strategy small and medium enterprises web · Sugar cane Vinegar Sugar Juice Sweets Forestry based...

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agriculture, forestry & fisheries Department: Agriculture, Forestry and Fisheries REPUBLIC OF SOUTH AFRICA S S tr tr ategy for the ategy for the development of small and development of small and medium agro-processing medium agro-processing enterprises enterprises in the in the R R epublic of epublic of S S outh outh A A frica frica

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agriculture,forestry & fisheriesDepartment: Agriculture, Forestry and FisheriesREPUBLIC OF SOUTH AFRICA

SStrtrategy for the ategy for the

development of small and development of small and

medium agro-processing medium agro-processing

enterprises enterprises

in thein the

RRepublic of epublic of SSouthouth AAfricafrica

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DEPARTMENT OF AGRICULTURE, FORESTRY AND FISHERIES

SStrategy for the trategy for the

development of small and development of small and

medium agro-processing medium agro-processing

enterprises enterprises

in thein the

RRepublic of epublic of SSouthouth AAfricafrica

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2015

Published by Department of Agriculture, Forestry and Fisheries

Design and layout by Directorate: Communication Services

Obtainable from the Department of Agriculture, Forestry and Fisheries Directorate: Agro-processing Support Private Bag X416 Pretoria 0001

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iiiDepartment of Agriculture, Forestry and Fisheries

CONTENTSAcronyms ........................................................................................................................................ v

Preamble ........................................................................................................................................ vii

1. Introduction .............................................................................................................................. 1

2. Agro-processing in context ....................................................................................................... 1

3. Problem statement ................................................................................................................... 3

4. Interventions to support and develop SME agro-processing industry ...................................... 4

4.1 Entrepreneurial support .................................................................................................. 5

4.2 Enterprise development .................................................................................................. 6

4.2.1 Access to fi nance ............................................................................................................ 7

4.2.2 Market access ................................................................................................................. 7

4.2.3 Incubation ....................................................................................................................... 8

4.3 Industry research and transfer of technology ................................................................. 8

4.4 Infrastructure investment ................................................................................................ 9

5. Roles and responsibilities ........................................................................................................ 10

6. Implementation plan ................................................................................................................. 13

7. Reporting mechanisms ............................................................................................................ 15

8. Monitoring and evaluation ........................................................................................................ 16

9. References ............................................................................................................................... 19

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iv Strategy for the development of small and medium agro-processing enterprises

LIST OF FIGURESFig. 1 .......................................................................................................................................... 2

Fig. 2 .......................................................................................................................................... 3

Fig. 3 .......................................................................................................................................... 5

Fig. 4 .......................................................................................................................................... 6

LIST OF TABLESTable 1.............................................................................................................................................. 2

Table 2.............................................................................................................................................. 3

Table 3.............................................................................................................................................. 4

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Department of Agriculture, Forestry and Fisheries v

ACRONYMS AgriBEE Agricultural Black Economic Empowerment

ARC Agricultural Research Council

BBBEE Broad Based Black Economic Empowerment

CSIR Council for Scientifi c and Industrial Research

DAFF Department of Agriculture, Forestry and Fisheries

DFI Development Finance Institutions

DSBD Department of Small Business Development

DST Department of Science and Technology

EDD Economic Development Department

FAO Food and Agriculture Organisation

FSSC Food Safety Standards Certifi cation

GAP Good Agricultural Practice

GEM Global Entrepreneurship Monitor

GMP Good Manufacturing Practice

HACCP Hazard Analysis and Critical Control Points

IDC Industrial Development Corporation

IPAP Industrial Policy Action Plan

ISIC International Standard Industrial Classifi cation

MCEP Manufacturing Competitiveness and Effi ciency Programme

MoU Memorandum of Understanding

MTSF Medium Term Strategic Framework

NAMC National Agricultural Marketing Council

NDP National Development Plan

NGO Non-Governmental Organisation

NGP New Growth Path

NGO Non-Governmental Organisation

PICC Presidential Infrastructure Coordinating Commission

PPP Public Private Partnership

R&D Research and Development

SIP Strategic Infrastructure Programme

SLA Service Level Agreement

SME Small and medium enterprises

SOE State Owned Enterprises

TIHMC The Innovation HUB Management Company

the dti Department of Trade and Industry

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viiDepartment of Agriculture, Forestry and Fisheries

PREAMBLEThe National Development Plan (NDP) and the Industrial Policy Action Plan (IPAP) identifi ed the poten-tial of agro-processing to motivate growth and development through backward and forward linkages with other sectors of the economy. Furthermore, agro-processing is among the sectors that has highest employment multipliers in the economy. However, the sector remains largely concentrated and entry and active participation of small and medium enterprises is limited.

The contribution of small and medium enterprises (SMEs) towards national development objectives of reducing unemployment and poverty is well-documented, emphasising the need for a focused approach by government to strategically support and develop manufacturing industry in general, and agro-pro-cessing industry in particular (APAP, 2015; IPAP, 2013; NDP, 2011; NGP, 2010).

This strategy seeks to articulate how government at National, Provincial and Local spheres would sup-port and develop SME agro-processing enterprises. Implementation of this Strategy is in line/conjunc-tion with National Small Business Amendment Act 29 of 2004, Broad Based Black Economic Empower-ment Act 53 of 2003, National Policy on Food and Nutrition Security, Agricultural Marketing Policy, Integrated Small Enterprise Development Strategy, Integrated Marketing Strategy for Agriculture, Forestry and Fisheries, Smallholder Development Programme and relevant Provincial Strategies. This strategy is written at a crucial time when there is clarion call for strategic direction as well as better tar-geted support for agro-processing SME. It is crafted against the background of the following practical realities:

• there is currently no national strategy to give a direction on support and development of SME agro-processing industry in South Africa;

• implementation of SME agro-processing initiatives is fragmented and disjointed because of lack of strategic cohesion at both National, Provincial and Local level;

• provision of funding towards support and development of SME agro-processing initiatives is mea-gre and available funding mechanism is geared towards large agro-processors;

• potential SME agro-processors fi nd it challenging to penetrate the mainstream market within agro-processing industry characterised by high concentration;

• empirical research depicts knowledge, skills and experience of potential agro-processors as low, requiring signifi cant improvement given agro-processing is technology intensive;

• agro-processing has a high propensity to create rural jobs and encourage rural economies through investment and development.

The aim of this Strategy is to adequately and comprehensively address these gaps and create an ena-bling environment for SME agro-processors to fully and actively participate in the mainstream economy. While this Strategy provides a strategic direction for the interventions for development of SMEs, the choice of approach, process and products are extensively articulated in Provincial strategies.

While DAFF will lead the strategic processes in this regard, it recognises the role that other Departments have played in providing valuable inputs in this process, notably the Department of Trade & Industry (the dti), the Economic Development Department (EDD) and its agencies, Department of Small Business Development (DSBD), Department of Rural Development & Land Reform (DRDLR) and Provincial Departments of Agriculture & Rural Development; as well as the Industrial Development Corporation (IDC), the National Agricultural Marketing Council (NAMC) and the Agricultural Research Council (ARC). Government recognises the role that other non-governmental and social partners will continue to play in the implementation of the interventions outlined in this document.

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Department of Agriculture, Forestry and Fisheries 1

1. INTRODUCTION This strategy on support and development of small and medium agro-processing enterprises was devel-oped to provide guidance towards the implementation of National Development Plan (NDP, 2011); Industrial Policy Action Plan (IPAP, 2013) and the Agricultural Policy Action Plan (2015). The strategy is directly linked to the following outcomes identifi ed by government in the Medium Term Strategic Framework (MTSF, 2014):

• Outcome 4: decent employment through inclusive growth

• Outcome 5: a skilled and capable workforce to support an inclusive growth path

• Outcome 6: an effi cient competitive and responsive economic infrastructure network

• Outcome 7: vibrant, equitable, sustainable rural communities contributing towards food secu rity for all

• Outcome 10: protect and enhance our environmental assets and natural resources.

The strategy aims to assist in the fulfi lment of strategic vision of the National Development Plan. Agro-processing is among the sectors identifi ed by the National Development Plan (NDP, 2011); New Growth Path (NGP, 2010); Industrial Policy Action Plan (2013) and Agricultural Policy Action Plan (APAP, 2015) for its potential and ability to encourage growth and create jobs, owing to its strong backward linkage with the primary sector and input suppliers but also forward linkages related to income generated from agriculture, forestry and fi sheries that may enhance domestic and local demand for manufactured goods.

As South Africa has become a net importer of processed agriculture, forestry and fi sheries products and the demand for processed, healthy and quality food is increasing owing to growth in urbanisation and the middle class, there is an opportunity for the country to explore the growth of its agro-processing in-dustry through localisation by promoting the entrance and active participation of smallholder farming entrepreneurs and SMEs agro-processors.

Therefore, persuaded by imperatives to enhance and broaden participation of SME agro-processing into mainstream manufacturing sector, the strategy for the development of SME agro-processing is de-veloped to realise a competitive, sustainable and inclusive agro-processing industry in South Africa. This strategy, therefore, contributes towards reducing the movement of raw products from rural areas to metropolises for processing and then transporting them back at higher prices to the same rural areas where they were produced. Furthermore, it contributes towards a signifi cant reduction of post-harvest losses encountered by smallholder producers through supporting and developing localised agro-pro-cessing activities.

2. AGRO-PROCESSING IN CONTEXTAgro-processing refers to those activities that change the form of agricultural, forestry and fi sheries products into various forms to facilitate easier handling and increase shelf-life. Agro-processing is also defi ned as a set of technology and economical activities undertaken on a basic agriculture, forestry and fi sheries product with the aim of transforming it into usable items such as food, fi bre, fuel and industrial raw material (FAO, 1997).

It is critical to differentiate between two terms that are mostly used interchangeably, namely, processing and value addition. Processing entails changing the form of a product; while value addition implies ad-dition of value to a product after which a buyer is willing to pay a price for the product that more than compensates for the cost of the inputs used in the process. Value can be added to products without changing their physical form, for example washing or cleaning, grading or labeling. Examples of se-lected processed products are listed in Table 1 below.

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2 Strategy for the development of small and medium agro-processing enterprises

TABLE 1 Examples of selected regular agro-processing products

Primary products Processed products

Fruit based Dehydrated fruit Juices & beverages Jam & jelly Paste, sauce & concentration

Vegetable based Frozen cut veggies Dehydrated veggies Pickles & chips Sauces and chutney

Grain based Flour Cereals Bread & biscuits Weaning foods

Milk based Butter Cheese Ice-cream Yoghurt

Sugar cane Vinegar Sugar Juice Sweets

Forestry based Pulp & Paper Veneer & ply wood Lump charcoal Furniture

Fisheries based Fish paste Minced fi sh Canned fi sh Fillet

Agro-processing techno-economic activities may be demarcated into three (3) broad categories which increases in technology use and human capital as the stage of processing increases from upstream which is classifi ed as primary processing to downstream processing classifi ed as advanced agro-pro-cessing (see Fig. 1). The interventions in the advanced agro-processing category are currently imple-mented by the dti and its subsidiary, the IDC and the Department of Science & Technology, through its subsidiary CSIR, this Strategy will focus on small and medium rural based agro-processing initiatives, particularly those located within the primary and secondary agro-processing category, as the current interventions are inadequate to meet the needs and challenges of this segment.

FIG. 1 Different phases of agro-processing activities

Primary agro-processing Secondary agro-processing Advanced agro-processing

Crop drying, threshing, cleaning, cutting, peeling, sorting, grading, storage,

packaging & labelling

Milling grain to fl our, grinding groundnuts to peanut butter, pressing oil out of vegetable seeds, pressing juice out of

fruit, cheese out of milk, paper from wood, mince/

sausage from meat

Canning & bottling, extraction for perfumes, mixing/combining to recipe, fl avoring, baking and

cooking

These activities are mainly carried out at farm and only transform commodity into

slight ly different form prior to storage and further

These agro-processing activities performed by big

corporates & multi nationals

Agro-processing activities by large corporates and multi

nationals

Intensity of human capital requirements

The wide-ranging nature of agro-processing activities implies a very wide range and heterogeneity of activities which make classifi cation quite complex. However, the United Nations’ International Standard Industrial Classifi cation (ISIC, 2013) has alleviated uncertainty around how to classify agro-processing products by defi ning a standard classifi cation of agro-industry as consisting of:

• Food and beverages

• Tobacco products

• Paper and wood products

• Textiles, footwear and apparel

• Leather products

• Rubber products.

Intensity of agro-processing technology usage

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Department of Agriculture, Forestry and Fisheries 3

The Standard Industrial Classifi cation further disaggregates agro-processing industry into several cat-egories. Food and beverage subcomponents, for example, are demarcated into the following four codes:

• Code 301 refers to manufacturing, processing and preservation of meat, fi sh, vegetables, oils, and fats.

• Code 302 refers to manufacturing, processing and preservation of dairy products.• Code 303 refers to manufacturing of grain mill products, starch products and prepared animal

feeds.• Code 304 refers to manufacturing of other food products like sugar, chocolate, pasta, coffee, nuts,

and spices.

It is also important to defi ne what is meant by the term ‘’small and medium agro-processing enterprises’’ (SMEs). The National Small Business Amendment Act 29 of 2004 defi nes SMEs according to certain characteristics such as the total full-time equivalent of paid employees, total turnover and total gross asset value (excluding fi xed property). Table 2 summarises the classifi cation of SMEs in the agriculture, forestry and fi sheries sector.

TABLE 2 Classifi cation of SMEs

Sector Size or class Total full-time equivalent of paid employees <

Total annual turnover < Total gross asset value (fi xed property excluded) <

Agriculture, Forestry and Fisheries

Small 50 R3 m R3 m

Medium 100 R5 m R5 m

Source: Classifi cation of SMEs according to the dti National Small Business Amendment Act 29 of 2004

3. PROBLEM STATEMENTSouth Africa faces numerous key economic and social challenges which are: high unemployment rates, high poverty rate and high inequality (APAP, 2015; IPAP, 2013; GEM, 2013; NDP, 2011and NGP, 2010). Unemployment rate averaged 26% over a decade (2000-2012) while the Gini coeffi cient measur-ing inequality was at its highest at 0.68 (StatsSA, 2013).

In order to address the challenges of national economic development, unemployment and food insecu-rity, this strategy aims to support and develop SMEs agro-processors. Fig. 2 provides a non-exhaustive list of key challenges hindering SMEs from participating in agro-processing activities. The major binding constraints facing SME agro-processing enterprises are lack of appropriate technology, access to fi -nance, inadequate infrastructure and lack of technical and entrepreneurial skills.

FIG. 2 Constraints limiting participation of SME in agro-processing

National economic development, employment and food security potential under-realised

Access to fi nance High post-harvest loss Non-compliance to market standards

Lack of appropriate technology

Market concentration Lack of appropriate

technologyInadequate agro-processing

infrastructure

Limited participation of SMEs in agro-processing

Limited market access

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4 Strategy for the development of small and medium agro-processing enterprises

Stringent food safety norms, standards and regulations, coupled with poor processing infrastructure entail high transaction costs resulting in barriers to entry in agro-processing activities. As a result SMEs are not able to comply with all the necessary requirements to get certifi cation of their produce and pro-duction processes. In addition, high degrees of market concentration is observed in the agro-processing industry, which is manifested fi rst in the domination of supermarkets at the downstream end of the sup-ply chain, which put pressure on upstream food processors to compete for valuable retail shelf space. This has resulted in some cases of mergers and acquisitions in the agro-processing sector. Since SME agro-processors are less able to meet the volumes needed to become listed suppliers and faced with the abovementioned challenges, they could not access formal markets which are vital for promoting their participation in the mainstream economy and creating an inclusive agro-processing industry in South Africa. As a result, rural areas largely remain producers of raw material with little or no value ad-dition and processing activities taking place.

Support and development of agro-processing activities by smallholder producers and processors is, therefore, not only propelled by developmental objectives of reducing unemployment, ensuring food security and enhancing economic growth, but also the need to reduce the post-harvest losses experi-enced by producers (see Table 3). Post-harvest loss is a collective food loss along the food production chain, from harvest and handling, to storage, processing, packing and transportation. Food losses are indicative of poorly functioning and ineffi cient food value chain systems.

Agro-processing activities are well noted to minimise post-harvest losses, including signifi cant contribu-tions to increased food availability, nutritional quality, food safety and retained earnings for producers (National Policy on Food and Nutrition security, 2013).

TABLE 3 Post-harvest loses of various agricultural products

Agro-processing segment Category Range of percentage loss

Food and beverage Roots and tubers 10–40%

Milk 8–16%

Fruits and vegetables 15–44%

Cereals, oil seeds and pulses 15–30%

Fish and sea food 10–40%

Meat 5–8%

Source: FAO/World Bank (2010)

Percentage loss refers to loss of food along the supply chain from harvest until consumption. In grains it occurs during harvesting, transporting, drying, threshing and during storage. In fruits and vegetables it is caused by biological, environmental and socioeconomic factors while in livestock it is mainly due to poor handling practices such as poor hygiene, lack of refrigeration, etc. Post-harvest loss in fi sheries is mainly due to spoilage. Table 3 depicts percentage losses of various products with the lowest percent-ages refl ecting post-harvest losses by the commercial enterprises while the highest percentages refl ect-ing losses by smallholder producers.

4. INTERVENTIONS TO SUPPORT AND DEVELOP SME AGRO-PROCESSING INDUSTRY The following four intervention pillars are outlined and proposed for implementation by DAFF to address the abovementioned key challenges facing the SME agro-processors:

• Intervention pillar 1: Entrepreneurial support • Intervention pillar 2: Enterprise development

Access to fi nance Market access Incubation

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Department of Agriculture, Forestry and Fisheries 5

• Intervention pillar 3: Industry research and transfer of technology• Intervention pillar 4: Infrastructure investment.

4.1 Entrepreneurial support

Government has prioritised entrepreneurship and advancement of SMEs as a catalyst to achieve eco-nomic growth and development. According to Global Entrepreneurship Monitor (GEM, 2013) South Africa is characterised by high levels of necessity or survival entrepreneurship. These are ventures clas-sifi ed as informal, mainly initiated because benefi ciaries have nothing else as a basis of livelihoods. Necessity or survival entrepreneurship is also synonymous with low growth and stagnant development. Opportunity entrepreneurship is however accompanied by high levels of human capital and high-growth but also likely to be sustainable, which is in contrast to necessity entrepreneurship.

Catalysing high-growth entrepreneurial behaviour of smallholder producers is critical, essential and probably one of the few alternatives to enable smallholder producers to benefi t from inclusion into the formal agro-processing mainstream economy through active participation in the value chains. Entrepreneurship involves starting or creating a new venture, innovating or putting together new combi-nations of resources; relentlessly pursuing opportunity, acquiring resources, taking calculated risks, ensuring profi t-seeking and creating value. Participation of SME processors and smallholder farming entrepreneurs in agro-processing activities is infl uenced and affected by cognitive abilities including exogenous factors at disposal of individual smallholder producers (see Fig. 3 below). Therefore, exploi-tation of agro-processing business opportunities will be reliant on capability of SME agro-processors and smallholder producers to discover, recognise and exploit business opportunities.

FIG. 3 Pattern of business opportunity recognition

Source: Adapted from Baron, 2006

Profi table, competitive and

thriving small and medium-process-

ing enterprise

Changes in environmental

factors (Disequilibrium)

Changes in markets

Changes in demographics

Changes in technology

Changes in climatic conditions

Changes in government

policies, statues and regulations

Changes in food consumption

Industry research for market

opportunities

Business opportunity

Patterns recog-nised as suggest-ing new products, new services and

new systems

Perceived and recognised business

opportunity patterns in changing

environmental change

Patterns that do not require and

aspire new products, new

services and new systems

Formation of new agro-processing

business enterprise

Access to fi nanceMarket accessInfrastructure investment

Product develop-ment

Business opportunity

Patterns recognised as suggesting new products, new

services and new systems

Cognitive abilities frameworks

Knowledge

Alertness

Experience

Outcome

Transmission and interpre-

tation

Process of implemen-

tation

Alertness

Transmission

Search

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6 Strategy for the development of small and medium agro-processing enterprises

As increasing and improving entrepreneurial facets of SME agro-processors is critical, Government will implement the entrepreneurial support through the entrepreneurial programmes which will include, but is not limited to:

• establishing networks and ties with training and capacity building institutions that provide entrepre-neurial skills development. Networking will be used as a tool by which entrepreneurs use a wide variety of contacts to help them achieve their business and professional objectives. Networking will give entrepreneurs greater access to information, new clients and people with similar business in-terests.

• entering into partnerships with accredited training institutions such as The Innovation HUB Management Company (TIHMC), Limpopo Agro-food Technology Station, Small Enterprise Development Agency (SEDA), incubation centres, non-governmental agencies such as centres for entrepreneurship and any other institutions involved in the promotion and enhancing entrepre-neurial culture

• collaborating with agro-processing industry organisations, provincial departments of agriculture, forestry & fi sheries and local government to promote and support SME agro-processors entrepre-neurial ventures

• liaising with organised agriculture to access and leverage training programmes already at play, particularly from incubation and mentorship programmes. Mentorship and incubation programmes will offer individual support to the SME agro-processors. The support can include expert advice, business introductions and help with gaining practical experience on the actual technical and man-agement of agro-processing enterprises.

• leveraging on mentorship programmes and strategic partnerships between government and private sector to promote entrepreneurial skills of SME agro-processors

• facilitate hosting of agro-processing information days geared to improve skills and understanding of agro-processing market requirements.

4.2 Enterprise development

AgriBEE charter, which is derived from Broad Based Black Economic Empowerment (BBBEE Act 53 of 2003), noted enterprise development as a critical pillar meant to transform, accelerate growth and devel-opment of smallholder producers. Enterprise development involves initiatives intended to assist and ac-celerate development and fi nancial sustainability of SMEs. Measures of enterprise development range from fi nancial support to non-fi nancial support (see Fig. 4). While the fi nancial support mainly involves facilitating access to fi nance, the non-fi nancial support involves facilitating market access, incubation and mentoring. Many corporations and big businesses commit a percentage of net profi t after tax towards enterprise development expenditure which is aimed at development and growth of SMEs in various ca-pacities, including fi nancial and non-fi nancial support (BBBEE Sector Code for Agriculture, 2012).

FIG. 4 Approaches to enterprise development

Mostly fi nancial support Hybrid/holistic Mostly non-fi nancial support

Loans, micro capital, develop-ment fi nance and venture

capital e.g. Khula, IDC, Anglo Zimile, MCEP and Philanthropy

Combination of fi nancial and non-fi nancial support

Incubation, strategic partner, mentoring, market access,

training, walk in centres e.g. Business Place SEDA and

Raizcorp

Enterprise development approach continuum

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Department of Agriculture, Forestry and Fisheries 7

4.2.1 Access to fi nance

A study done by the Technical Centre for Agricultural and Rural Cooperation (CTA, 2000) on the small-scale food processing sector in South Africa reveals that more than 80% of SMEs cited limited access to fi nance as the biggest constraint for business operation and expansion. These assertions are further contained in the Global Entrepreneurship Monitor (GEM, 2013) that lack of access to start-up fi nance remains a major impediment to successful small business initiation. The main reason for inability to ac-cess fi nance was high collateral required by fi nancial institutions considering high-risk profi le attached to this segment and the inability to provide a track record of fi nancial statements owing to poor fi nancial record keeping. As a result, producing a bankable business plan for funding to be considered by fi nan-cial institutions is a huge challenge. Therefore, SME agro-processors cannot obtain appropriate pro-cessing facilities and machinery to operate their businesses.

Improving access to fi nance by SME agro-processors will, therefore, be implemented through:

• establishing networks and ties with various fi nancing institutions focusing on development fi nance institutions located within the government sphere

• entering into partnerships with accredited and approved fi nancial institutions, specifi cally those lo-cated within government sphere to facilitate positive processing of applications

• lobbying various conglomerates within the agro-processing space for sizable enterprise develop-ment spent allocation towards promotion, support and development of SME agro-processors

• training and capacity building of SME agro-processors to appreciate funding pre-requisites and requirements

• lobbying for linkage of grant funding available within government with loan funding to enhance prob-ability of positively assessing loan. This will be done though liaising and engaging provincial depart-ment of agriculture and local municipalities.

• lobbying the Department of Trade and Industry to consider grant funding mechanism solemnly dedicated to agro-processing segment of the manufacturing sector noting unique and dynamic na-ture of this subsector. Currently, Manufacturing, Competitiveness and Effi ciency Programme (MCEP) does not adequately and suffi ciently meet fi nancing requirements of SME agro-processing segment.

• DAFF to set aside a percentage of grant or loan funds to support agro-processing investments.

4.2.2 Market access

Several studies shows that stringent regulations and standards, including the apparent need for a con-sistent and large volume supply put SME processors in unfavourable positions to access formal mar-kets. Consequently, SME processors tend to supply to the informal market and therefore are unable to expand their operations. To access formal mainstream markets which is vital to the growth and sustain-ability of SME agro-processing enterprises, market readiness of rural based small and medium enter-prises is critical.

4.2.2.1 MARKET READINESS

Market readiness by SMEs requires complying with the standards, regulation and volume of supply needed by the formal mainstream markets. Findings by Mather (2005) indicate that requirements im-posed by the retail sector are so onerous for SMEs that a huge ‘‘step-up’’ investment is needed to qualify in order to be listed as a supply company for the retailers. SME food-processors, for example, are required to obtain Hazard Analysis and Critical Control Points (HACCP) accreditation by retailers before they could be contracted to supply them. Furthermore, formal markets require the SME process-ing facility to be certifi ed with Food Safety Standards Certifi cation (FSSC 22 000). Complying with all these certifi cations not only requires huge capital investment by SME agro-processors, which is in short supply, but also an understanding of these standards and regulations is inadequate, which can be im-parted through training and mentorship.

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8 Strategy for the development of small and medium agro-processing enterprises

To assist SME entrepreneurs in accessing formal mainstream markets, government will play a facilitat-ing role in ensuring market readiness of SMEs by providing assistance in meeting the standards re-quired from the formal markets through quality certifi cation programmes which will be implemented in collaboration with the South African Bureau of Standards (SABS) as the custodian of quality assurance in South Africa.

Other intervention mechanisms will include:

• establishing networks and ties with various retailers and wholesalers focusing on requirements of enterprise development within AgriBEE charter to secure markets for SME agro-processors

• entering into partnerships with various hospitality sectors to provide markets to SME agro-proces-sors

• lobbying government departments to allocate a portion of processed food tenders to SME agro-processors, recognising the huge budget spent by government on procurement of various pro-cessed products

• lobbying various conglomerates within the agro-processing space for sizable enterprise develop-ment spent allocation towards promotion, support and development of SME agro-processors

• training and capacity building of SME agro-processors to appreciate market pre-requisites and re-quirements

• capacity building through training and demand-driven technical assistance that relate to HACCP, Good Agricultural Practice (GAP), Good Manufacturing Practice (GMP), identity preservation, traceability methods, product and packaging standardisation, and industry codes of practice, etc. Strengthening producer and industry associations could be one vehicle for this support. This sup-port could be horizontal (across subsectors) or focused on one or a few commodity subsectors.

4.2.3 INCUBATION

Business incubators are organisations that provide a business environment that is protected to assist and capacitate start-up and emerging businesses. Incubators provide fl oor space, secretarial support, shared offi ce space and IT equipment, mentoring and networking and venture capital. Incubators assist start-up and emerging businesses to develop ideas from conception to commercialisation. They turn ideas into new viable businesses at reduced risks. Incubators assist start-ups and emerging businesses to survive during a period when they are most vulnerable. Incubators are therefore in the business of facilitating entrepreneurship of start-up and emerging enterprises. Various incubator models exist for implementation such as not-for-profi t incubator, for-profi t incubator and private equity. It has been prov-en that successful completion of a business incubation programme increases the likelihood that a start-up company will stay in business for a long term (Dees, 2000).

Various government sanctioned incubations like the Limpopo Agro-Food Technology Station (LATS) will be approached for intake of SME agro-processors. The following interventions will also be undertaken:

• establishing networks and ties with various private incubators for absorption of SME agro-proces-sors that are ready and available for incubation

• lobbying various conglomerates within the agro-processing space for sizable enterprise develop-ment spent allocation towards promotion, support and development of SME agro-processors through incubation

• entering into partnerships with accredited and approved incubators located within government sphere to facilitate absorption of SME agro-processors. The Department of Science and Technology (DST), for example, has established the agro-processing incubation at the Limpopo Agro-Food Technology Station dedicated to incubate small and medium agro-processing enterprises.

4.3 Industry research and transfer of technology

Most studies have indicated that SMEs lack appropriate agro-processing technologies that are simple to operate and manage. Furthermore, research and development of SME agro-processing machinery

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Department of Agriculture, Forestry and Fisheries 9

and equipment have not received the adequate support it deserves. As a result, SME agro-processors use rudimentary technologies in their business activities, which hamper their performance, fi nancial sustainability and competitiveness (SEDA, 2008).

There is also a general shortage of basic and applied research that is directed to enhance the participa-tion of rural based SME agro-processing industry. Research on identifying the best practices to promote SME agro-processing, exploring the issues and challenges facing SMEs and evidence-based interven-tion needed to enhance their participation is critical for the growth and better positioning of the SMEs in the competitive global environment. In addition, understanding the issues and challenges facing the agro-processing industry at large and monitoring the trends and the participation of SME in the industry is useful to evaluate the progress of several governmental and SOE initiatives.

As part of implementation of this strategy, research and the transfer of appropriate agro-processing technologies, and related support services such as the skills needed to operate and maintain the tech-nology to SME agro-processors will be supported through:

• collaborating with, among others, academic institutions, the Department of Science and Technology (DST), Agricultural Research Council (ARC), Council for Scientifi c and Industrial Research (CSIR) and The Innovation HUB Management Company (TIHMC) in the provision of access to appropriate processing technology for SME agro-processors

• establishing networks and ties with various private companies involved in research and develop-ment of SME agro-processing machinery and equipment

• facilitating and supporting basic and applied research for identifying market and investment oppor-tunities

• engaging with international institutions to adopt best practices and business models for SME agro-processing development such as the Indian Institute of Crop Processing Technology.

4.4 Infrastructure investment

Infrastructure is critical to developing, maintaining, and strengthening value chains in the economy. Quality and affordable infrastructure enhances economic productivity and permits economic expansion through exploitation of new opportunities by SME agro-processors. Infrastructure also builds on social capital and encourages entrepreneurship because of reduced transaction costs. Infrastructure obsta-cles such as poor state of the roads, inadequate road networks, poor communication modes, lack of electricity and poor sanitation hinder market effi ciency—resulting in high transaction costs faced by SME agro-processors. This is further exacerbated by the inadequate and acute lack of appropriate agro-processing machinery among SME agro-processors.

Infrastructure, however, has potential to confer competitive and comparative advantage to SME agro-processors. While competitive advantage stems from possession of unique set of various assets such as locational advantages, natural resources, human capital and other elements that give enterprises advantage over others, comparative advantage entails the ability to produce and render a product more effi ciently, competitively and effectively than its counterpart.

Some of the intervention mechanisms to implement infrastructural investment for SME agro-processors include lobbying and advancing infrastructure requirements necessary to promote and support the de-velopment of SME agro-processing industry through the Presidential Infrastructure Coordinating Commission (PICC), specifi cally Strategic Integrated Projects (SIP11).

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10 Strategy for the development of small and medium agro-processing enterprises

5. ROLES AND RESPONSIBILITIESThe roles and responsibilities of various stakeholders for the implementation of this strategy are as fol-lows:

5.1 DAFF

DAFF has the following central role in providing support on the implementation of the strategy:

• assist in the formulation and designing of the strategy

• facilitate industry research and scout for available technology and information for usage by SME agro-processors

• develop strong market intelligence network to cater for the information needs of stakeholders

• establish networks and ties with training and capacity building institutions that provide entrepre-neurial skills development

• enter into partnerships with accredited training institutions such as The Innovation HUB Management Company (TIHMC), Small Enterprise Development Agency (SEDA), incubation centres, non-gov-ernmental agencies such as Centres for Entrepreneurship and any other institutions involved in promotion and enhancing entrepreneurial culture

• collaborate with agricultural, forestry and fi sheries research institutions to identify research and development (R&D) required by SME’s agro-processors

• leverage on mentorship programmes and strategic partnerships between government and private sector to promote entrepreneurial skills of SME agro-processors and smallholder producers

• facilitate hosting of agro-processing information days aimed to improve skills and understanding of requirements

• collaborate with global institutes in the area of processed agriculture, forestry and fi sheries products

• ensure participation of provincial Departments of Agriculture, Forestry and Fisheries, the Department of Trade and Industry, Economic Development Department, government agencies, organised agri-culture, agro-processing industry and relevant stakeholders in the implementation of the strategy

• facilitate the undertaking of the feasibility study and business planning of the agro-processing hub

• review the strategy on an ongoing basis, depending on changes in the environment and on the re-quirements of the provinces, producers and other stakeholders

• facilitate investment opportunities for SME agro-processors

• monitor and evaluate the implementation of this strategy.

5.2 The Department of Trade and Industry and the Department of Small Business Development

The Department of Trade and Industry and Department of Small Business Development are expected to:

• broaden capacity of SEDA to cater for SME agro-processing initiatives

• enhance and intensify entrepreneurial support and development

• enhance and facilitate the ease of registering legal entities of SME agro-processors

• enhance and broaden the role of IDC in supporting and developing SME agro-processors

• enhance and intensify formal market access linkages for SME agro-processors

• build global brands on the back of South African SMEs agro-processors’ strength

• facilitate the promotion of aggregated exports to meet the minimum order requirement of importers

• undertake industry specifi c campaign in conjunction with other government agencies including DAFF, EDD and IDC to attract foreign direct investment focusing on SME agro processors

• reconfi gure Manufacturing Competitiveness and Effi ciency Programme (MCEP) to cater specifi -cally for SME agro-processors taking into consideration the characteristics of the subsector

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Department of Agriculture, Forestry and Fisheries 11

• providing fi nancial resources towards investment in SME agro-processing machinery and equip-ment.

5.3 Provincial Department of Agriculture

Provincial departments of agriculture are expected to:

• align the provincial agro-processing strategies with the DAFF agro-processing strategy

• incorporate provisions of strategy into annual performance plans and operation plans of respective departments

• assist in the identifi cation and implementation of agro-processing initiatives

• contribute towards the development and review of the strategy

• interpret, internalise and popularise the strategy amongst key stakeholders to fast track implemen-tation

• mobilise supplementary resources to leverage the available public resources

• continuously investigate agro-processing infrastructure gaps experienced by SME processors in collaboration with the national department and industry bodies

• provide resources both fi nancial and non-fi nancial required to implement agro- processing strategy

• undertake continuous monitoring and evaluation to assess the impact of the strategy on benefi ciar-ies

• evaluate the effectiveness of the strategy.

5.4 Financial Institutions including Development Finance Institutions (DFIS)

Financial institutions are expected to perform the following functions:

• revise evaluation and qualifying parameters for agro-processing enterprise fi nancing (e.g. value chain fi nancing)

• enhance and broaden fi nancial assistance to SME agro-processing projects

• serve as effi cient disbursement institutions for fi nancial resources from the state

• promote the public-private partnership and joint ventures

• make fi nancial resources available towards the implementation of the various programmes in this strategy.

5.5 Technology Transfer Institutions

Technology transfer institutions are expected to perform the following functions through MoU with DAFF:

• provide affordable, user friendly and quality agro-processing technologies

• research, develop, and transfer appropriate agro-processing to SME

• train and capacitate SME agro-processors on the usage of agro-processing technology

• continuously research latest innovation and transfer up-to-date agro-processing technology to keep abreast with trend of the industry.

5.6 Research and Academic Institutions

Research and academic institutions are expected to perform the following functions through the MoU with DAFF:

• engage on both basic and applied research, focusing on industry needs

• protect SME agro-processors’ interest by ensuring that patents are obtained for all research carried out for processors

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12 Strategy for the development of small and medium agro-processing enterprises

• conduct research for agro-processing trade and investment opportunities

• provide potential market access gaps

• conduct research on competitiveness improvement

• conduct demand and opportunity driven technical research on agro-processing

• best practice or lessons on promoting SME agro-processing industry.

5.7 Private Sector and Organised Industry Associations

Private sector and organised industry associations are expected to:

• design and implement special training programmes to upgrade unorganised SME’s agro-proces-sors

• assist in facilitating market access linkages

• provide adequate capacity and development training

• assist in the facilitation of the formation of SME agro-processing associations with the relevant pro-vincial departments.

5.8 National Agricultural Marketing Council (NAMC)

National Agricultural Marketing Council is expected to perform the following functions through MoU with DAFF:

• provide infrastructure for the agro-processing hub as a custodian of Strategic Integrated Plan (SIP) 11

• facilitate the development of a network of warehouses at appropriate locations

• participate in public-private partnerships for infrastructure development

• institute evaluation and monitoring mechanism for projects assisted under SIP 11

• facilitate market access linkages

• facilitate and support export promotion.

5.9 Donors and NGO’S

Donors and NGO’s are expected to:

• facilitate access to fi nance assist in training and capacity building of SME agro-processors

• provide seed funding to SME agro-processors

• facilitate the scoping of bankable agro-processing for SME processors

• facilitate the implementation and monitoring of the strategy through public-private partnerships.

5.10 National Agro-processing Forum

The National Agro-processing Forum, is expected to:

• serve as a platform for reporting and reviewing progress regarding the implementation of the strat-egy

• serve as platform to exchange experiences and best practice models on implementing the strategy

• monitor and evaluate progress on implementation of the strategy.

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Department of Agriculture, Forestry and Fisheries 13

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14 Strategy for the development of small and medium agro-processing enterprisesO

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tech

nolo

gy

inst

itute

s an

d co

mpa

nies

Mon

itorin

g th

e tr

ansf

er o

f ag

ro-p

roce

ssin

g te

chno

logy

Mon

itorin

g tr

ends

in

agro

-pro

cess

ing

indu

stry

Con

duct

ing

dem

and

and

oppo

rtun

ity d

riven

res

earc

h on

agr

o-pr

oces

sing

App

ropr

iate

tech

nolo

gies

id

entifi

ed

and

sele

cted

MoU

s an

d S

LAs

sign

ed w

ith

tech

nolo

gy in

stitu

tes

and

com

pani

es

Agr

o-pr

oces

sing

tech

nolo

gy

tran

sfer

red

to S

ME

ag

ro-p

roce

ssin

g en

terp

rises

Qua

rter

ly a

nd a

nnua

l in

dust

ry r

evie

ws

Res

earc

h re

port

s

Num

ber

of a

ppro

pria

te

tech

nolo

gy id

entifi

ed

and

sele

cted

for

tran

sfer

Num

ber

of M

oUs

sign

ed w

ith

incu

bato

rs

Num

ber

of S

ME

agr

o-pr

o-ce

ssin

g en

terp

rises

ac

cess

ing

incu

batio

n an

d en

trep

rene

ursh

ip p

ro-

gram

mes

Num

ber

of q

uart

erly

and

an

nual

indu

stry

rev

iew

s

Num

ber

of r

esea

rch

repo

rts

AR

C, C

SIR

, ind

ustr

y or

gani

satio

ns, p

rivat

e co

mpa

-ni

es, s

ervi

ce p

rovi

ders

, D

irect

orat

e: A

gro-

proc

essi

ng

Sup

port

, Pro

vinc

ial

Dep

artm

ent o

f Agr

icul

ture

, in

dust

ry o

rgan

isat

ions

, pr

ivat

e se

ctor

, NA

MC

, AR

C,

CS

IR, I

DC

, Dire

ctor

ates

A

gro-

proc

essi

ng S

uppo

rt;

Dire

ctor

ate:

Mar

ketin

g,

SM

E a

gro-

proc

esso

rs,

univ

ersi

ties

and

othe

r re

sear

ch in

stitu

tions

An

effi c

ient

, com

petit

ive

and

resp

onsi

ve e

cono

mic

in

fras

truc

ture

net

wor

k

Vib

rant

, equ

itabl

e an

d su

stai

nabl

e ru

ral c

omm

uni-

ties

with

food

sec

urity

for

all.

Infr

astr

uctu

re in

vest

men

tA

dequ

ate

agro

-pro

cess

ing

infr

astr

uctu

reF

acili

tate

the

iden

tifi c

atio

n of

in

fras

truc

ture

req

uire

d by

S

ME

agr

o-pr

oces

sing

en

terp

rises

Fac

ilita

te th

e im

plem

enta

tion

of in

fras

truc

ture

pro

ject

s th

roug

h P

ICC

(S

IP11

)

Infr

astr

uctu

re n

eeds

id

entifi

ed

Infr

astr

uctu

re p

roje

cts

impl

emen

ted

List

of i

nfra

stru

ctur

e ne

eds

iden

tifi e

d

Num

ber

of in

fras

truc

ture

pr

ojec

ts im

plem

ente

d

AR

C, C

SIR

, ind

ustr

y or

gani

satio

ns, p

rivat

e co

mpa

-ni

es, s

ervi

ce p

rovi

ders

, D

irect

orat

e: A

gro-

proc

essi

ng

Sup

port

, Rel

evan

t Pro

vinc

ial

Dep

artm

ent o

f Agr

icul

ture

, in

dust

ry o

rgan

isat

ions

, pr

ivat

e se

ctor

and

SM

E

agro

-pro

cess

ors

Page 25: strategy small and medium enterprises web · Sugar cane Vinegar Sugar Juice Sweets Forestry based Pulp & Paper Veneer & ply wood Lump charcoal Furniture Fisheries based Fish paste

Department of Agriculture, Forestry and Fisheries 157.

RE

PORT

ING

MEC

HA

NIS

MS

The

fol

low

ing

repo

rtin

g fr

amew

ork

will

be

used

by

all

affe

cted

sta

keho

lder

s on

an

annu

al b

asis

to

trac

k pr

ogre

ss r

egar

ding

im

plem

enta

tion

of t

he s

trat

egy.

R

epor

ting

shal

l be

tabl

ed to

the

Nat

iona

l Agr

o-pr

oces

sing

For

um

Item

Key

Prio

rity

Are

aO

bjec

tivel

y ve

rifi a

ble

Indi

cato

rs (

OV

I)T

arge

tA

ctua

l Ach

ieve

men

tC

halle

nges

Cor

rect

ive/

mea

sure

sB

udge

ted

amou

ntB

udge

t spe

nt

1.E

ntre

pren

euria

l S

uppo

rtLi

st o

f SM

E a

gro-

proc

essi

ng e

nter

pris

es

iden

tifi e

d fo

r en

trep

rene

uria

l tra

inin

g

Num

ber

of M

oUs

and

SLA

’s s

igne

d w

ith tr

aini

ng

agen

cies

Num

ber

of S

ME

agr

o-pr

oces

sing

ent

erpr

ises

ac

cess

ing

entr

epre

neur

ship

pro

gram

mes

2.A

cces

s to

fi na

nce

List

of v

iabl

e ag

ro-p

roce

ssin

g bu

sine

ss p

lans

Num

ber

of b

anka

ble

busi

ness

pla

ns s

ubm

itted

Num

ber

of fu

nded

agr

o-pr

oces

sing

pro

ject

s im

plem

ente

d

3.M

arke

t acc

ess

List

of S

ME

agr

o-pr

oces

sing

ent

erpr

ises

look

ing

for

mar

ket l

inka

ges

Num

ber

of id

entifi

ed

mai

nstr

eam

mar

kets

and

in

form

atio

n pr

ovid

ed o

n m

arke

t sta

ndar

ds

Num

ber

of S

ME

agr

o-pr

oces

sing

ent

erpr

ises

that

co

mpl

y w

ith th

e m

arke

t sta

ndar

ds

Num

ber

of s

ale

cont

ract

s si

gned

4.In

cuba

tion

List

of S

ME

agr

o-pr

oces

sing

ent

erpr

ises

that

re

quire

incu

batio

n

Num

ber

of M

oUs

sign

ed w

ith in

cuba

tors

Num

ber

of S

ME

agr

o-pr

oces

sing

ent

erpr

ises

ac

cess

ing

incu

batio

n an

d en

trep

rene

ursh

ip

prog

ram

mes

5.In

dust

ry

rese

arch

, and

tr

ansf

er o

f te

chno

logy

Num

ber

of a

ppro

pria

te te

chno

logy

iden

tifi e

d an

d se

lect

ed fo

r tr

ansf

erre

d to

SM

E a

gro-

proc

essi

ng

ente

rpris

es

Num

ber

of M

oUs

sign

ed w

ith te

chno

logy

in

stitu

tes

and

com

pani

es

Num

ber

of S

ME

agr

o-pr

oces

sing

ent

erpr

ises

that

re

ceiv

ed te

chno

logy

tran

sfer

s

Pub

lishe

d qu

arte

rly a

nd a

nnua

l ind

ustr

y re

view

s

Num

ber

of r

esea

rch

repo

rts

6.

Infr

astr

uctu

re

inve

stm

ent

List

of i

nfra

stru

ctur

e ne

eds

iden

tifi e

d

Num

ber

of in

fras

truc

ture

pro

ject

s im

plem

ente

d

Page 26: strategy small and medium enterprises web · Sugar cane Vinegar Sugar Juice Sweets Forestry based Pulp & Paper Veneer & ply wood Lump charcoal Furniture Fisheries based Fish paste

16 Strategy for the development of small and medium agro-processing enterprises

8.

M

ON

ITO

RIN

G A

ND

EVA

LUAT

ION

A p

rope

r m

onito

ring

and

eval

uatio

n pl

an o

f gov

ernm

ent p

rogr

amm

es is

a c

entr

al r

ole

that

cen

tral

gov

ernm

ent s

houl

d fu

lfi ll.

DA

FF

, th

roug

h its

Pla

nnin

g, P

olic

y,

Mon

itorin

g an

d E

valu

atio

n (P

PM

E)

Pro

gram

me

has

put s

yste

ms

in p

lace

to m

onito

r de

part

men

tal p

erfo

rman

ce. T

he m

onito

ring

and

eval

uatio

n fr

amew

ork

pre-

sent

ed b

elow

will

be

an in

put t

o th

e bi

gger

DA

FF

PP

ME

sys

tem

. It i

s pr

esen

ted

belo

w:

Ou

tco

me

4: D

ecen

t em

plo

ymen

t th

rou

gh

incl

usi

ve e

con

om

ic g

row

th

Ou

tco

me

7: V

ibra

nt,

eq

uit

able

an

d s

ust

ain

able

ru

ral c

om

mu

nit

ies

con

trib

uti

ng

to

war

ds

foo

d s

ecu

rity

fo

r al

l

Key

Obj

ectiv

eT

o in

crea

se th

e pa

rtic

ipat

ion

of r

ural

-bas

ed s

mal

l and

med

ium

agr

o-pr

oces

sing

indu

stry

in th

e ec

onom

y

Inte

rven

tion

Pill

ars

Ent

repr

eneu

rial s

uppo

rt

Goa

lsA

ctiv

ities

Out

puts

Indi

cato

rsR

espo

nsib

ility

Fre

quen

cyE

vide

nce

Dev

elop

and

enh

ance

ent

repr

e-ne

ursh

ip b

y S

ME

agr

o-pr

oces

-so

rs

Fac

ilita

te th

e id

entifi

cat

ion

of S

ME

ag

ro-p

roce

ssin

g en

terp

rises

re

quiri

ng e

ntre

pren

euria

l tra

inin

g

Fac

ilita

te th

e si

gnin

g of

MoU

s an

d S

LAs

with

and

trai

ning

age

ncie

s on

ent

repr

eneu

rial s

uppo

rt.

Fac

ilita

te a

cces

s to

ent

repr

e-ne

uria

l sup

port

pro

gram

mes

for

SM

E a

gro-

proc

essi

ng e

nter

pris

es

SM

E a

gro-

proc

essi

ng e

nter

pris

es

requ

iring

ent

repr

eneu

rial t

rain

ing

iden

tifi e

d

MoU

s an

d S

LAs

sign

ed w

ith tr

ain-

ing

agen

cies

and

incu

bato

rs

Ent

repr

eneu

rial s

uppo

rt

prog

ram

mes

acc

esse

d by

SM

E

agro

-pro

cess

ing

ente

rpris

es

List

of S

ME

agr

o-pr

oces

sing

en

terp

rises

iden

tifi e

d fo

r en

trep

rene

uria

l tra

inin

g

Num

ber

of M

oUs

and

SLA

s si

gned

with

trai

ning

age

ncie

s

Num

ber

of S

ME

agr

o-pr

oces

sing

en

terp

rises

acc

essi

ng e

ntre

pre-

neur

ship

pro

gram

mes

Inde

pend

ent

eval

uato

r/as

sess

orO

nce

in fi

ve y

ears

SM

E a

gro-

proc

essi

ng e

nter

pris

e id

entifi

ed

for

entr

epre

neur

ial

trai

ning

Sig

ned

MoU

s an

d S

LAs

with

tr

aini

ng a

genc

ies

Agr

o-pr

oces

sing

ent

erpr

ises

ac

cess

ing

incu

batio

n an

d en

trep

rene

ursh

ip p

rogr

amm

es

Ou

tco

me

4: D

ecen

t em

plo

ymen

t th

rou

gh

incl

usi

ve g

row

th

Ou

tco

me

5: A

ski

lled

an

d c

apab

le w

ork

forc

e to

su

pp

ort

an

incl

usi

ve g

row

th p

ath

Ou

tco

me

6: A

n e

ffi c

ien

t, c

om

pet

itiv

e an

d r

esp

on

sive

eco

no

mic

infr

astr

uct

ure

net

wo

rk

Ou

tco

me

7: V

ibra

nt,

eq

uit

able

, su

stai

nab

le r

ura

l co

mm

un

itie

s co

ntr

ibu

tin

g t

ow

ard

s fo

od

sec

uri

ty f

or

all

Ou

tco

me

10:

Pro

tect

an

d e

nh

ance

ou

r en

viro

nm

enta

l ass

ets

and

nat

ura

l res

ou

rces

Key

Obj

ectiv

eT

o in

crea

se th

e pa

rtic

ipat

ion

of r

ural

-bas

ed s

mal

l and

med

ium

agr

o-pr

oces

sing

indu

stry

in th

e ec

onom

y

Inte

rven

tion

Pill

ars

Acc

ess

to fi

nanc

e

Goa

lsA

ctiv

ities

Out

puts

Indi

cato

rsR

espo

nsib

ility

Fre

quen

cyE

vide

nce

Acc

ess

to fu

ndin

gF

acili

tate

com

pila

tion

of

agro

-pro

cess

ing

busi

ness

pla

ns

for

fund

ing

cons

ider

atio

n

Fac

ilita

te s

ubm

issi

on o

f ag

ro-p

roce

ssin

g bu

sine

ss p

lans

fo

r sc

reen

ing

and

fund

ing

cons

ider

atio

n

Mon

itor

the

impl

emen

tatio

n of

the

fund

ed a

gro-

proc

essi

ng p

roje

cts

Via

ble

agro

-pro

cess

ing

busi

ness

pl

ans

Ban

kabl

e bu

sine

ss p

lans

su

bmitt

ed

Impl

emen

tatio

n of

fund

ed

agro

-pro

cess

ing

proj

ects

List

of v

iabl

e ag

ro-p

roce

ssin

g bu

sine

ss p

lans

. In

depe

nden

t eva

luat

or/a

sses

sor

Num

ber

of b

anka

ble

busi

ness

pl

ans

subm

itted

.

Num

ber

of fu

nded

agr

o-pr

oces

s-in

g pr

ojec

ts im

plem

ente

d

Inde

pend

ent

eval

uato

r/as

sess

orO

nce

in fi

ve y

ears

Bus

ines

s pl

an d

ocum

ents

.

Sub

mis

sion

rep

orts

of b

usin

ess

plan

s

Agr

o-pr

oces

sing

ent

erpr

ises

that

ar

e op

erat

iona

l

Page 27: strategy small and medium enterprises web · Sugar cane Vinegar Sugar Juice Sweets Forestry based Pulp & Paper Veneer & ply wood Lump charcoal Furniture Fisheries based Fish paste

Department of Agriculture, Forestry and Fisheries 17O

utc

om

e 4:

Dec

ent

emp

loym

ent

thro

ug

h in

clu

sive

gro

wth

Ou

tco

me

7: V

ibra

nt,

eq

uit

able

, su

stai

nab

le r

ura

l co

mm

un

itie

s co

ntr

ibu

tin

g t

ow

ard

s fo

od

sec

uri

ty f

or

all

Key

Obj

ectiv

eT

o in

crea

se th

e pa

rtic

ipat

ion

of r

ural

-bas

ed s

mal

l and

med

ium

agr

o-pr

oces

sing

indu

stry

in th

e ec

onom

y

Inte

rven

tion

Pill

ars

Mar

ket a

cces

s

Goa

lsA

ctiv

ities

Out

puts

Indi

cato

rsR

espo

nsib

ility

Fre

quen

cyE

vide

nce

Link

SM

E s

cale

agr

o-pr

oces

sing

en

terp

rises

to m

arke

tsF

acili

tate

the

iden

tifi c

atio

n S

ME

ag

ro-p

roce

ssin

g en

terp

rises

for

inte

grat

ion

into

mai

nstr

eam

m

arke

ts

Fac

ilita

te th

e id

entifi

cat

ion

of

mai

nstr

eam

mar

kets

and

pro

vide

in

form

atio

n on

mar

ket s

tand

ards

Fac

ilita

te m

arke

ts s

tand

ard

com

plia

nce

by S

ME

agr

o-pr

o-ce

ssin

g en

terp

rises

.

Fac

ilita

te th

e co

ordi

natio

n of

m

arke

t sal

e co

ntra

cts

by S

ME

ag

ro-p

roce

ssin

g en

terp

rises

Dat

abas

e of

SM

E a

gro-

proc

ess-

ing

ente

rpris

es lo

okin

g fo

r m

arke

t lin

kage

s

Mai

nstr

eam

mar

kets

iden

tifi e

d an

d in

form

atio

n on

mar

ket

stan

dard

s pr

ovid

ed

SM

E a

gro-

proc

essi

ng e

nter

pris

es

com

ply

with

sta

ndar

ds r

equi

red

by th

e m

arke

t

Mar

ket c

ontr

acts

sig

ned

List

of S

ME

agr

o-pr

oces

sing

en

terp

rises

look

ing

for

mar

ket

linka

ges

Num

ber

of id

entifi

ed

mai

nstr

eam

m

arke

ts a

nd in

form

atio

n pr

ovid

ed

on m

arke

t sta

ndar

ds

Num

ber

of S

ME

agr

o-pr

oces

sing

en

terp

rises

that

com

ply

with

the

mar

ket s

tand

ards

Num

ber

of s

ale

cont

ract

s si

gned

Inde

pend

ent

eval

uato

r/as

sess

orO

nce

in fi

ve y

ears

List

of S

ME

agr

o-pr

oces

sing

en

terp

rises

look

ing

for

mar

ket

linka

ges

List

of m

ains

trea

m m

arke

ts

iden

tifi e

d an

d re

port

s on

mar

ket

stan

dard

s

SM

E a

gro-

proc

essi

ng

ente

rpris

es th

at c

ompl

y w

ith th

e m

arke

t sta

ndar

ds

Sig

ned

sale

con

trac

ts

Ou

tco

me

5: S

kille

d a

nd

cap

able

wo

rkfo

rce

to s

up

po

rt a

n in

clu

sive

eco

no

mic

gro

wth

Key

Obj

ectiv

eT

o in

crea

se th

e pa

rtic

ipat

ion

of r

ural

-bas

ed s

mal

l and

med

ium

agr

o-pr

oces

sing

indu

stry

in th

e ec

onom

y

Inte

rven

tion

Pill

ars

Icub

atio

n

Goa

lsA

ctiv

ities

Out

puts

Indi

cato

rsR

espo

nsib

ility

Fre

quen

cyE

vide

nce

Incu

batio

n fo

r S

ME

agr

o-pr

oces

s-in

g en

terp

rises

Fac

ilita

te th

e id

entifi

cat

ion

of S

ME

ag

ro-p

roce

ssin

g en

terp

rises

that

re

quire

s in

cuba

tion

Fac

ilita

te th

e si

gnin

g of

MoU

s an

d S

LAs

with

incu

bato

rs

Fac

ilita

te a

cces

s to

incu

batio

n pr

ogra

mm

es b

y S

ME

agr

o-pr

o-ce

ssin

g en

terp

rises

SM

E a

gro-

proc

essi

ng e

nter

pris

es

that

req

uire

incu

batio

n id

entifi

ed

MoU

s an

d S

LAs

sign

ed w

ith

incu

bato

rs

Incu

batio

n pr

ogra

mm

es a

cces

sed

by S

ME

agr

o-pr

oces

sing

en

terp

rises

List

of S

ME

agr

o-pr

oces

sing

en

terp

rises

that

req

uire

in

cuba

tion

Num

ber

of M

oUs

sign

ed w

ith

incu

bato

rs

Num

ber

of S

ME

agr

o-pr

oces

sing

en

terp

rises

acc

essi

ng in

cuba

tion

prog

ram

mes

Inde

pend

ent

eval

uato

r/as

sess

orO

nce

in fi

ve y

ears

List

of i

ncub

atio

n pr

ogra

mm

es

requ

ired

by S

ME

agr

o-pr

oces

s-in

g en

terp

rise

Sig

ned

MoU

s w

ith a

gro-

proc

ess-

ing

incu

bato

rs

SM

E a

gro-

proc

essi

ng

ente

rpris

es a

cces

sed

incu

batio

n pr

ogra

mm

es

Page 28: strategy small and medium enterprises web · Sugar cane Vinegar Sugar Juice Sweets Forestry based Pulp & Paper Veneer & ply wood Lump charcoal Furniture Fisheries based Fish paste

18 Strategy for the development of small and medium agro-processing enterprisesO

utc

om

e 4:

Dec

ent

emp

loym

ent

thro

ug

h in

clu

sive

gro

wth

Ou

tco

me

5: S

kille

d a

nd

cap

able

wo

rkfo

rce

to s

up

po

rt a

n in

clu

sive

gro

wth

pat

h

Ou

tco

me

7: V

ibra

nt,

eq

uit

able

, su

stai

nab

le r

ura

l co

mm

un

itie

s co

ntr

ibu

tin

g t

ow

ard

s fo

od

sec

uri

ty f

or

alll

Key

Obj

ectiv

eT

o in

crea

se th

e pa

rtic

ipat

ion

of r

ural

-bas

ed s

mal

l and

med

ium

agr

o-pr

oces

sing

indu

stry

in th

e ec

onom

y

Inte

rven

tion

Pill

ars

Indu

stry

res

earc

h an

d tr

ansf

er o

f tec

hnol

ogy

Goa

lsA

ctiv

ities

Out

puts

Indi

cato

rsR

espo

nsib

ility

Fre

quen

cyE

vide

nce

Tec

hnol

ogy

tran

sfer

to S

ME

ag

ro-p

roce

ssin

g en

terp

rises

Enh

ance

com

petit

iven

ess

and

futu

re p

ositi

onin

g of

agr

o-pr

o-ce

ssin

g in

dust

ry

Iden

tifi c

atio

n an

d se

lect

ion

of

appr

opria

te a

gro-

proc

essi

ng

tech

nolo

gy fo

r tr

ansf

er to

SM

E

agro

-pro

cess

ing

ente

rpris

es

Fac

ilita

te th

e si

gnin

g of

MoU

s an

d S

LAs

with

tech

nolo

gy in

stitu

tes

and

com

pani

es

Mon

itorin

g th

e tr

ansf

er o

f ag

ro-p

roce

ssin

g te

chno

logy

Mon

itorin

g tr

ends

in a

gro-

pro-

cess

ing

indu

stry

Con

duct

ing

dem

and

and

oppo

rtun

ity d

riven

res

earc

h on

ag

ro-p

roce

ssin

g

App

ropr

iate

tech

nolo

gies

id

entifi

ed

and

sele

cted

MoU

s an

d S

LAs

sign

ed w

ith

tech

nolo

gy in

stitu

tes

and

com

pani

es

Agr

o-pr

oces

sing

tech

nolo

gy

tran

sfer

red

to S

ME

agr

o-pr

oces

s-in

g en

terp

rises

Qua

rter

ly a

nd a

nnua

l ind

ustr

y re

view

s

Res

earc

h re

port

s

Num

ber

of a

ppro

pria

te

tech

nolo

gy id

entifi

ed

and

sele

cted

fo

r tr

ansf

erre

d to

SM

E a

gro-

proc

essi

ng e

nter

pris

es

Num

ber

of M

oUs

sign

ed w

ith

tech

nolo

gy in

stitu

tes

and

com

pani

es

Num

ber

of S

ME

agr

o-pr

oces

sing

en

terp

rises

that

rec

eive

d te

chno

logy

tran

sfer

s

Pub

lishe

d qu

arte

rly a

nd a

nnua

l in

dust

ry r

evie

ws

Num

ber

of r

esea

rch

repo

rts

Inde

pend

ent

eval

uato

r/as

sess

orO

nce

in fi

ve y

ears

List

of a

ppro

pria

te a

gro-

proc

ess-

ing

tech

nolo

gy id

entifi

ed

for

tran

sfer

Sig

ned

MoU

s

SM

E a

gro-

proc

essi

ng

ente

rpris

es th

at r

ecei

ved

tech

nolo

gy tr

ansf

ers

Pub

lishe

d qu

arte

rly a

nd a

nnua

l in

dust

ry r

evie

ws.

Res

earc

h re

port

s

Ou

tco

me

6: A

n e

ffi c

ien

t, c

om

pet

itiv

e an

d r

esp

on

sive

eco

no

mic

infr

astr

uct

ure

net

wo

rk

Ou

tco

me

7: V

ibra

nt,

eq

uit

able

an

d s

ust

ain

able

ru

ral c

om

mu

nit

ies

wit

h f

oo

d s

ecu

rity

fo

r al

l

Ou

tco

me

10:

En

viro

nm

enta

l ass

ets

and

nat

ura

l res

ou

rces

th

at a

re w

ell p

rote

cted

an

d c

on

tin

ual

ly e

nh

ance

d

Key

Obj

ectiv

eT

o in

crea

se th

e pa

rtic

ipat

ion

of r

ural

-bas

ed s

mal

l and

med

ium

agr

o-pr

oces

sing

indu

stry

in th

e ec

onom

y

Inte

rven

tion

Pill

ars

Infr

astr

uctu

re in

vest

men

t

Goa

lsA

ctiv

ities

Out

puts

Indi

cato

rsR

espo

nsib

ility

Fre

quen

cyE

vide

nce

Fac

ilita

te in

fras

truc

ture

in

vest

men

t for

agr

o-pr

oces

sing

in

dust

ry

Fac

ilita

te im

plem

enta

tion

of

infr

astr

uctu

re th

roug

h P

ICC

(S

IP11

)

Fac

ilita

te th

e id

entifi

cat

ion

of

infr

astr

uctu

re r

equi

red

by S

ME

ag

ro-p

roce

ssin

g en

terp

rises

Infr

astr

uctu

re n

eeds

iden

tifi e

d

Infr

astr

uctu

re p

roje

cts

impl

emen

t-ed

List

of i

nfra

stru

ctur

e ne

eds

iden

tifi e

d

Num

ber

of in

fras

truc

ture

pro

ject

s im

plem

ente

d

Inde

pend

ent

eval

uato

r/as

sess

orO

nce

in fi

ve y

ears

Dat

abas

e of

infr

astr

uctu

re n

eeds

id

entifi

ed

Impl

emen

ted

infr

astr

uctu

re

proj

ects

Page 29: strategy small and medium enterprises web · Sugar cane Vinegar Sugar Juice Sweets Forestry based Pulp & Paper Veneer & ply wood Lump charcoal Furniture Fisheries based Fish paste

Department of Agriculture, Forestry and Fisheries 19

9. REFERENCESBroad Based Black Economic Empowerment, Sector Codes for Agriculture (2012). Government Gazette, Vol. 570, No. 36035.

BARON, R.A. 2006. Opportunity recognition as pattern recognition: How entrepreneurs “connects the dots” to identify new busi-ness opportunities. Academy of Management Perspectives, 20,1:104–119.

CTA. 2000. Small-scale Food Processing Sector in South Africa: Technical Centre for Agricultural and Rural Cooperation (CTA), Working Document, Number 8014.

FAO/World Bank. 2010. Workshop on reducing post-harvest losses: 18–19 March 2010. Rome, Italy.

GEM. 2013. Global Entrepreneurship Monitor (GEM). National Reports.

IPAP. 2013. Industrial Policy Action Plan 2013/4–2015/6 Economic Sectors and Employment Cluster: The Department of Trade and Industry.

ISIC. 2013. United Nations International Standard Industrial Classifi cation System.

MATHER, C. 2005. SME’s in South African Food Processing Complex: Development Prospects, Constrains and Opportunities. The Department of Trade and Industry Policy Strategies (TIPS).

NDP. 2011. National Development Plan: Vision for 2030, National Planning Commission.

NGP. 2010. New Growth Path: Framework. Department of Economic Development.

SEDA. 2008. Survey on the Textiles, Clothing and Footwear Sector with a Focus on Small Enterprises. SEDA (Small Enterprise Development Agency), a Member of the dti group.

Stats SA. 2013. Quarterly Labour Force Survey (QLFS), Quarter 3 and GDP Statistical release.

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Page 32: strategy small and medium enterprises web · Sugar cane Vinegar Sugar Juice Sweets Forestry based Pulp & Paper Veneer & ply wood Lump charcoal Furniture Fisheries based Fish paste