Cape Peninsula University of Technology Agrifood ...

Cape Peninsula University of Technology

Agrifood Technology Station

Observations and Results from the Rapid Appraisal of Local Innovation Systems (RALIS)

exercise conducted in the Food Sectors of the Western Cape, South Africa

during April 2008 Scope This document describes the results from a rapid and participative appraisal of competitiveness and innovation systems within the Food Sector of the Western Cape, South Africa. The purpose of the exercise was to identify practical projects that could contribute catalytically to improving competitiveness of the sector. Hosted by: Agrifood Technology Station

Cape Peninsula University of Technology Sponsored by: Tshumisano Trust (Department of Science and Technology) GTZ (German Agency for Technical Cooperation)

RALIS Report: Agrifood Technology Station in support of the Western Cape Food Sector: 2008

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TABLE OF CONTENTS TABLE OF CONTENTS........................................................................................2 Acknowledgements...............................................................................................3 Abbreviations ........................................................................................................4 Definitions .............................................................................................................5 EXECUTIVE SUMMARY ......................................................................................6 1 Introduction......................................................................................................7

1.1 Report purpose.......................................................................................7 1.2 Need and Industry context (AMTS & MEDS)..........................................7

2 Process .........................................................................................................11

2.1 Goals and Objectives ...........................................................................11 2.2 Methodology .........................................................................................11 2.3 Participation and sequence of events...................................................13

3 Findings and Observations............................................................................13

3.1 Issues across the value chain and the Four Pillar Model......................13 4 Proposals for Short and Medium Term Catalytic Initiatives ...........................16

4.1 Introduction...........................................................................................16 4.2 Catalytic Initiatives................................................................................17

5 Way Forward .................................................................................................27 6 References....................................................................................................28 Appendix 1: List of participating institutions in Ralis Workshops.........................29 Appendix 2: Food Industry Structure Framework................................................31 Appendix 3: Western Cape Food Sector Advanced Manufacturing Technology Sector: Industry Analysis...............................................................................32


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Acknowledgements This report is the outcome of a wide range of stakeholder inputs, including the following:

Core Team Roles and Responsibilities Rae Wolpe Facilitator John Lawson Lead Consultant Willie Hall Nick Starke Randall Kennedy

Facilitator and Industry Advisors

Larry Dolley ATS Manager Appendix one contains the names of institututions that participated in the RALIS process.


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Abbreviations Abbreviation BBBEE Broad Based Black Economic Empowerment DoL Department of Labour DST Department of Science and Technology GDP Gross Domestic Product GDS Growth and Development Summit GTZ German Agency for Technical Cooperation IDP Integrated Development Plans KPAs Key Performance Areas LED Local Economic Development MEDS Micro-economic development strategy NGO Non-Governmental Organization PGDS Provincial Growth and Development Strategy PGWC Provincial Government Western Cape R&D Research and Development RALIS Rapid Appraisal of Local Innovation Systems SA South Africa SAAFoST South African Association for Food Science and Technology SETA Sector Education and Training Authority SMME Small, Medium and Micro Enterprise The dti The Department of Trade and Industry TISA Trade and Investment South Africa Wesgro Western Cape Trade and Investment Promotion Authority


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Definitions Term Definitions

Competitiveness

Competitiveness is determined by the productivity with which a sector or a company within a specific sector uses its human, capital, and natural resources. In general, a sector’s competitiveness is driven by its micro-environment, macro-environment, and quality of business strategy and operations. If the increases in productivity resulting from innovation are sustainable, innovation can lead to improved standards of living for the average person and in the end to prosperity and rising welfare

Food Sector

The industry and the companies within this sector that produce, process and sell products, which are used for physical consumption (eating and drinking) by humans (Western Cape Advanced Manufacturing Technology Strategy (2004)).

Innovation

Innovation is defined broadly to include all stakeholders along this value chain and any action that will result in improved competitiveness. It is not just confined to production factors, nor just on the roles of firms. Innovation means to find a new way of doing things, i.e. to create something new by pulling together existing elements (“recombination”). This can be producing a given garment or fabric in a more efficient

Value Chain The entire sequence of economic activities from the generation of raw materials to the delivery of a final product to a customer


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EXECUTIVE SUMMARY The Food Sector plays a significant role in the economy of the Western Cape. Most players in the sector are highly dependent upon labour and consequently the sector is one of the main employers in the Western Cape. The nature of the industry lends itself to entrepreneurial business models and consequently the sector contains a multitude of small manufacturers. Rapid Appraisal of Local Innovation Systems (RALIS©) is a rapid, practical, bottom-up, participatory, network-stimulating and innovation-oriented approach to value chain development and local/regional economic development. The objectives of the RALIS in the food sector in the Western Cape was to formulate practical proposals that will enhance innovation and strengthen the competitiveness of the food sector in Western Cape. Simultaneously, this was to gain commitment from industry, government, support institutions and unions to support and implement the projects aimed at exploiting the short and medium term opportunities to improve competitiveness of the sector. The core part of the food RALIS process was executed from 7-18th April 2008. The team conducted 14 interviews and 6 Mini-workshops with 70 stakeholders from various sub-sectors and related organizations. The information gathered was analyzed based on the Four-Pillar-Model of Technological Capability, to identify the key strengths and weaknesses of the Local Innovation System. Practical initiatives were identified to mainly contribute towards reducing barriers to entry for SMEs in the food sector, and to increase the scale of innovation and technology transfer. Improvements in these areas should contribute towards increased competitiveness, in turn leading to increased growth and more jobs. The following initiatives were prioritized based on expected impact, pragmatism and availability of resources:

• Establish a reliable Information and Referral Service • Turnkey product and process development • Investigation into Pilot plant facilities • CPUT Academic Re-Curriculation and Technology Transfer • Respond to the Need for Short Courses • Identify and Implement Collaborative Projects by Accessing State and

Other Funding Opportunities • Multi-expert Issue-Focused Review Panels • Food Innovation Competition • Review Policies & Procedures relating to ATS and CPUT Interaction

Champions have agreed to drive implementation of these initiatives.


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1 Introduction

1.1 Report purpose The purpose of this report is to summarize the RALIS process followed and results achieved in terms of way forward catalytic initiatives. The anticipated impacts from this process include:

• A better understanding by the Technology Station of the Agrifood industry and its needs;

• Clear guidelines on what the station can offer the SMEs in the Agrifood industry as well as what the station will NOT do;

• Identification of catalytic initiatives which are realistic and implementable and which can have a positive impact on innovation in the Western Cape food sector with resultant enhanced job creation and economic empowerment.

1.2 Need and Industry context (AMTS & MEDS) The Food Sector plays a significant role in the economy of the Western Cape. The industry is extensive and diverse. The level of cohesion within the sector is extremely low and even the sub-sector industry organizations are seeing an erosion in membership. The sector spans the entire value chain from primary producer (farmer) to processor. The value chain itself is complex due to the number of value adding players in the chain and the involvement permutations. The diagram below (Figure 1) gives some insight into the complexities of the value chain. In principle, the exact value chain is product specific. Figure 1: General Food Value Chain

Consum

er

Source: Western Cape Advanced Manufacturing Strategy: Food Sector (2004).


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As can be seen from the above diagram, the route to market in the food sector is complex with a range of value adding intermediaries, largely dependent upon the product type and target market definition and location. It should be borne in mind that the above diagram is also a simplification of the real situation in that each of the entities indicated on the diagram will have a number of sub-types. For instance the “Retailer” could take the following forms:

Supermarket; Hypermarket; Food Store; Forecourt Store; Convenience Store; Restaurant; Fast Food Outlet; Internet Store; etc.

The Western Cape Micro-economic Development Strategy for the Food Sector (2006) focused on the following value chain elements in Figure 2 below: Figure 2: Western Cape Food Micro-economic development strategy value chain focus

Source: Western Cape Provincial Government, Micro-Economic Development Strategy: Food Sector (2006)

SterilisingPulpingDryingCanningMilling & grinding PressingChillingFreezing HeatingFermentation & aging Preservation in vinegarSugar-based preservationChemical preservationPackaging & labelling

“BASIC” AGRO-PROCESSING

“ADVANCED” FOOD PROCESSING -SUBSTANTIAL TRANSFORMATION &

COMBINING

ExtractionMixing/ combining to recipeFlavouringExtrusionBaking and cookingPreservationPackaging & labelling

FruitVegetables, roots & tubers

Chocolate &confectionary

Grains & cereals

Ready meals & meal solutions

Sauces

Snacks

Pasta & noodles

PRO

CES

S EX

AM

PLES

Seeds & nutsHoney

Herbs, leaves & flowers

Sorting & gradingCutting & peelingChillingPackaging & labelling

Meat, poultry, fish & by-productsMilk & eggs

Juices

Whole dried goodsPowders & flours

Pastes

Sugars, syrups

Pickles & jams Fats and oils

Buttermilk yoghurt, cheese,

Frozen /freeze dried goods

Soups

Food

ingr

edie

nts

& “f

unct

iona

l”ad

ditiv

es*

Seasonings

Baby food

Breakfast cereals

Vinegars

Baked goods

Meal replacements

Spreads

* E l f f d i di t fl & fl h f t b tit t

PRO

DUCT

EXA

MPL

ES

FOOD PROCESSINGAGRICULTURE


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The nature of the industry lends itself to entrepreneurial business models and consequently the sector contains a multitude of small manufacturers. By the same token, these businesses are frequently consolidated into substantial businesses. This is a significant trend in the industry. The main corporate players in the Western Cape industry are:

o Pioneer Foods o Tiger Brands o Distell o KWV o Ceres Group

The MEDS identified the following overall industry strengths, weaknesses, threats and opportunities (Table 1): Table 1: Western Cape Food Value Chain Strengths, Weaknesses, Threats, Opportunities. Strengths

Weaknesses

• Strong and established agricultural sector • Various indigenous and endemic plants • Many established processors • Food processing activity in various parts of the

province • Strong transport, cool chain and export infrastructure • Strong retail base in the province • Relatively high consumer spending • Well established tourism industry – domestic and

international • Attractive lifestyle drawing high-value food investors • Existing food technology and research capacity

• Inadequate information gathering and dissemination

• Historical trend of limited output and employment growth

• Limited empowerment • Insufficient manufacturing and food-

specific skills • Inadequate access to national

incentives

Opportunities

Threats

• Specialist production linked to farm and tourism activity

• Specialist retail opportunities e.g. franchise,independents, niche

• Skills transfer and empowerment to unlock newcapabilities

• Food trends that match Western Cape capabilities • Responding to specific local tastes and niche markets• Product development utilising indigenous/endemic

resources • Export growth in niche or high value-add products • Innovative packaging • Branding to tap into established “lifestyle” associations

• Water shortages, climate change • SME access to mainstream retail • Concentration and strength of

multinational brands / imports • Failure to comply with certification/

food safety requirements • Failure to access required

proprietary technologies

While there is no coherent provincial food sector association, there are various national associations e.g. SAAFoST, Agricultural Processors Association,


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Consumer Goods Council (formerly Grocery Manufacturers Association). There are also some national sub-sectoral associations based in the Western Cape e.g. olive oil, honeybush, etc. Most players in the sector are highly dependent upon labour and consequently the sector is one of the main employers in the Western Cape. However, the exact level of employment within the sector is unknown although it is probable that the food sector is the largest employer in the Western Cape1. Furthermore, there is a significant level of employment in the supporting industries (such as packaging, equipment manufacture, etc). Other industry factors which were identified as part of the Western Cape Advanced Manufacturing Technology strategy process are: • Growing strength of retailers: Through a process of consolidation, the

buying power of the remaining retail chains is getting significantly stronger, especially with small players. Furthermore, most retailers have own brand strategies and are steadily eroding the position of the manufacturers brands with consequent drop in profits. By the same token, this trend is opening opportunities for startup manufacturers2 who do not have the financial strength to take on the big brands.

• The current level of the Rand has put pressure on manufacturers by eroding their export cost position as well as in local markets due to cheap imports. In spite of this the health of the local economy coupled with low interest rates presents good prospects for top line growth.

• The industry is relatively mature and stagnant. This is evidenced by low real growth rates3. Furthermore, internationally, the industry is characterized by low levels of innovation (mainly line extensions/overseas imports).

• A concern is the low levels of reinvestment in assets with most companies in the sector being content to simply maintain assets.

• In general the sector has yet to show any real levels of empowerment although there are a few notable exceptions.

1 Especially if agriculture is included in the sector. 2 To manufacture products for the dealers own brand. This allows the manufacturer to focus resources on the task of manufacturing without having to build a brand. 3 Probably the main driving force behind the industry consolidation as the larger companies seek investment and turnover growth opportunities.


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2 Process

2.1 Goals and Objectives The objectives of the RALIS exercise include the following:

1. To formulate practical proposals that will enhance innovation and strengthen the competitiveness of the food sector in Western Cape

2. To gain commitment from industry, government, support institutions and unions to support and implement the projects aimed at exploiting the short and medium term opportunities to improve competitiveness of the sector.

Successful implementation of identified initiatives are expected to contribute towards reducing barriers to entry for SMEs in the food sector and increase the scale of innovation and technology transfer. Improvements in these factors are expected to contribute towards increased sector competitiveness, in turn leading to increased growth and more jobs.

2.2 Methodology Rapid Appraisal of Local Innovation Systems (RALIS©) is a methodology to attain, within a short period of time, an overview of the main features of a local innovation system and the innovation processes along a value chain. In the wider sense, it is a rapid, practical, bottom-up, participatory, network-stimulating and innovation-oriented approach to value chain development and local/regional economic development RALIS© is different from other diagnostic efforts in various respects:

1. Quickly scanning the structure of the local innovation system, identifying main mechanisms and bottlenecks to technology transfer.

2. Involving relevant stakeholders along the value chain in a participatory way and motivating them to enhance interaction.

3. Identifying suitable actions for improvement and innovation.

4. Transferring know-how to local stakeholders and businesses. The key idea of RALIS© is to conduct a rapid diagnosis of a locality, a value chain or a cluster with a special focus on technology and innovation. The starting point is an observation which is consistently coming out of the analysis of successful localities: innovation is not only based on intra-firm efforts but also, and in particular, on dense networks of interaction between a variety of actors -- companies, training institutions, research and technology extension institutions, and others. Thus, RALIS© is designed in a way which permits the identification of


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such networks (local innovation systems), or their absence, and a rough assessment of their density and effectiveness (see Figure 3 below). Figure 3: The Context of the Local Innovation System

Conventional approaches often involve huge up-front investment in terms of time and money, it often takes long for proposals to develop and emerge. These proposals are not always practical and compatible with the local mindset. RALIS© does the opposite. It is an action- and results-oriented methodology which is based on principles of rapid and participatory appraisal. Its basic elements are:

• The initial diagnosis takes no more than 10-14 days, and the results are presented and discussed immediately post-process completion.

• Both external specialists and local stakeholders are involved in the diagnosis. The stakeholders’ active participation facilitates the transfer of methodological and conceptual know-how, and it motivates and empowers local actors to continue with the initiative once the external consultants have left the project.

• External consultants play a role in the first diagnosis, but the main work in implementing concrete activities has to be done by local actors, firms and institutions.


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2.3 Participation and sequence of events The activities followed the typical sequence of a RALIS© project (see figure 4 below):

o Preparatory activities: organization and collection of advance information (31st January 2008)

o Workshop of Technology Station with University Administration (1 April 2008)

o Implementation of RALIS© Exercise (7-18th April 2008): o Internal hypothesis workshop o Kick-off workshop o Fieldwork (interviews and mini-workshops) o Internal results workshop (diagnosis and proposals) o Presentation event o Way-forward workshops

Figure 4: Western Cape Food Sector: Ralis Participation Process

Prepa-ration:* Orga* Ad-vanceinfo

Kick-off

Wks

Results-Workshop:Diagnosis

+ Proposals

Interviews

Mini-workshops

Pre-sen-tationevent

Imple-mentation

Hy-po-the-sis

Wks

Wayfor-

wardWks

7 Workshops +14 Interviews =Input from +- 70 stakeholders

Today

The RALIS team conducted 14 interviews and 6 Mini-workshops with 70 stakeholders from various sub-sectors and related organisations. Interviews and mini-workshops utilised structuring tools like the 4-Pillar Model of Technological Capabilities (see figure 5) or Michael Porter’s 5-Forces.

3 Findings and Observations

3.1 Issues across the value chain and the Four Pillar Model The findings and observations of the rapid appraisal follow. Due to the rapid appraisal approach, the findings and proposals are sometimes generic statements and ideas serving as stimulus and as inputs to the follow up workshops, which still have to unpack, drill down and further specify.


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Figure 5: Four Pillar Model of the Innovation System:

Table 2: Western Cape Food Value Chain RALIS Exercise

Observations: OObbsseerrvvaattiioonnss oonn FFiirrmmss

Consumer demand trends results in retailers / export markets as well as regulatory systems demanding more from suppliers: –Less trust in food, more importance attached to food safety –Greater health concerns requiring health-improving products –Demands on Packaging and Labelling to match above –Environmentally aware, eg recycling –Increased demands for convenience –Food fashion trends

This places increased demands for supplier expertise and diversity, systems of compliance and accreditation

Retailers have massive bargaining power advantage over suppliers, and do not always understand the full consequences to SMEs

Continuous improvement and innovation is expected Some retailers expect all SMEs to appoint a food technologist These and other factors result in barriers to entry into markets increasing

and even existing SMEs dropping out Some retailer’s continuously increasing demands adds cost to SMEs

struggling to survive and at the same time expect lower prices from these SMEs

SMEs are increasingly struggling to overcome these barriers Those that succeed with overcoming them gain advantage, find new

customers and grow faster There are many creative ideas but very few make it to the market


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–Limited product & process development know-how –Limited marketing know-how –Limited entrepreneurial skills

SMEs don’t know where to find appropriate information on what to do, good practices, and who can help

Many enterprises fear collaboration, as ideas are easy to copy, and it occurs often

There are many sub-sector and professional bodies A few sector bodies have facilitated effective cluster collaboration Limited collaboration around food exports – increasing costs and

sometimes damaging the SA industry reputation

OObbsseerrvvaattiioonnss oonn EEdduuccaattiioonn IInnssttiittuuttiioonnss

Growing demand for higher skills and more food technologists Industry is currently experiencing a shortage of skilled staff

–Number of qualified –Skills levels –Older qualified persons not always keeping up with trends

Lead firms express their concern about skill levels and expertise Limitation specifically in Product and Process Development expertise

relating to all stages from idea to consumer Currently insufficient graduate personnel (at CPUT and nationally) Knowledge resources on good practices not yet well-consolidated and

easily accessible to SMEs Lack of appropriate and specific sort courses targeted at things like shelf-

life testing, sampling, product development et al.

OObbsseerrvvaattiioonnss oonn TTeecchhnnoollooggyy SSuuppppoorrtt IInnssttiittuuttiioonnss

Inconsistency of testing and accreditation service results Shortage of laboratory expertise Outdated analytical equipment in some instances Backlogs at some laboratories due to above resulting in unnecessary

delays Some tests in SA take 6 weeks whilst the UK takes 3 days Limited choices in suppliers of accreditation services Testing and Accreditation services more costly than necessary Erroneous results from labs passed without question in some instances These factors contribute to higher development cost and slower

development cycles, contrary to the market demand for faster and more reliable development cycles

OObbsseerrvvaattiioonnss oonn FFrraammeewwoorrkk CCoonnddiittiioonnss

Government policy impacts: Health, Agriculture, Consumer Protection (Trade and Industry), Environmental Affairs

Fragmented government policies impact on industry growth –e.g. conservation policy impedes Abalone production

Delays in passing legislation impacts cost of products International quality systems impact local regulatory systems Major retailers seek to define unique standards to differentiate

themselves Food safety systems that do exist not always well understood by users or

auditors (or have different perceptions)


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4 Proposals for Short and Medium Term Catalytic Initiatives

4.1 Introduction Proposals with a bias for quick and visible results are listed below. The RALIS methodology promotes a focus on a limited number of practical proposals. Criteria for selection of RALIS initiatives included:

• Opportunities that could rapidly make the most substantial impact. • Suitable to be implemented quickly. • Suitable to show visible / tangible effects within 3- 6 months. • Suitable to be implemented with available resources (motivation, skills,

time, funds). The logic behind these criteria and the need to identify proposals that are likely to be implemented is that fast and visible results will encourage further collaboration and joint effort, to face the challenges. As the efforts of collaboration increase, more ambitious and longer-term initiatives are more likely to succeed. Key Proposed Initiatives The Following priority initiatives have been identified:

Initiative 1: Information and Referral Service Initiative 2: Turnkey product and process development Initiative 3: Investigation into Pilot plant facilities Initiative 4: CPUT Academic Re-Curriculation and Technology

Transfer Initiative 5: Respond to the Need for Short Courses Initiative 6: Identify and Implement Collaborative Projects by

Accessing State and Other Funding Opportunities Initiative 7: Multi-expert Issue-Focused Review Panels Initiative 8: Food Innovation Competition Initiative 9: Review Policies & Procedures relating to ATS and

CPUT Interaction


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4.2 Catalytic Initiatives Initiative 1: A one stop information service- responding mainly to e-mail inquiries within a 24-hour response time Offerings (description) Champion Funding Risks/ Blockages Priorities

and Next Steps

When Started?

Backed by a comprehensive and up to date resource database concentrating on the following elements:

Business start-up information such as funding sources, State agencies assisting, etc.

Services such as laboratories, suppliers of ingredients and equipment and other support services such as consultants and their specialities (incl. internet-enabled database with service provider links)

New product development: feasibility, costing, process to follow, labelling, packaging

Access to information regarding internal and external legislation, food safety systems and audits.

Information Service Larry, Bradley, CPUT (Food Tech) Larry Dolley + interns – referral database Nick Starke – to develop

Tshumisano as a motivated project, approaches to be made to SAAFoST and PGWC

Slow response times Not sufficiently accessible re. open

for business times vs education hours

Not being able to provide relevant information

Insufficient response capacity to respond to demand

Criticism re not accessible to grass-roots level and limited capacity to deal with face-to-face and telephonic enquiries

Email communication channel not ideal relationship medium

Being able to obtain sufficient information_ perceived competition Information outdates and inaccuratemay lead to referrals to poor provider services/ o unhappiness

TOR then appoint project manager & topic expert to design service & est. operations TOR for service specification/ offering & performance targets Appoint Team leader / job profile FAQ compile

Manager appointed


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Initiative 2: Turnkey product and process development services Offerings (description) Champi

on Funding Risks/ Blockages Priorities and Next

Steps When Started?

Market and industry trends necessitate ongoing product development The service will provide both product and process development for companies to develop a product from idea to final marketable product. This service will also include the following: nutritional analysis shelf life testing label development packaging selection sensory analysis (technical and focus groups) scale-up facility The service will add value by breaking down the barriers for SME’s to enter into the market with new products. It will assist them in testing ideas before major expenses are incurred on equipment that might not be suitable for the process, or on “dead ducks”

Larry Dolley + Bradley + CPUT Foodtech

Internal The setting up of the systems will be funded internally by the Station with support from Tshumisano. Other corporate funders to be approached

Services limited by lack of new Plant and lab equipment Lack of appropriately skilled Staff and ability to appoint new staff Low service levels Contracting re lack of proper service contract to deal with product failure risk, service specification etc. Poor quality control with health risks Failure to manage client expectations Lack of branding/ merchandising / distribution /labelling knowledge/skill impacts on client/ product success

Finalise contract research & IP policy Identify target client profiles Finalise service description & design/ print publicity material appropriate to client profile Develop standard conditions of service for PD Identify most critical unit operation gaps and initiate steps to address

Policies finalised Identify target client profiles


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Initiative 3: Investigate pilot plant facilities and build a new plant to fill the gaps Offerings (description) Cha

mpion

Funding

Risks/ Blockages Priorities and Next Steps When Started?

There is a need for a laboratory that can effectively respond to requirements for competitive product and process development. An investigation will be launched into the availability of pilot plant facilities in the country and what capabilities already exist. Based on the findings, a pilot plant will be built to fill the gaps where facilities are required, but do not exist. The plant will conform to all international food safety standards. Offerings of the pilot plant:

create a platform for prototyping of products or production lines

small production runs for market testing

training facility for CPUT students ValueL State-of-the-art facility will attract more and better learners and CPUT can better respond to industry needs Student will get better exposure to up-to-date technologies and increased opportunities for practical experience and therefore better equipped to add value to industry

Jessy van Wyk + Willie Hall

CPUT consolidation funding CSI for equipment, DST, PAWC

Identification of strong business case based on sound research Finalisation of plant location Land suitability (sufficient services etc.) & availability Approval from Profs Fatoki, Staak, Tanga. Facility consolidation funds: Warren Conrad Clarify ASAP: Can enough funds be secured and how much funds are required (compile facility specification)? (building costs 3000m2, finishing, human resources etc.)

In-principle formal decision confirming land availability / location (from Prof Staak) Letter from PGWC re confirm funding of feasibility/ bus case. Get quotes & appointment: consultant(s) (fast-track preferred supplier route) (companies good history building food plants etc.)

o Business case o Building plants (land suitability)

Business Case and specification, to clarify budget and get approval key decision-makers (by end June) (w/ industry input) (communicate progress updates along the way) Study tour/ International expert identify (?German, Denmark?) Tshumisano letter intent (David) and DST Chief Director (find out who) present/ support)c Provincial government support (+ skills budget who in charge) and Treasury official identify

Consultant’s appointment by Mid May .


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Station will be able to provide more competitive product and process development services to assist SME’s and larger companies to get their new products to the market quicker with the least amount of errors, utilising world class technology to gain a competitive edge, supported by the analytical service of Food Tech The shared small scale production run facilities reduces the cost of development and therefore allows more development, to take place Increased product development will lead to more innovation successes which will result in growth of existing firms and allow more entrants into the market Both of the above will lead to improved competition which will support increased specialisation, innovation ,and is likely to contribute to lower food prices


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Initiative4: CPUT Academic Re-Curriculation and Technology Transfer: Offerings (description) Champi

on Funding

Risks/ Blockages Priorities and Next Steps

When Started?

Update the present curriculum with value-added elements based on outcomes of RALIS together with transfer of knowledge and technology advances experienced in the Station’s business. This to include further statistics, GLP, production planning and management, NPD, shelf-life testing, alternative processing and food safety et al. VALUE: A uniquely updated curriculum with more value-added graduates and possibly a new qualification offered by CPUT.

Jessy van Wyk (Food Technology: CPUT)

CPUT Standard practice at CPUT – no overt costs

Insufficient academic space / time in 3 year course to cover all topics adequately New degree may not be accepted DOE & institutional planners

Long term project and existing processes underway

Proposals for new degree have been tabled/ proposed, instit. planners agree, and stakeholders then make inputs


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Initiative 5: Identify Needs for Short Courses Offerings (description)

Champion

Funding

Risks/ Blockages Priorities and Next Steps

When Started?

Identify the priority needs for specific short courses. Develop courses if they do not exist and list/employ service providers to deliver to constituents. VALUE: Niche, unique, specialist market-driven courses are not freely available. The costs prohibits participation for many. Pooling/coordinating this need reduces development and delivery cost to clients generally.

Larry Dolley + Jessy van Wyk

Internal Seed

funding from Agrifood Technology Station and further funding via successful running of courses to become self-sustaining.

Wrong courses identified based on poor input Wrong person (or no person) appointed to identify industry needs Courses designed poorly Industry not prepared to share access to existing internal courses Lack of accreditation may limit demand/ take-up from employees Industry not attend courses due to timing, length, costs, structure etc. Lack of qualified service providers

Contract (incl. TOR) person to identify needs incl. contact industry to explore opportunity to broaden access to their internal courses Identify service providers to offer courses/ appropriate raining ITO contract. Publicise courses Deliver courses Quality assurance

Appointment made


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Initiative 6: Identify possibilities for jointly accessing government funding and broker deals for clients Offerings (description)

Champion Funding Risks/ Blockages Priorities and Next Steps When Started?

The Station to act as a broker to support industries in terms of joint projects including SME support, training, mentoring, export support, certification with a view to accessing State and other funding agencies. VALUE: A myriad of funding agencies and requirements can be simplified with synergy and clout in terms of joint funding applications

Larry Dolley + Shaheed Hartley + Tsumisano + Randall Kennedy

Internal Seed funding from

Agrifood Technology Station and further funding via successful applications

Unsuccessful deals Expectations not managed- reputation damage Credibility and skills and connections of facilitator

Spech & scope service offerings (learn from others/ examples in+outside TSs) Identify high potential topics/ issues Identify funding deal maker service providers to facilitate application, structure relationship (contract-seed funding) and submit project proposals

Service defined Service provider appointed


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Initiative 7: Multi expert review service Offerings (description) Champion Funding Risks/ Blockages Priorities and

Next Steps When Started?

Panels of Issues-Focused Industry Experts convened and facilitated by ATS, such as: Product development feasibility advice service Strengthening of cluster initiatives in order to improve: Joint collaborative research initiatives across sub-sectors Lobby government to address cross-sector constraints Access to information on cutting edge technologies and market research Sharing of best practice approaches to specific problem-solving Accreditation services improvements: Workshop with accreditation bodies to address variation in different systems, cost concerns, and disparities in interpretation VALUE: Access to top expertise to address industry needs/ priorities on ongoing basis Efficient, fast-track access to expert advice to speed up product development process and access relevant support Enhanced ability of industry/ cluster initiatives to resolve sub-sector and cross-sector constraints (e.g. lobbying government effectively) and add value to members through enhanced access to market information

Larry Dolley supported by (?rotating) panel of industry experts and specialised service providers

–Participation voluntary based on added value to all

Finding sustainable public sector funding partner Industry does not respond- see clear benefits Confidentiality/ trust/ safety barriers to participation Expectations not managed Processes become complicated, lengthy etc.

Define programme & communicate Secure funding Hold workshops based on demand/ hot topics and ensure responsibility for outcomes is shared by participants

Define programme & communicated


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Initiative 8: Innovation Competition Offerings (description) Champion Funding Risks/ Blockages Priorities and

Next Steps When Started?

A paper-based competition based on feasible innovative ideas for new products or processes being taken to the market phase. Possible cash prize and/or substantial assistance with getting idea to market. VALUE: Unearth new innovative talent (without costs of going to market) i.e. a training ground for innovators, stimulating a creative tension with the possibility of linking the idea to a company who could take it to market.

Nick Stark + (possible PAWC + SAAFoST)

Funder to be identified

PGWC to be approached.

Funding not secured for prizes Industry does not support- perceived as competition Insufficient publicity/ awareness/ submissions

Allocate seed funding Facilitator brief compile Hold think-tank to define TOR and rules of game Secure funding Partner with media- food review/ Food Bev report etc. Appoint relevant service provider turn-key (event management, PR? Etc.)

Facilitator brief compiled


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Initiative 8: Review policies and procedures for the operation of ATS under CPUT Offerings (description)

Champion Funding Risks/ Blockages Priorities and Next Steps

When Started?

The current relationship places some constraints on the Station, some fiduciary, some HR and some operational. Some policies and procedures are being further developed and reviewed presently. VALUE: The Technology Station needs to respond to clients in a business like manner, such as efficient responses to clients. Reduced red-tape and bureaucracy in procurement, without compromising governance.

Larry Dolley, Dr. C. Nhlapo (DVC: Innovation & Partnerships). Dr.S. Hartley (Contract Research Unit), Prof. A Fatoki (Dean: Applied Sciences)

CPUT Standard practice at CPUT – no overt costs

Policy changes/ plans not supported / approved Governance controls tightened, restricting service delivery efficiency

Larry meet EMT to update on key decisions required and get confirmation of support for plans (assess if further Tshum support needed) Engage with policy comment processes

First meeting Deputy VC


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5 Way Forward Implementation of these initiatives commenced immediately after the RALIS. Monthly meetings of champions serve to take stock of progress and provide opportunity for champions to gain further support where required. The results of these monthly meetings will be shared with stakeholders directly involved in the initiatives and quarterly reporting to all stakeholders will keep everyone informed about progress. A follow-up industry-wide event will be scheduled for one year after the RALIS to review achievements, and identify new industry and market developments and their implications in terms of catalytic initiatives.


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6 References Western Cape PAMTS, Food Sector Report (May 2005) Western Cape Provincial Government, Micro-economic development strategy: Food Sector (2006).


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Appendix 1: List of participating institutions in Ralis Workshops NAME SURNAME COMPANY Anza Bester Swift Laboratories Willie Hall FIRI Consulting Nick Starke Private Consultant Rosie Maguire In Essence Johan Visser Nampak R&D Arrie Wessels Pioneer Foods Ina Paarman Paarman Foods Micheal Graz I&J Kieran Quinn Danisco Randall Kennedy hr Options Africa Mashumi Tutu Pioneer Foods Daunton Ogilvie Nestle Grant Momplé Afriplex Dennis Griffiths Sea Harvest Goodwell Dingaan PGWC Saligh Bardien Improchem Manuel Jackson CPUT Adri Al-Mohamadi Tshumisano/GTZ Sharon Crafford CPUT Shaheed Hartley CPUT Victor Hugo CPUT Karen Carstensen Woolworths Deon Ackhurst Orley Chris Nhlapo CPUT Jessy van Wyk CPUT Olalekan Fatoki CPUT Larry Dolley CPUT Kim O’Kennedy Pioneer Foods Barbara Kleinschmidt Totally Wild Aloe Michael Sittig Lionheart Gary Pardoe Chemimpro Theo Pepler Pioneer Foods David Howard Pioneer Foods Danielle Croza Woolworths Andrea Hegewisch Hegewisch Consulting Abdullah Amien Nestlé Purina Bertram Fisher Pioneer Foods Mel Butterworth SEDAWC Aobakwe Galehole Student


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Derrick Brown Sasko Nashieta Cooper CPUT Intern Zininzi Ntando CPUT Joseline Felix-Minnaar CPUT André Munian CSIR Nixwell Mudau University Limpopo Luthengo Negenomoni University Limpopo Mark Topass Topass Consulting Terry Nicholson San Giorgio’s Meats Natalie Kanigowska LB Manufacturing Kathryn Sinclair Tiger Brands Nicolette Bird Simba Lucia Anelich Consultant Julie Strydom Freddy Hirsch Wayne Barnes Abalone Farmers Ass. Gerhard Niemand Puris Johan Neethling Consultant Thomas Mashamaite Tshumisano Hybre Michaels Student Intern


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Appendix 2: Food Industry Structure Framework

Source: Western Cape Advanced Manufacturing Technology Strategy (2004)


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Appendix 3: Western Cape Food Sector Advanced Manufacturing Technology Sector: Industry Analysis4 MMAARRKKEETT TTRREENNDDSS AANNDD DDEEVVEELLOOPPMMEENNTTSS The market trends which are defining the future of the food industry have been identified by a brain storming exercise with a panel from industry, academia and government. Examination of the schedule reveals the following broad trends in the food market:

Convenience: The lives of consumers are becoming more and more rushed.

Furthermore, there is a significant trend in the number of single parents and/or

families where both parents work. In response they are seeking to minimize the

time spent preparing meals without having to sacrifice nutrition or taste.

Out of Home: The proportion of spend on meals away from home is increases.

Variety: Consumers are becoming accustomed to being presented with an

abundance of choice, be this due to innovative formulations, novel packaging or

slick supply chain management56. This trend is set to continue and it will be the

key to future growth for manufacturers.

Food Safety: Consumers are becoming more and more aware of the potential

hazards of processed and packaged foods, be this due to formulation, errant

processing or malicious action. The demand is for greater vigilance on the part of

food manufacturers.

Consolidation: In a continued drive for profit growth and economies of scale,

players in the industry will seek alliances and amalgamations.

It should be noted that these trends are probably prevalent in all sectors of the food market although the product offering will be significantly different with income group being the primary differentiator. Furthermore, it is interesting to note that these trends are representative of both the local Western Cape situation as well as the national situation. In addition, while the product offering may differ somewhat7, the base trend is probably the same in most parts of the world. In fact, due to advances in processing and packaging technology as well as supply chain management, products are easily moved across the globe, especially the

4 Source: Source: Western Cape Advanced Manufacturing Technology Strategy (2004) 5 This could be due to the fact that products that could previously not be made available can now be offered to consumers or fresh produce being brought from other parts of the world in out of season periods. 6 Or a combination of these technologies. 7 Due to ethnic preferences and disposable income.


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higher priced items that can afford to carry a transport premium8.

TTEECCHHNNOOLLOOGGYY TTRREENNDDSS AANNDD DDEEVVEELLOOPPMMEENNTTSS The defining trends for the food sector was considered in some depth by a panel constituted from players within the Western Cape food sector. The technologies that were identified in this session are listed in annexure C. From a consideration of the identified technologies in conjunction with a model for the inputs to food products production processes (see right) the following key technology areas (including sub areas) have been identified for the food sector:

Agriculture Innovative Ingredients Packaging Technology New Processing Technology ICT Supply Chain Management

These areas can be correlated with the PAMTS project technology areas as follows: TECHNOLOGY AREA

FOOD SECTOR DEFINITION

Advanced Materials

Advanced Product

Technologies

Adv. Production

Technologies

Cleaner Production

Agriculture

Innovative Ingredients

Packaging Technology

New Processing Technology

ICT

Supply Chain Management

From the above is is clear that technological developments within the industry are taking place on a broad front with no one player making significant advances on all fronts. Typically advanced technology tends to occur in localised areas even within an individual company and it is not unusual to find the latest technology being employed adjacent to age old manual processes. What is also apparent is that companies tend to focus in specific areas of technological development as opposed to advancing across a broad front. The reason for this would appear to be in-house competence as opposed to specific strategy. 8 This is evidenced by some larger manufacturers consolidating the manufacture of certain products at single locations for distribution across a broad geography.


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While initial consideration may lead one to believe that the sector is not technology intensive, closer examination reveals that this is not necessarily the case. What is true however is that the application of technology differs significantly from the approach in other sectors. SSTTRRAATTEEGGIICC IIMMPPEERRAATTIIVVEESS

The food sector is a mature industry9. It serves a broad spectrum of needs across the entire population of the Western Cape. It is difficult to imagine a situation where the entire sector will fail to be successful. Certainly individual parts will be more successful than others as they are able to better adjust to market requirements and conditions. Certain sub sectors may even disappear. However, it is highly unlikely the food sector nor any of the components, as defined in the value chain diagram in section 1 will disappear within the next 10 years. However, what is certain is that they will change their form as they grapple with market demands and conditions. Accordingly, the strategic imperatives should be considered from a provincial perspective, specifically, what actions should the Western Cape take in order to ensure a strong and vibrant food sector.

9 In the Western Cape, nationally and internationally.

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