Around $30 billion of processed food is imported in Africa. Agro processing can create jobs and reverse that trend
Johannesburg — South African Trade and Industry Minister Rob Davies has lauded the benefits of agro-processing in the country, charging that the processing of agricultural products could create a number of jobs amid the fall in mineral commodity prices.
Speaking at an American Chamber of Commerce breakfast this week, Davies said: “Some of the quick job gains that we can make are in agriculture.”
He said agro-processing was the biggest employer in the agricultural subsectors despite the drought. “We don’t expect the same climatic challenges next year. We hope to see better results in the agricultural sector next year,” Davies said.
Davies’s comments about the stimulation of agro-processing were in line with the government’s general stance that the country should break out of commodity dependence and increase manufacturing-based value addition — the thrust of the Industrial Policy Action Plan 2016, which the government launched last week.
Davies said the country had to find a new base for economic growth. He said the government was focused on developing sector-specific programmes in sectors such as locomotives, gas, agro-processing and automotive.
He said, in terms of the recent African Growth and Opportunity Act agreement, black-owned companies would be responsible for the importation of at least 50 percent of the chicken imports from the US.
He said the chicken, pork and beef imports from the US were already entering the country and that companies in fast moving consumer goods manufacturing were looking for locally-procured crops for their manufacturing facilities, thus stimulating agriculture.
He referred to the recent agreement between the government and Anheuser-Busch (AB) InBev, in which the two parties agreed on a range of public interest commitments by the company as a condition to the approval of AB InBev’s acquisition of SABMiller. These included helping new farms to produce raw materials, such as hops and barley for the merged entity.
He said there were huge opportunities in the processing of raw agricultural products.
Quoting a 2014 report of financial services firm KPMG, Davies said Africa exported about $6 billion (R93bn) worth of coffee, which was processed, packaged and branded outside the continent, to be resold for $100bn.
“There was value to be extracted in processing agricultural raw materials,” he said.
“The government has developed the higher impact industrial policy under difficult circumstances. Other than the fall in commodity prices, there was a glut in the global steel industry, which means there is steel being dumped all over the world.”
He said steel firms in the US and South Africa were under extreme threat. “We have had to grapple with this particular challenge in our steel value chain. (There were) no easy choices,” he said.
Meanwhile, Davies said the country was “bombarded” with sub-standard goods that were harmful.
He said imported non-compliant paraffin stoves were sold in poor communities, heightening the risk of loss of life and property.
“After tightening measures to curb the imports, there had been a trend whereby the stoves were imported as components and assembled in South Africa,” he said.
National Regulator for Compulsory Specifications chief executive Asogan Moodley said a number of non-compliant compact fluorescent lamps (CFLs) had entered South Africa through Durban.
Moodley said the regulator last year intercepted a consignment of 17 tons of non-compliant CFLs.
“Our job is to protect the consumers from the harmful products,” he said. — Business Report