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Seeding future entrepreneurs

Oct 15 2017 06:01
Gayle Edmunds

Abundant harvest: Manoj Seonath, the head of agroprocessing and agriculture for the Industrial Development Corporation. PIcture: Deon Raath

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Balancing job creation, opportunity and innovation in the agricultural sector is a challenge. Manoj Seonath, head of agroprocessing at the IDC, tells Gayle Edmunds how they are approaching it.

Whether you chose cereal, eggs, toast or fruit and yogurt for breakfast this morning, your breakfast was possible because of the agroprocessing value chain.

This sector of the economy ensures that, when we visit our favourite supermarket, there is variety of goods on the shelves to feed us. And as such, it has an inportant role in growing our economy. In the last three to four years, the IDC has created in excess of 7 500 direct jobs in the sector, and this financial year to date the IDC has created in excess of 1 300 jobs and is anticipated to create a few thousand more before the financial year end in March.

Manoj Seonath, the Industrial Development Corporation’s (IDC’s) agroprocessing and agriculture head, says there is a lot of “positivity” in the sector. This has the potential to create an enormous number of jobs and have a positive impact the economy.

“You can still make a good success out of agriculture with hard work and if you have done your research. But it is not a ‘get rich quick’ sector. I do see more educated youth going back to agriculture, however,” Seonath says.

He added that, because of the sector’s potential in driving transformation and the possibilities for creating a more inclusive economy, the corporation has started to fund entrepreneurs and businesses throughout the sector’s value chain. This approach has made the corporation’s involvement more dynamic as they adapt to gaps and opportunities all along the chain.

The corporation is looking to help entrepreneurs and existing businesses looking to expand in high-value field crops; wheat and sugar; the livestock value chain such as cattle, poultry and pigs; fishing and aquaculture; beverages; forestry: and horticultures including fruit, vegetables, nuts, tea and coffee.

Seonath explains, using the dairy industry as an example. Even though the bulk of raw material (in the form of milk) comes from big commercial farmers, there is also room for the involvement of emergent black farmers. These emerging farmers could require funding to form a collective that provides a percentage of the milk to the leading dairy. This investment would be a way for the IDC to promote the inclusion of those farmers in that value chain. This would also give the farmers the opportunity to move up the value chain, where they could perhaps become shareholders in the dairy. In such instances, transformation is realised and the farmers may be further included in all parts of the value chain.

This focus on inclusion and transformation has meant that the IDC considers differently their role in funding workers’ trusts or trusts that benefit whole communities.

In a classic funding model, a funder could provide capital to buy workers a significant stake in farms on which they work. But a better long-term strategy is to ensure that those workers see real benefits of ownership (from the first year of ownership) in the form of trickle dividends.

These trusts then immediately improve the lives of these workers whereas the classic model results in years (or even decades) of waiting – usually while a capital debt is paid off – before they see any results from their investment.

Another regional level strategy is to acquire businesses that are currently run by people who wish to pass on their skills, and ultimately their business, to an emerging entrepreneur. Such an example would be where a new entrepreneur might be funded to become a partial shareholder in an established business. The IDC would then ensure that the existing skills remain in the business for three to four years, or at least until the emerging shareholder is ready to take over. This ensures that skills and businesses that are crucial to the agroprocessing value chain don’t retire or die with their current owners.

While the sector itself holds a great deal of potential, agroprocessing is held hostage by Mother Nature. Regional droughts around the country have presented farmers with some unforeseen challenges.

“We are all aware of the drought in the Western Cape and the farmers are especially affected on the growing side. The distressed farmers affect local consumption, but it [the drought] also has a major impact on export,” said Seonath.

“There are also unforeseen consequences of the drought. For example, the windbreaks on farms are trees, but when water is scarce farmers chop down these trees that use up water, which in turn exposes the farms to additional risks.”

The dynamic nature of the sector – a result of ever-changing climate patterns – means that those working in agroprocessing need to keep a constant eye on emerging opportunities, Seonath explains. An excess of maize can encourage farmers to start planting soy, for example, or farmers with the right soil type can instead grow blueberries and macadamia nuts – both of which are high-value exports for South Africa.

While the sector’s reliance on the weather offers a specific set of challenges, innovation and technology also present opportunities in the sector. Seonath says the corporation works closely with a range of agricultural organisations to tap into their ongoing and up-to-date research around climate change and technological advances.

“Technology is a trade-off with job creation. As a country, we don’t want to be left behind, but jobs are crucial.

“Technology is on our doorstep, and is being seen throughout the agricultural value chain, both on the primary and agroprocessing sides.

“We have to create and save as many jobs as we can, but we also have to look at farmer profitability. Job creation at the IDC is always vitally important, but it is also about big innovations. To balance the trade-off between job creation and technology enhancements which replace manual labour, it is vital that we find ways to grow the capacity base in the sector, so that we are able to absorb more jobs despite technological advancements.

“We have a certain amount of industrial capacity, how do we grow that industrial space to produce more demand for local and export market?”

This is a question every sector is facing.

A project in partnership with the IDC

Call the IDC 0860 693 888 or email callcentre@idc.co.za or apply online: www.idc.co.za

The pre-investment business centre walk-in centre is at the IDC head office at 19 Fredman Drive, Sandton or visit one of the regional offices

entrepreneurship  |  idc
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