CHALLENGES AND OPPORTUNITIES FACING THE MADC

1
CHALLENGES AND OPPORTUNITIES FACING THE MADC

• The block of granite which was an obstacle in
  the path of the weak becomes a stepping stone in
  the path of the strong Thomas Carlyle.

2

• The MADC has a noble vision, that of aspiring To
  be the leading development and agricultural
  finance organisation.
• The purpose of the MADC, its mission, is to
  contribute to the economic growth of the
  agricultural sector of the Mpumalanga Province
  by
• - Providing loan finance for viable farming
  enterprises and agri-businesses
• - Providing business advice and counseling
• - Facilitating access to markets for emerging
  commercial farmers and agri-businesses
• - Facilitating training and capacity
• building for MADC clients
• - Providing project management services for
  target government intervention programmes.

3

• The corporation contributes actively to
  government initiatives concerning
• Poverty alleviation
• Rural development
• Employment creation
• Youth and female development
• HIVAIDS programmes
• Environment caretaking

4

• The MADCs ultimate goal is to become a model for
  agricultural development corporations (DFIs) in
  Southern Africa
• Agriculture is a dynamic industry, constantly
  being affected in various ways by changes in the
  climate, technology, marketing and government
  policy.
• Consequently, little in agriculture remains the
  same for long market conditions change from year
  to year, weather conditions change, as do the
  governments agricultural and economic policies.
  In addition, new products and production
  techniques are being developed all the time
  Finance and Farmers 1999.

5
INTERNATIONAL LEVEL

• Nowadays, agriculture operates in a deregulated
  and internationalised environment. Globalisation
  has brought many challenges as well as
  opportunities.
• International problems are solved by means of
  conventions, agreements, treaties or between
  power and trade blocks. The underlying idea is
  that everybody should be equally happy or equally
  unhappy.

6

• This trend influences or even dictates the policy
  options that countries could adopt.
• The result of a farmers policy decisions are
  increasingly being determined by international
  mega-factors and national macro-factors.
• Let us look at how policy decisions influence
  various levels of agricultural production,
  processing, storage, marketing and consumption of
  agricultural products and services.

7
NATIONAL LEVEL

• The repeal of the Agricultural Marketing Act of
  1935 which resulted in the abolition of
  agricultural control board system.
• The repeal of the Agricultural Credit Act of 1968
  which resulted in the abolition of agricultural
  financial assistance schemes. The government has
  ultimately realised its mistake by bringing them
  (assistance schemes) back in the form of CASP and
  MAFISA programmes.
• Deregulation of Co-operatives and as a result
  they transformed into trusts, CCs or private
  companies

8
PROVINCIAL AND LOCAL LEVEL

• Unclear policies regarding various forms of
  Development Finance Institutions (DFIs)
• In-fighting for control and ownership of these
  (DFIs) institutions as delivery mechanisms
  vis-à-vis the perception of them being viewed as
  either competing with, or duplicating, the role
  of the responsible department/s

9
MADC LEVEL OR DFIs

• The perception by the clients (farmers) of DFIs
  being extensions of the Department/s mandated
• The refusal by the farmers/clients to repay loans
  advanced to them because such funds are coming
  from the government (tax-payers contribution)
  a perception
• The perception of wanting to equate loans to
  government grants

10

• Unkind and uncompromising market forces
• Poor farm infrastructure
• Persistent drought conditions
• Unaffordable insurance premiums
• Dualism nature of the agricultural sector (which
  the President refers to as First and Second
  Economy)
• Dualism in land ownership and utilisation
• High land prices as well as other requisites such
  as machinery, implements and inputs prices

11

• In his State of the Province address, Premier
  Makwetla stated that together with various
  stakeholders that were in the PGDS summit, have
  all committed to transform the province into one
  that is, amongst other things,
• A province that is no longer an example of
  poverty, unemployment and underdevelopment.
• A province of equitable and wide-ranging
  development opportunities for the citizens.

12

• The Premiers statement poses both challenges and
  opportunities for MADC. It requires us to move
  with speed in addressing issues of poverty, job
  creation and exploiting opportunities on behalf
  of our clients.
• Sasol is investing in a R12 billion project,
  which commenced in January, to expand downstream
  value chain beneficiation in the chemical
  industry Premiers SoP Address, 2005.
• Sasol is manufacturing lots of agro-chemicals and
  fertilizers.

13

• The MADC should approach SASOL to negotiate a
  stake on behalf of itself to be passed over to
  BEE partners that can be identified later on.
  The Premier mentioned the CASP programme,
  partnership with Research Institutions and
  implementation of the Agricultural Sector Plan
  with the aim of improving the agricultures
  contribution to wealth creation in our province,
  and particularly our rural areas.

14

• An amount of R15 million has been set aside to
  roll out an improved support programme aiming at
  supporting and benefiting those rural communities
  who want to go back to land.
• The President has put aside R1billion for the
  establishment of the agricultural Credit Schemes
  that are now taking the shape of MAFISA to be
  implemented in April 2005.
• The Minister of Finance, in his budget speech,
  has announced that R600 million is available for
  this financial year.

15

• MADC is busy positioning itself to finance right
  through the value chain
• Plans are close to maturity for the establishment
  of an equity fund
• This will surely increase the momentum aimed at
  addressing the Agri-BEE targets
• Again, MADC will increase the pace of turning
  around the problematic land reform programmes
• The MADC is ready, willing, and able to take on
  the mammoth and daunting task of economic
  development in the agricultural related field