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Davies punts agro-processing for job creation
Davies punts agro-processing for job creation

Davies punts agro-processing for job creation

FMCG SUPPLIER NEWS

IOL Business - Mar 26th 2012, 08:40

Smallholder farming continues to be on the agricultural development agenda as the government seeks to stimulate the agro-processing sector to kick-start its job creation drive. 

According to Trade and Industry Minister Rob Davies, the agro-processing sector employed more people than most manufacturing industries, with about 177 000 employees.

“Food processing is also significant in value addition terms, with the sector contributing approximately 11 percent of total manufacturing value added,” he told delegates at a food processing workshop held in Johannesburg on Friday.

Davies also launched the Organic Farmer/Retailer programme at the Bryanston branch of Pick n Pay. According to Davies, the programme was an initiative between Spar, Shoprite, Pick n Pay and the department to facilitate the supply of organic produce from emerging farmers.

Keith Clark, the general manager of fresh produce at Pick n Pay, said farmers from areas such as Limpopo were involved in the initiative to supply organic fresh produce to the chain. About 10 percent to 15 percent of fresh produce at Pick n Pay was supplied by smallholder farmers.

He said the retailer was involved in various projects such as the Bethlehem Farmers Trust where a group of farmers had developed a co-operative that supplied apples to the chain and exported the rest. This programme had resulted in a R3 million turnover for the farming enterprise, he added.

Speaking to Business Report, Davies confirmed that he had signed a new draft black economic empowerment (BEE) charter for agriculture, which was sector specific and focused on skills development.

The charter would serve as an upgrade of the AgriBEE transformation charter of 2008.

Insiders close to the signing of the draft, which has been treated as confidential, told Business Report that the charter would be in line with the codes of good practice on broad-based BEE.

The draft would address industry-specific issues such as land reform. Davies highlighted that the charter would be in line with the framework of the Broad-based BEE Act and other targets identified by the sector where transformation was needed.

In a recent interview, AgriSA deputy president Theo de Jager said he believed the charter process was moving towards a sector-specific approach.

De Jager, who is a member of the charter council, said public and private sector players in agriculture started negotiating a charter in 2003. The AgriBEE charter was adopted in 2006 and gazetted in 2008.

Since 2008, however, very little progress had been made with BEE because several government departments had called for smaller micro enterprises with only R300 000 in annual turnover to be included in the charter.

Prior to the demand from the departments, the charter said enterprises with a five-year “moving average annual turnover” of between R5m and R35m qualified for BEE compliance measurement.

De Jager said the average profit margin experienced by commercial farmers over the past decade stood at between 5 percent and 6 percent.

It would be unrealistic to lower the threshold because of the sector’s lack of profitability, which would create huge pressure on small players.

According to De Jager, the policy could also place a greater emphasis on profitability because input costs had risen considerably. Diesel prices, high minimum wages, electricity and toll fees had put a strain on productivity across the value chain, he said.  

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