AGRIPARKS – TOWARDS AN INCLUSIVE AGRICULTURE ECONOMY

DEPARTMENT OF AGRICULTURE AND RURAL DEVELOPMENT

PRESENTATION TO THE CPSI

Presenter: Mr Motlatjo Makaepea29 JUNE 2017

KEMPTON PARK

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Contents

• An introduction to Gauteng

• Overview of Gauteng Agriculture Economy

• Focus on Agriparks as a mechanism for

inclusive participation of all farmers in the

agriculture economy

• Conclusion

An introduction to Gauteng Province: Location • Gauteng is the

smallest province in South Africa with 1.7m ha of land surface area

• It occupies only 1.4% of RSA land surface area

• Population: 12.3m (23.7% -Largest % share of RSA population –Census 2011)

• Gauteng has 3 of the 8 Metro Municipalities in the Country

Broader economic overview of Gauteng • Gauteng is the economic

powerhouse of South Africa

• The province contributes 33.9% to

national GDP

• It furthermore contributes 10% to

Africa GDP

• Major cities such as Johannesburg

and Pretoria are in Gauteng

Province.

• Built-Development pressure high

• The province has 4 largest fresh

produce markets in the country – Johannesburg Fresh Produce Market

– Tshwane Fresh Produce Market

– Springs Fresh Produce Market

– Vereeniging Fresh Produce Market

Contribution of agriculture to Gauteng economy• Contribution of primary agriculture to Gauteng GDP is 0.5%• Contribution of total agricultural value chain including secondary and tertiary agric tiers to

GDP is 2.3% • The province is 18% built-up with 17.3% of High Potential Agricultural Land• Vacant land in the province is 946 710ha (52% of the total surface area)• Vegetation: 2 biomes which are Grassland and Savanna• Agriculture households in Gauteng

Gauteng Agricultural sub-sectors gross farming income

• Livestock production is the lead

agricultural sector with 59% of

gross farming income

• Horticulture sector with specific

reference to Vegetables and

flowers is the 2nd biggest income

earner with 21% of the gross farm

income

Field crops8%

Horticulture21%

Animals/Livestock59%

Animal/Livestock products

10%

Other products2%

Agriparks: National Context• State of the Nation Address (SONA): Declared 2015 year of

Freedom Charter • Agriparks becomes a focal point for Agriculture

development• A sum of R2b was reprioritized for the program • Department of Rural Development and Land Reform

(DRDLR) becomes the National Custodian of the Program• State of Province Address (SOPA)• Township Economic Revitilization (TER) linked to Agri-Parks • Agro-Processing as a viable tools to re-industrialise Gauteng

(WRDM & Sedibeng)• Gauteng becomes a leading province for development of

Agriparks nationally by allocating its own resources R60M 7

Agri-Parks - Formulation of the problem• Low contribution of agriculture to the economy (0.4%)

• Lack of adequate land parcels for production

• Low productivity levels of smallholder farming sector

• Lack of infrastructure for value-adding and agro-processing

targeted at smallholder farmers

• Inadequate clustering of smallholder agricultural produce for

ensuring adequate volumes, access to markets and value-

added infrastructure

• Funding constraints impeding development of processing

infrastructure at individual farm level

AGRI-PARKS: CONCEPT

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• Agri-Parks which is a network comprised of clustered agricultural

infrastructure for production and value-adding developed in the peri-

urban areas

• Agri-parks based on Agriculture Policy Action Plan (APAP) and

Industrial Policy Action Plan (IPAP) with priority given to “Horticulture

Value Chain” and “Grain-Poultry Integrated Value Chain”.

AGRI-PARKS: CONCEPT

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• The Agri-parks provides for:

• Secured, intensive bulk production of a specific agricultural

commodity for economies of scale

• Agro-processing within a shared infrastructure (incubation),

• Marketing avenues of agri-infrastructure,

• Value adding and marketing within the boundaries of a single

geographical farm or an agricultural holding.

• Model different from existing farming model (Based on - One

locality)

AGRI-PARKS GOALS

• Agri-parks emphasise

competitiveness

• Production of High-value

commodity (Focus)

• Branding (Logo) & Visibility

• Localiztion

• Volumes & Quality of produce

• Retail presence

• Export capability

PRIORITY COMMODITIES FOR GAUTENG (AGRIPARKS PROGRAM)

Horticulture Value Chain (21% of Gauteng GVA)• Vegetables • Cut Flowers• Herbs & Essential oilsOpportunity: Proximity to large population and growing middle class –Bulking up, quality assurance and branding

Horticulture Value Chain Grains – Poultry Integrated Value Chain (4th largest producer of Grains)

Red Meat Value Chain

59% of Gauteng Gross farm income comes from Livestock predominantly in FeedlotsOpportunity: Processing infrastructure for smallholder farmers and their integration.- Linkage to mobile abattoirs program

Agriparks / Agrihubs – Protect Areas of High Potential Agricultural Land

• 7 Agricultural Hubs

are Agricultural

Development Zones

delineated to protect

High Potential

Agricultural Land and

focus agric

development.

• The Agric Hubs

encompass the Maize

growing belt of

Gauteng also known

as Maize Traingle

Major Crop Commodities – Spatial Distribution • A total of 314 992ha is

under cultivation with the following crops– Grains (Maize &

Sunflower) covers a large area of 107 259ha

– Vegetables – Orchards (Peaches &

Citrus)– Flowers– Essential oils and herbs

• Gauteng is the Number 1 producer of cut flowers with the exception of Proteas

• 4th Maize producer in South Africa

AGRIPARKS CATCHMENT

AGRIPARKS LINKAGE TO NEIGHBOURING FARMERS

AGRIPARKS OPERATING MODEL• Each Agripark will be a critical link

between the formal markets and the smallholder farmers.

• The Agripark will serve as an intermediary and a distribution facility whereby the smallholder farmers `s produce will be aggregated and graded in accordance with formal markets requirements

• Management of each Agripark is to be undertaken on a private-public partnership to ensure a balance between with economic and development goals.

FORMAL MARKETS

AGRIPARK• Shared packaging & coldroom facilities• Out-grower Model & On-site production

Smallholder farmer

Smallholder farmer

Community gardens

Smallholder farmer

Off-take Agreements

Generic Project Plan for all Agripark Sites

KEY ACTIVITIES TIME

2014/15 2015/16 2016/17 2017/18

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1. Planning Agri-parks

2. Infrastructure Development 3. Entrepreneur Selection

4. Contract Markets Negotiations

5. Production (Scaled and Synchronised per commodity)

6. Logistic (Aligned to Contract Markets)

7. Maintenance

7.1. Servicing markets

7.2. Infrastructure

7.3. Relationships

RANDWEST AGRI-PARK FACILITIES

Westonaria Agripark: Hydroponics, Packhouse and Administration Block and Training room

Westonaria Agripark: Lettuce production Training room

Westonaria Agripark Hydroponics Vertical chamber

Investment in New Technology onsite• As part of Re-industrialization the department has introduced

the latest farming technology in the form of Vertical Growth Chamber farming system.

• The facility is also established at Rand West Agri-park facility. This is also in line with adaptation mitigation of climate change.

• The chamber is an intensive growth chamber for vegetable production; high yield is attained within short period of time.

• This technology has the potential to solve many problems associated with access to land and attain economic viability within a small space

Production of baby spinach on vertical chamber

AGRIPARKS TER LINKED - SEBOKENG ZONE 10

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Size 3.16haPerimeter 816M

Sebokeng Zone 10 Agri park

COJ Eikenhof Agripark - Fence, training and office building

MERAFONG AGRIPARK (EXPANSION)

• The Project includes:

• Construction of 16 x 300m2 hydroponics tunnels(100% complete)

• Construction of a 5000m2 shade net (100%Complete)

• Repairing of pumpstation (96% complete)

Eikenhof FPSU - 20 Tunnels and 4 10000l water tanks

Fence, training and office building at the Eikenhof Agri-park

MERAFONG AGRIPARK (EXPANSION)

• The Project includes:

• Construction of 16 x 300m2 hydroponics tunnels(100% complete)

• Construction of a 5000m2 shade net (100%Complete)

• Repairing of pumpstation (96% complete)

Merafong Agripark Vegetable production

ONVERWACHT AGRIPARK FARMER PRODUCTION SUPPORT UNIT (FPSU)

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Commodities to be produced:Vegetables, Flowers and Herbs

The Innovation Hub Agri park - Food innovation

CONSTRUCTION STATUSGreenhouse construction• 90 % completed

– Entrance cabins, electricalinstallations tested and functional(extractor & circulation fans)

– wettable wall installed– Water reticulation layered (Main

line, drainage pipe, internal gutterdown pipes, underground pipes andirrigation pipes)

– Thermal screens installed

CONSTRUCTION STATUS …. continue• 10 % remaining (plastic covering)

– Side walls to be covered uponcompletion of automated system tobe housed in the pack house

– Complete covering withoutautomated climate control willaccelerate destruction of the plastic

Risks and challenges RISKS AND CHALLENGES MITIGATION

Acts of vandalism and theft Full-time on site security

Disruption by non-project participants Legal binding agreements for all the project participants

Group dynamics affecting operational capabilities

Continuous Cooperative capacitation

Water and electricity costs and interruptions On-site back-up generators

Poor market uptake or inability to service off-take agreements (Need at least guarantee off-take from state institutions)

Support of agri-entrepreneurswith inputs and logistics support

Poor commitment from agro-entrepreneursoperating in the Agripark

Legal binding agreements for all the project participants

Success factors

• Crowding of agricultural and rural development investment in the Agri-Park model including land reform programmes

• Management Institution of the Agri-parks (Subject to land tenure system)

• Availability of state land to develop the identified agri-parks (DRDLR to list its properties)

• Funding availability and project management support (DRDLR is working on the financing model)

• Committed beneficiaries (Agri-entrepreneurs)

• Dedicated technical and management support

• Formidable partnerships with industry and DRDLR, DAFF and Municipalities (Site Approval)

Spin offs

• Each Agri-park is expected to contribute a minimum of 30 jobs onsite with emphasis on youth, it is anticipated that 150 jobs per agri-park when each Agri-park is operating at full capacity.

• Agri-parks will contribute to increased productivity, competitiveness and agro-industrialisation.

• Consolidation and aggregation of interventions is critical.

• Critical skills - Farmer Entrepreneurial capacity to be enhanced. Local and international partnerships to be undertaken.

GDARD strategies supporting Agriparks

• Gauteng Agricultural Development Strategy (GADS)

• Extension Services • Agri-input support program

(Letsema)• West Rand Agriculture Training

Institute*• Biotechnology Strategy• Agro-processing Strategy• Household Food Security

Program • Floriculture program

Thank you

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