AGRO-PROCESSING & DEVELOPMENT IN SOUTH AFRICA

It is my intention to relaunch the site before the end of 2007, at which time I will inform all those on the SAFPP address list. Please email me if you want to make sure you are on the SAFPP list. In the meantime you could read my blog at http://agribusiness.wordpress.com/ which will be integrated with www.safpp.net.

Dave Harcourt

04/11/2007

12/01/2006 - Focusing on a niche product

So SMMEs can focus on developing niche food products that have appeal to the target markets the select.

This calls for real effort, first of all in selecting the market they wish to serve, identifying that markets need, developing a product then developing the marketing plan.

What sort of niche products.

• The bakeries that I referred to which found competition from the commercial bakeries in South Africa, bought a gas cooker, large pot and oil and started producing "vetkoek" (essentially a savoury doughnut) using the raw materials and skills they had acquired in setting up the bakeries. They were looking at differentiating their vetkoek by adding the type of condiments, normally eaten with the vetkoek, before cooking.

• In Botswana wood fired ovens produced by the Rural Industries Innovation Center are used to produce wedding cakes in the remote rural areas of Botswana. This works because the urban confectionary bakeries are to far away to take orders and the cakes are not easily transported in a taxi.

These are really looking a products to address local markets but there are examples of products that have taken the worldwide formal markets by storm.

• Amarula Cream, (the second biggest cream liquor in the world) arose from a well defined niche ie a product from Africa that could be promoted as such.

• The sun dried tomato hit the South African market a few decades below and was an immediate hit commanding a high price amongst those looking for a health natural product to add to their trendy up market cooking.

Its of course not as easy as this makes it sound, but its one of the tried and tested way of succeeding. There are of course others

09/01/2006 - Agro-Processing and Development

I have been quite busy recently with a number of projects that were all aiming at the same thing - to identify agriculture based processing opportunities in South Africa.

It is interesting that there is now a strong awareness of the potential of agro-processing, after all in South Africa the existing industry contributes about 2.4% to total GDP, 3.2% to exports and and 2% of total employment (Mather 2005) which meant sales were around 80 billion Rand (12 billion US$) and employment just over 140 000 in 2003.

However, it should also be noted that Food Processing's growth has been lower than the rest of the manufacturing industry, there is over capacity in the industry and it is dominated by large factories, companies and groups that operate in the global market.

This means while agro-processing offers opportunities for the Small Enterprise, its not simply a matter of starting  processing and reaping the benefits.

This is what I am going to be addressing here over the next while topic by topic. My first topic and surely something we will come back to often is MARKET.

I know every one will say "yes of course we know we need a market" but if they really understood it why do they come to me and ask "what technology have you got for me to start a business?". It is something that the new business really has to take to heart and address very seriously.

In the South African situation where major companies dominate its even more important and probably demands that any though of making a commodity type food product is shelved. In South Africa these are distributed at spaza (informal shop) level throughout the country. I was once working on a bakery we had installed in a deep rural area and was shocked to see two bakery groups trucks making their delivery by mid morning. When we later tried to match their prices to gain a school feeding scheme contract were say the power of economy of scale and marginal costing.

Dave Harcourt

09/01/2006

PS The Mather article referred to above "SMEs in South Africa’s Food Processing Complex: Development Prospects, Constraints and Opportunities" (http://www.tips.org.za/profile/annualreport2003/activities.pdf) is an interesting one as it deals in some detail with the constraints facing Small Enterprises in South Africa.

PSS The SAFPP website has fallen somewhat into disrepair - I apologise for this and will be bringing it back on line over the next while.

Chronological Blog

09/01/2006

Agro-Processing and Development

I have been quite busy recently with a number of projects that were all aiming at the same thing - to identify agriculture based processing opportunities in South Africa.

It is interesting that there is now a strong awareness of the potential of agro-processing, after all in South Africa the existing industry contributes about 2.4% to total GDP, 3.2% to exports and and 2% of total employment (Mather 2005) which meant sales were around 80 billion Rand (12 billion US$) and employment just over 140 000 in 2003.

However, it should also be noted that Food Processing's growth has been lower than the rest of the manufacturing industry, there is over capacity in the industry and it is dominated by large factories, companies and groups that operate in the global market.

This means while agro-processing offers opportunities for the Small Enterprise, its not simply a matter of starting  processing and reaping the benefits.

This is what I am going to be addressing here over the next while topic by topic. My first topic and surely something we will come back to often is MARKET.

I know every one will say "yes of course we know we need a market" but if they really understood it why do they come to me and ask "what technology have you got for me to start a business?". It is something that the new business really has to take to heart and address very seriously.

In the South African situation where major companies dominate its even more important and probably demands that any though of making a commodity type food product is shelved. In South Africa these are distributed at spaza (informal shop) level throughout the country. I was once working on a bakery we had installed in a deep rural area and was shocked to see two bakery groups trucks making their delivery by mid morning. When we later tried to match their prices to gain a school feeding scheme contract were say the power of economy of scale and marginal costing.

Dave Harcourt

09/01/2006

PS The Mather article referred to above "SMEs in South Africa’s Food Processing Complex: Development Prospects, Constraints and Opportunities" (http://www.tips.org.za/profile/annualreport2003/activities.pdf) is an interesting one as it deals in some detail with the constraints facing Small Enterprises in South Africa.

PSS The SAFPP website has fallen somewhat into disrepair - I apologise for this and will be bringing it back on line over the next while.