Creating an exclusive South African economy

In his opening to the State of the Nation Address (Sona) last week, Cyril Ramaphosa, President of South Africa, told the nation that it is gathering at an extremely difficult and challenging time.

Ramaphosa said: “Our economy is not growing. Not enough jobs are being created. This is the concern that rises above all others.”He asked every South African to focus on those actions that will have the greatest impact on job creation in the immediate term and over the next 10 years, with now being the time to focus on implementation.The focus is to build a legacy.Every South African needs to be building a better future for tomorrow.

In the weeks and months after a Sona, it is incumbent upon every corporate to not just acknowledge the planned direction of government policy-making based on the needs of society at large, but to have a bias towards alignment and action wherever possible.

Creating a thriving industry

Tiger Brands realised a number of years ago that as an iconic South African company with its much-loved products and brands featuring in almost every shopping basket, its supplier development programmes should be focused on the farming value chain.

As the largest producer of branded consumer goods in sub-Saharan Africa and with quality food products being the larger share of its business outputs, a thriving local agricultural sector in South Africa is vital to the company.

Through its Enterprise and Supplier Development (ESD) programme, Tiger Brands has focused on developing black farmers to be at the heart of its supply chain, to progress the economic transformation of the country through deliberate targeted initiatives.

A flourishing local agri-market creates significant wins for all relevant stakeholders in the country, acting as a catalyst for broader rural economic development and the participation of previously marginalised groups in the primary economy.

One of the company’s early key initiatives is the Smallholder Farmer Development Programme that was designed to create access for small-scale black and black women farmers to actively participate in its supply chain through technical support and guaranteed offtake agreements. The contribution of this programme to date has created 412 jobs in mainly rural communities — 194 of which have been occupied by females.

These farmers have not only put food on the table for themselves but for fellow South Africans through direct jobs and the valuable produce they farm, which goes into the company’s award-winning products.

Critically, by understanding the key needs and opportunities that exist within the farming value chain, the Smallholder Farmer Development Programme has created a further opportunity for new black small, medium and micro-sized enterprises (SMMEs) entrants into the company’s supply chain.

The biggest issues facing small-scale farmers are producing at the scale and at the quality standards that large food producers demand. This means that farmers need to graduate from being standalone entities and develop the operational and financial capacity to enable them to sustainably compete.

This requires a great deal of development and support, often spanning several years, which in turn adds additional complexity for corporate supply chains.

To address this challenge and assure the ongoing participation of smallholder farmers, Tiger Brands introduced its new Agriculture Aggregator model earlier this year and is set to increase the number of participating small-scale farmers while growing the number of black suppliers. Aggregators are new expert black-owned farming companies that work directly with farmers to provide technical and management skills. As fully-fledged business entities themselves, aggregators will procure from multiple farmers and enter into commercial agreements with corporates such as Tiger Brands, providing better guarantees on tonnages, delivery timeframes and quality standards.

Tiger Brands will support aggregators with input finance, agrarian and technical support, business contracts and offtake agreements and support services also extended to black smallholder farmers.

However, the real business growth for aggregators is unlocked when they move from primary agriculture into agri-processors that manufacture value-added inputs that Tiger Brands can procure for its food production. Such diversification significantly enhances the sustainability of aggregators.

In addition to raising productivity, enhancing food security in terms of the availability and affordability of food as well as focusing on quality, safety and nutritional value and promoting rural development, Tiger Brands programmes are expected to continue to create jobs outside of farming, in the services and production sectors.By 2025, the company’s ambition is to develop 500 sustainable black-owned enterprises, create 3 000 jobs and significantly increase procurement spend towards black-owned enterprises.The focus is on implementation.

A further timely opportunity for these black-owned enterprises could be to tap into the newly-created African Continental Free Trade Area that will improve the movement of goods and services, capital and means of production across the continent.

Implementation

It was pleasing to note from the Sona that the government plans to substantially expand the agriculture and agro-processing sector by supporting key value chains and products, developing new markets and reducing South Africa’s reliance on agricultural imports.

Unlocking access opportunities requires a real meeting of minds and collaboration between key functions such as procurement, finance, marketing and corporate affairs within a company and a broad range of stakeholders within the emerging supply chain.A constant feedback loop is required to quickly understand from the nascent supply chain members the challenges that need to be faced and the successes that need to be repeated quickly. Addressing complexity and broadening participation will certainly help any organisation quicken the pace of their supply chain transformation.

The course and focus is set for supplier development in agriculture.It is an area where real impact can be achieved in terms of economic transformation and job creation; education, skills and health.While early actions have been capitalised upon, all South Africans must further step up to the president’s request to implement at speed in order to play their part in confronting the severe challenges that this country faces.

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Mary Jane Morifi
Guest Author

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