and agencies. 4

5 10 Implementation The training workshop highlighted that good strategy and planning rooted in collaboration was critical. However, it was also clear that effective execution of strategies and plans was the most important factor for success. The importance of grounding strategy in clear practical stretch targets for priority sectors and districts (linking producers, processors and retailers) was highlighted. A programme of multi-stakeholder rapid action planning processes for priority value chains is established by the provincial government in collaboration with key industry stakeholders. This programme should be initiated with a focus on the red meat value chain and how the its value for the Eastern Cape can be maximised. 5

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