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Gift mafuleka :cutting edge agric value chain financing

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Looks at cutting edge agricultural development through public-private partnership finance models. Experiences of Mphiwe Siyalima Enterprises in South Africa, a small to medium size farming corporation, are shared.

Publié dans : Business, Économie & finance
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Gift mafuleka :cutting edge agric value chain financing

  1. 1. CUTTING EDGE AGRICULTURAL DEVELOPMENT THROUGH PUBLIC PRIVATE PARTNERSHIP FINANCE MODELS ---------------------------------------------------------------------- Including experiences of Mphiwe Siyalima Enterprises in South Africa, a small to medium size farming corporation. Gift Mafuleka BTech: Agriculture: TUT Foum for Agricultural Research in Africa 6th Africa Agricultural Science Week, ACCRA, GHANA 15-20 July 2013
  2. 2. OUTLINE 1. Background: Agricultural Development in Africa 2. Introduction: Agricultural Financing in Africa 3. Main challenges: The 4 Production Factors 4. Enterprise Level Financing 5. Industry Level Value Chain Financing 6. Risks Management 7. Conclusion
  3. 3. BACKGROUND: AGRICULTURAL DEVELOPMENT IN AFRICA 19th Century • Agricultural Extension Services • Agricultural Co-operatives • International Donor Funding –Supply Driven 20th Century • Agricultural Value Chains • Agricultural Technology • International Donor Funding –Market Driven
  4. 4. 1. Background: Agricultural Development in Africa 2. Introduction: Agricultural Financing in Africa 3. Main challenges: The 4 Production Factors 4. Enterprise Level Financing 5. Industry Level Value Chain Financing 6. Risks Management 7. Conclusion
  5. 5. INTRODUCTION: AGRICULTURAL FINANCING • The Future and the Past co-exist in the Present • Subsistence and Smallholder farming versus modern, high tech, integrated value chains operating globally. • New global competition – manufactured competitiveness (value chains) versus old natural /comparative advantages or competitive advantages
  6. 6. INTRODUCTION: AGRICULTURAL FINANCING (Cont.) • “What are we as Africa doing to ensure that we champion and pioneer development successes in food value chains across geographical spheres?”
  7. 7. INTRODUCTION: AGRICULTURAL FINANCING (Cont.) Financial Analysis Socio-economic contribution Job creations and Skills Development Real Impact
  8. 8. INTRODUCTION: AGRICULTURAL FINANCING (Cont.) Financial Analysis Socio-economic contribution Job creations and Skills Development Real ImpactBefore After
  9. 9. 1. Background: Agricultural Development in Africa 2. Introduction: Agricultural Financing in Africa 3. Main challenges: The 4 Production Factors 4. Enterprise Level Financing 5. Industry Level Value Chain Financing 6. Risks Management 7. Conclusion
  10. 10. CHALLENGES • Lack of self-driven agripreneurs – Entrepreneur • Disintegrated or lack of relevant training - Management • Unfavourable land tenure systems – Land • Lack of cognitively restructured financing - Capital
  11. 11. 1. Background: Agricultural Development in Africa 2. Introduction: Agricultural Financing in Africa 3. Main challenges: The 4 Production Factors 4. Enterprise Level Financing 5. Industry Level Value Chain Financing 6. Risks Management 7. Conclusion
  12. 12. ENTERPRISE FINANCE MODEL 12 Input&Equipment FarmingExpertise Land&Infrastructure Transport&Markets Real Impact on Enterprise Development Public Private Partnerships
  13. 13. MPHIWE SIYALIMA ENTERPRISES MPHIWE SIYALIMA 2013-14 Grain Production 600ha Maize 500ha Soybeans 100ha Vegetables Production 35 ha Cabbage 20ha GreenMaize 30ha McCain Production 60ha Peas60ha (winter) Semi-intensive Beef Production 200LSU/200ha STUDBreeding 100LSU Preconditioning& Weaner Production CommercialBeef Production 50LSU 13
  14. 14. EXPENDITURE 2010/11 Infrastructure Expenditure, 1 212 592.00, 29% Farm Production, 1 133 148.00, 27% Overhead Expenses, 1 077 000.00, 26% Cattle , 403 000.00, 10% Moveable Assets Expenditure, 356 560.00, 8% Infrastructure Expenditure Farm Production Overhead Expenses Cattle Moveable Assets Expenditure
  15. 15. EXPENDITURE 2012/13 Infrastructure Expenditure, 550 000.00, 5% Farm Production, 6 500 000.00, 56% Overhead Expenses 1,900,000.00 16% Cattle , 850 000.00, 7% Moveable Assets Expenditure, 1 856 560.00, 16% Infrastructure Expenditure Farm Production Overhead Expenses Cattle Moveable Assets Expenditure 15
  16. 16. 1. Background: Agricultural Development in Africa 2. Introduction: Agricultural Financing in Africa 3. Main challenges: The 4 Production Factors 4. Enterprise Level Financing 5. Industry Level Value Chain Financing 6. Risks Management 7. Conclusion
  17. 17. AGRICULTURAL VALUE CHAIN FINANCING (ENTERPRISE LEVEL) 17 Farmer produces for a specific off taker Off- taker Contract Production output Production input Contract Farmer Backgrounder Feedlot operators Agro-processors Exporters Peas seed delivery Harvesting & deliveryCrop husbandryPlanting of peas
  18. 18. AGRICULTURAL VALUE CHAIN FINANCING (INDUSRTY LEVEL) Collateral Guarantee Fund 18 18 Government & Donors Collateral (50% - 90% of loan value) Agricultural Development Bank Funding flow Agricultural Lender Collateral Guarantee Fund Fund administration + participation Eligible Lender With extension services Credit Assessment & loan Eligible Borrower Farmer of Agribusiness Partnerships with public & private sectors can be Formal market Futures, Off-take agreements, Open etc. Sales Formal Markets
  19. 19. AGRICULTURAL VALUE CHAIN RISK MANAGEMENT MODEL 19 19 OPEN e.g. Traders, Agro-processors, Supermarkets, Retailers. (Spot price) HEDGING e.g. Futures Market, Grain traders - Fixed prices Farmer 60% of direct costs – Grain crops Eligible Lender OFF-TAKE e.g. Agro-processors, Feedlot, Exporters - Fixed Prices 20% of direct costs – Grain crops 20% of direct costs - Grain crops Deliver Proceeds on saleProceeds less direct input costs Cessionofaportionof theproductionoutput Insurance cover i.r.o. Quality & Quantity Insurance wont cover Bad Farming Practices Proceeds (Normally informal markets) 80% of out– Ornamental crops 20% of out– Ornamental crops
  20. 20. 1. Background 2. Introduction 3. Main challenges: The 4 Production Factors 4. Enterprise Level Financing 5. Agricultural Value Chain Financing 6. Risks Management 7. Conclusion
  21. 21. Weather RISK MATRIX 22 Low Manageability Watch Factors Distracters Tactical Factors Strategic Drivers BEE and Land Reform Regulatory Compliance Consumer activism Food safety Food Security Cyber crime Ethical Trade and Social Upliftment Water Quality Available Human Capital Climate Change Availability of Resources Value Chain Integration New Technology Global Economy High Impact Low Impact High Manageability Food Inflation Uncertain monitory, tax and fiscal policies Labour Laws Illegal Trading Strategic Alliances Alternative Energy Data fraud Political uprising Globalization
  22. 22. Weather RISK MATRIX 23 Low Manageability Watch Factors Distracters Tactical Factors Strategic Drivers BEE and Land Reform Regulatory Compliance Consumer activism Food safety Food Security Cyber crime Ethical Trade and Social Upliftment Water Quality Available Human Capital Climate Change Availability of Resources Value Chain Integration New Technology Global Economy High Impact Low Impact High Manageability Food Inflation Uncertain monitory, tax and fiscal policies Labour Laws Illegal Trading Strategic Alliances Alternative Energy Tea Coffee Dairy Livestock Fishing Rice and Maize AgribusinessesPiggery Data fraud Political uprising Globalization
  23. 23. Weather RISK MATRIX 24 Low Manageability Watch Factors Distracters Tactical Factors Strategic Drivers BEE and Land Reform Regulatory Compliance Consumer activism Food safety Food Security Cyber crime Ethical Trade and Social Upliftment Water Quality Available Human Capital Climate Change Availability of Resources Value Chain Integration New Technology Global Economy High Impact Low Impact High Manageability Food Inflation Uncertain monitory, tax and fiscal policies Labour Laws Illegal Trading Strategic Alliances Alternative Energy Tea Coffee Dairy Livestock Fishing Rice and Maize AgribusinessesPiggery Data fraud Political uprising Globalization
  24. 24. 1. Background 2. Introduction 3. Main challenges: The 4 Production Factors 4. Enterprise Level Financing 5. Agricultural Value Chain Financing 6. Risks Management 7. Conclusion
  25. 25. CONCLUSION • A focus on developing and improving agricultural value chains will change the image of farming, perceptions by the bankers, young people and our governments. • Micro Financiers remain an integral part to smallholder farmer development in Africa. • Our skill, experience and drive as farmers is an asset to our enterprises • Private Public Partnerships as well as agripreneurship and technology drive.

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