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The State of Agro-processing in SA - Uzenzele blog

The State of Agro-processing in SA

 

Food security continues to be a concern as food prices have continued to rise month after month. The devastating drought, continued farm attacks and aging farmer-population, have all contributed to the result that half of the farms in the country are on the market.

 

However, there is good news for the industry as R1.7 billion has been allocated for specific food production initiatives through government grants through the Agro-Processing Support Scheme (APSS).

 

Agro-processing has been identified as a segment with the potential to actualise macro-economic objectives as pronounced in the New Growth Path (NGP) and National Development Plan (NDP).

 

The agro-processing industry has long been a focus area for growth, similar to mineral beneficiation, with little uptake. South Africa is simply not adding value to its primary production base. Agro-processing provides the opportunity for both local and export markets and is a contributor to the needed job creation. 

A key characteristic of the agro-processing sector is its strong upstream and downstream linkages.

 

Upstream, the sector links to primary agriculture across a variety of farming models and products.

 

Downstream, agro-processing outputs are both (1) intermediate products to which further value is added and (2) final goods that are marketed through wholesale and retail chains as well as a diverse array of restaurants, pubs, shebeens and fast-food franchises. This link with agriculture makes it critical for employment creation and poverty eradication.

 

A large majority of finance (grants and loans) is available for downstream activities which are deemed less risky than primary agriculture and where downstream manufacturing and value adding adds to the employment base as well as export potential for the South African economy.

 

The following sub-sectors reflect the scope covered by the unit in the agro-processing sector:

  • Aquaculture (marine and freshwater sub-sector);
  • Floriculture;
  • Fruit and vegetables;
  • Dairy;
  • Meat (poultry, exotic meat, ostrich, equine, sheep, beef and goat);
  • Grains (maize, barley, wheat, sorghum and rice);
  • Beverages (tea, non-alcoholic beverages, fruit juice and alcoholic beverages on a case-by-case basis);
  • Edible oils (soybean, sunflower, canola, olives, dry bean, ground nuts and other nuts - macadamia, almonds, hazelnuts, etc.);
  • Sugar and confectionery sector;
  • Tobacco (not supported by incentives as it’s a “sin” sector);
  • Forestry (Furniture manufacturing and fibre processing);
  • Feed production; and
  • Fertilizer production

 

Financial Solutions include grant finance such as:

    1. Agro-processing Support Scheme - up to R20 mil Grant Incentive
    2. Aquaculture Development and Enhancement Programme - up to R30 mil grant incentive
    3. Black Industrialist Scheme - up to R50 mil grant incentive
    4. Export Marketing and Investment Assistance – attendance at up to 6 foreign exhibitions per annum - wholly or partially subsidized
    5. Capital Projects Feasibility Programme – up to R8 mil per project to support feasibility studies for agro-processing industrial projects