KZN agriculture to return profits

In his budget policy address in August last year MEC for Agriculture and Rural Development Cyril Xaba said that the need to develop new business opportunities in agriculture to make it attractive for investors is a must.

“Integrated planning with agricultural commodity associations, strategic partnerships and the crowding in of investments are all key to achieving our departmental outcomes,” he said.

Xaba pointed out that the National Development Plan, the Agricultural Policy Action Plan, and the Provincial Growth and Development Plan illustrate that certain agricultural commodities can be significant creators of employment, with growth and value adding potential. “The KwaZulu-Natal Executive Council identified key commodities such as red meat, chicken meat, dairy and dairy products, vegetables, dry beans and soya beans as focus commodities that have the potential to become self-sufficient industries and eventually enter the export market,” he said.

“The department will be taking a commodity approach into the future and aims to drive these commodities by recognising our local opportunities and developing strategies tailored to local conditions.

“We will also aim to take enterprise development to the creation of agrivillages, finding more innovative market linkages and facilitating joint ventures between communities and local and international investors.”

On a separate occasion Xaba said that KwaZulu-Natal is to have 10 district “Agri-parks,” each of which will centre on the dominant commodity of the area.

“A key component is an agro-processing unit, where primary products can be processed to add value and bring more revenue into the area.”

In his budget address Xaba also pointed out that for a number of years the department has facilitated agricultural primary production through its massification and mechanisation programmes.

However, this approach largely ignored the fact that agriculture is a business. “The business skills development of participants is thus of utmost importance,” he said.

“The application of basic scientific and business principles to any project, large or small, will become an integral part of the development and enhancing of enterprises.

“Yes, we must aim for food security, nutrition and health first, and yes, we must at the same time be environmentally responsible, but the anchor to the activities of the department will become the creation of accountable agricultural businesses that deliver and ensure economic viability andshare value, across the entire food and agriculture chain, from farmers to consumers.”

To this end, Xaba is intent on providing support to collective structures such as rural producer associations and co-operatives. “This includes economic infrastructure, further technology and skills development, more marketing, establishment of small, medium and micro enterprises in processing or light manufacturing and trade, and creating an incentive scheme to support local agricultural production and value addition/agroprocessing,” he said.

Xaba also announced that his department, in partnership with the KwaZulu-Natal Agricultural Union, is to create an emerging famer development unit that will focus on the growth, development and sustainability of emerging farmers.

“Commercial farmers will be assisting us to develop supporting mechanisms to promote small and developing farmers in an integrated manner. I have had some interactions with the commercial agricultural sector and look forward to strengthening our relations so that we can share best practice towards agricultural and rural development.”

Don’t underestimate the trees

The three largest forest owners in South Africa can be found in KwaZulu-Natal; large plantations are located in the northern areas of the province.  Forestry is a rural activity and is therefore recognised by the government as a vehicle of development, with the future growth of the industry lying mainly with small-scale rural growers.

Traditionally, forestry has provided raw materials for sawmills and paper production, as well as hard and soft board and rayon pulp mills, and KwaZulu-Natal is at the forefront of manufacturing sawn timber particleboard, furniture, kitchen cupboards and wood products for the building industry such as doors and windows. 

With the world moving in the direction of renewable sources of energy and with a European market for domestic heating, forestry presents a new and exciting investment opportunity in the form of wood pellets. Wood residues such as sawdust, sawmill offcuts, woodchips and forest plantation trimmings are compressed and extruded to make wood pellets, with large forestry operations around Richards Bay providing a continuous supply of raw materials. 

A business plan for the initiative already exists; a German engineer will hold 15% of the company, with the balance being available for purchase.  As at June 2011 a total investment of R56-million was required, with the return on investment expected to be 25% thereof.  A German company will supply a plan with performance guarantees to ensure successful technology transfers. 

There is also potential to invest in an existing wood pellet plant in the Richards Bay area, which is looking to expand output.The three largest forest owners in South Africa can be found in KwaZulu-Natal; large plantations are located in the northern areas of the province.  Forestry is a rural activity and is therefore recognised by the government as a vehicle of development, with the future growth of the industry lying mainly with small-scale rural growers.

Traditionally, forestry has provided raw materials for sawmills and paper production, as well as hard and soft board and rayon pulp mills, and KwaZulu-Natal is at the forefront of manufacturing sawn timber particleboard, furniture, kitchen cupboards and wood products for the building industry such as doors and windows. 

With the world moving in the direction of renewable sources of energy and with a European market for domestic heating, forestry presents a new and exciting investment opportunity in the form of wood pellets. Wood residues such as sawdust, sawmill offcuts, woodchips and forest plantation trimmings are compressed and extruded to make wood pellets, with large forestry operations around Richards Bay providing a continuous supply of raw materials. 

A business plan for the initiative already exists; a German engineer will hold 15% of the company, with the balance being available for purchase.  As at June 2011 a total investment of R56-million was required, with the return on investment expected to be 25% thereof.  A German company will supply a plan with performance guarantees to ensure successful technology transfers. 

There is also potential to invest in an existing wood pellet plant in the Richards Bay area, which is looking to expand output.

 

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