An Outlook: Abundant opportunities in SA Agribusiness

AMT Conference22 September 2010

John Purchase

Average Weekly Food Consumption

Bhutan: The Namgay family of Shingkhey

VillageFood expenditure for one week: $5.03

Chad: The Aboubakar family of BreidjingCampFood expenditure for one week: $1.23

Peter Menzel, www.menzelphoto.com

Soybean production, domestic use, net trade and prices

Average Weekly Food Consumption

Egypt: The Ahmed family of CairoFood expenditure for one week: $68.53

Ecuador: The Ayme family of TingoFood expenditure for one week: $31.55

Peter Menzel, www.menzelphoto.com

Average Weekly Food ConsumptionGermany: The Melander family of

BargteheideFood expenditure for one week: $500.07

Peter Menzel, www.menzelphoto.com

USA: The Revis family of North CarolinaFood expenditure for one week

$341.98

Global Food & Agriculture environment• Complex and diverse – subsistence to corporate

farming, basic staples to highly processed products.

• Globally markets generally work, but purchasing power & distribution problems major challenges.

• One billion out of 6 billion people chronically hungry• Food security major focus of many countries today,

especially after food price crisis of 2008.• Skewed government support and trade environment,

as well as under-investment in many cases.• Need to produce ~50% more food by 2030, and double (100% increase) food production by 2050.

The Future of Food...“Evolution of World Food Chains:

Response of Companies in Developing Countries”

Prof. Dr. Marcos Fava NevesProfessor at School of Economics and Business - University of São Paulo, Brazil

Out Topics – Future of Food1. Introduction to our Group and Style2. 1990-2010 – Exciting 20 Years of Changes3. 2010-2020 - What to Expect, How Should Companies in Developing

Countries Respond?4. What is the Role of Governments?5. Research Agenda on Food Chains for South Africa

Chapter ()

Note: 2010F and 2014F are calculated using fixed exchange rates based on the average rates of 2009 from www.oanda.com (01.01.09 to 07.12.09).

Source: IGD Research, December 2009

2006 2010F 2014F

Rank Country €bn Rank Country €bn Rank Country €bn

1 US 612 1 US 638 1 China 761

2 China 328 2 China 529 2 US 745

3 Japan 297 3 Japan 345 3 India 448

4 France 206 4 India 279 4 Japan 360

5 India 190 5 France 205 5 Russia 322

6 UK 188 6 Russia 186 6 Brazil 284

7 Germany 150 7 Brazil 185 7 France 228

8 Italy 127 8 UK 170 8 UK 198

9 Russia 116 9 Germany 160 9 Germany 168

10 Mexico 112 10 Italy 130 10 Indonesia 167

2,326 2,827 3,681

BRIC to drive Modern Retail growth

% of Population living <1.0$ pd

% of Population Undernourished

SAARF LSM Segments: Proportion of SA adult population and average monthly household

income in 2009

Source: SAARF (2010a) & BFAP, 2010

LSM class mobility: All adults during the period 2004 to 2008

Source: SAARF AMPS data for the period 2004 to 2009, as quoted by BFAP

Consumer trends• 2009 Consumer expenditure on food: R339,7bn• Supermarket phenomenon• Globally, massive move to animal protein,

impacting on grain production as well• BFAP Consumer trends: - Health and well being - Indulgence - Ethical and environmental concerns - Simplicity - Convenience

Primary Production: Performance of SectorGross Value of Production in R million

0

10000

20000

30000

40000

50000

60000

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Crops Horticulture Animal products

R'm

illio

n

Source: DAFF, 2009.

Performance of Sector

0

20 000

40 000

60 000

80 000

100 000

120 000

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Ra

nd

X1

00

0 0

00

Seasons

Gross and Nett Farming Income

Gross Farming Income Nett Farming Income

Source: DAFF, 2009.

Agricultural trade trends

18Source: DAFF/NAMC, 2009.

Total

-

5

10

15

20

25

2004 2005 2006 2007 2008

R b

illi

on

Year

Primary exports Primary imports Primary trade balance

Primary

-10

-5

-

5

10

15

20

25

30

35

2004 2005 2006 2007 2008

R b

illi

on

Year

Processed exports Processed imports Processed trade balance

Processed

Agricultural trade

Major agricultural products exported: (R millions)

2007 2008 2009

Wine R4 749 R6 220 R6 133

Citrus R4 322 R5 869 R5 624

Corn R226 R4 210 R3 748

Table grapes R2 570 R3 198 R3 201

Apples R2 323 R3 030 R3 074

Sugar R1 947 R1 798 R3 260

Major agricultural products imported: (R millions)

2007 2008 2009

Rice R2 130 R3 827 R3 868

Wheat R1 844 R3 668 R2 377

Soybean cake R1 479 R2 573 R2 505

Palm oil R1 380 R2 469 R1 957

Soybean oil R1 495 R2 380 R901

Whisky R1 498 R1 674 R1 699

Soybean oilcake production, consumption, net trade and prices

Source: BFAP, 2010

Soybean production, domestic use, net trade and prices

Source: BFAP, 2010

SA Meat Consumption

Source: BFAP, 2010

SA chicken production, consumption and chicken:maize price ratio

Source: BFAP, 2010

Farming Debt (X R1 000 000)

Source: DAFF, 2009.

Opportunities• Farming requisites, machinery and inputs• Financing and insurance• Technology service provision• Storage and handling• Processing• Agro-logistics• Trade and marketing services• Retail

Conclusion• Growing markets create opportunities, but

with risks and stiff competition.• Technology and scale key to

competitiveness.• Developing and developed agriculture.• South Africa has a highly diversified and

competitive agro-food industry, and a lot more credit should be afforded the industry for providing safe, nutritious and affordable food to the people of our country.

Thank you

www.agbiz.co.za