Agri-Outlook 2007 Conclusion and Acknowledgements

1. Agri-Outlook 2007Conclusion and Acknowledgements By Herman van Schalkwyk CEO: AMT

2. Daniel Silke Succession 2009 • Beyond 2009 • Enhancing the developmental rather than a dysfunctional state • Competing globally AMT Conference 2007

3. Roelof BothaSouth Africa beyond 2010Scenario 1 • High levels of crime persist & brain drain continues • Instability in Zimbabwe & DR Congo continues • Uncompetitive corporate tax rate & high cost of capital • Relatively low levels of labour productivity • Political risk remains high • Public service becomes increasingly inefficient • Labour market rigidity continues & high wages persist • Over-regulation continues (particularly BEE) • Economic growth does not reach the Asgisa target AMT Conference 2007

4. Roelof BothaSouth Africa beyond 2010 – Scenario 2 • Sustained expansion of infrastructure • Peace in DR Congo, Mugabe retires & crime drops • RDP houses reach the 3 million mark • Health policy becomes more effective • Primary sectors benefit from commodity surge • Strong growth in financial, IT & business services • Fiscal policy becomes more growth-orientated • Deregulation is pursued on all fronts • New President embraces market friendly policies • Asgisa target reached & lifted to 7% AMT Conference 2007

5. Jan GroenewaldProbable Future Developments • More recognition of different final demand segments, nationally and internationally. • Will different segments be served by specialized firms, or more diversified firms? Do we have the management needed for the latter? Will we see parallel, or branching value chains? • Increased countervailing power movement (struggles?) in agricultural value chains, with increased cooperation among primary producers. • New generation cooperatives among established commercial producers, and assistance to cooperatives serving small farmers AMT Conference 2007

6. Jan GroenewaldProbable Future Developments… • Volatility in production and in prices. • This may lead to new hedging innovations; more infrastructure investment, higher fixed costs, increased importance of procurement & financial management. Also more intense market scanning! • Increased calls from labour union & populist groups for government intervention. • So many people ask: What should the government do? But so few ask: What CAN a government do well? AMT Conference 2007

7. Ron SandreyTrade and the way forward • Bilateral and Regional – these are blurred • Economic Partnership Agreements (EPA) for African Caribbean and Pacific (ACP) now merging into a SADC (SACU)/South African TDCA for tariffs. This should (in theory) give South Africa some power for agr access in Europe. • Tralac analysis suggests that there was a lot ‘left on the table’ for agr in the TDCA • BEEF is the big issue (plus sugar) AMT Conference 2007

8. Ron SandreyTrade and the way forward • Bilateral –regional continued with FTA analysis • India-Brazil-South Africa (IBSA). Some increased agr exports to India, and some increased imports from Brazil • China - some increased exports (sugar) and very minor changes to agr imports. Clothing the big issue. • Japan – solid increases in agr exports (maize) • USA – sugar and oilseed exports. Marginal imports AMT Conference 2007

9. Andrew FearneSuccessful Marketing in Agrifood industry • Opportunities abound in increasingly fragmenting markets • Provenance, environment, health & well-being, fair-trade indulgence… • Need much better understanding of who buys what and why in support of targeted market segmentation • The more scarce the resources the more important it is to target them • Cannot afford to ‘hit and hope’ AMT Conference 2007

10. Andrew FearneSuccessful Marketing in Agrifood industry • Sustainable competitive advantage requires fundamental changes to industry structure and business capability • leaders with strategic vision who understand the drivers for change and embrace the principles of co-innovation within and between organisations • alignment of scarce resources with the needs & wants of targeted consumer segments in distinct value chains • efficient and effective flow of information to all stakeholders who have the capacity to exploit it • integration ofkey business processes with key customers and key suppliers AMT Conference 2007

11. Charles HughesChina’s effect on SA Agriculture • What can we learn from this and what impact will it have on SA and Africa • Both SA and Africa have been targeted by China to provide a wide range of products to boost their needs • The African continent has the potential to grow many staples and China is willing and able to invest millions of $’s to achieve these goals • China has already identified Africa for development • Beijing have 12 specific projects covering a host of crops sustainable and beneficial for China • For SA its aquaculture in the Northern Province’s AMT Conference 2007

12. Charles HughesChina’s effect on SA Agriculture • SA should be in conjunction with Govt pursuing bilateral agreements to attract funds from China to develop unused or under utilized land aimed at export • Bio-fuel crops could be a major priority • SA could follow China’s small scale farming principles helping new farmers to develop unused land • SA could revise its farming principles to grow suitable crops by region • Of course we should also learn from their past mistakes and tap into current successes! AMT Conference 2007

13. Lindie BothaRetailers VS Producers • We say “Supermarkets in SA are to concentrated and powerful” • But remember: The biggest monopoly in our country is also our biggest contributor to our economy – DE BEERS • Today, with globalization and deregulation of international markets, concentration and power of SA Supermarkets is actually low! • It is not just Pick ‘n Pay, Shoprite, Woolworths and SPAR anymore, but also Tesco, Wal-Mart, Carrefour and Ahold… • Our Supermarkets are also not as big as they think they are when they negotiate prices and setting their standards & requirements • Difference between supermarket procurer and a terrorist? • Agriculture should position themselves better • However, producers should take in consideration what risks/costs are being carried by retailers, before attempting to replace the pressure back up the value chain AMT Conference 2007

14. Emile van Zyl Biofuels • Fossil fuel won’t last! Biofuels are here to stay, at least for the next decade or two – get use to it! • South Africa has potential to play in the biofuels arena, we should not be too hasty and we should learn from other’s mistakes. • However, if we come to grip with 1 & 2 above, South Africa can be a force in the biofuels field, locally and abroad. We had and we still have know-how and excellence – we have to nurture it wisely! • If we make a concerted effort and invest in lignocellulosics in time, be willing to change to a sustainable future and manage energy crops too, South Africa can provide for himself in the future! AMT Conference 2007

15. Thozi GwanyaEnabling Environment : Partnership • Identify sector needs that may unite the sector • Agree to disagree on specific issues • Agree on strategy to address the needs & differences • Regular focus sessions to be on the same page (shared understanding and approach) • Reviews and assessment • Support to Ministerial Advisory Council AMT Conference 2007

16. Thozi GwanyaPartnerships in Agriculture • Dialogue and Negotiations led to the SA miracle • The Implementation of the Sector Plan is the test for successful partnership in the agriculture sector • Collective effort from both the Government and the sector Partners will take us where we want to go as the sector • This country has many opportunities for all of us, we must simply learn to work together in the spirit and letter of the new SA AMT Conference 2007

17. Andre DuvenhageGrondhervorming: Die pad vorentoe • Transformasie en sy toepassing op die gebied van grondhervorming is uiters kompleks en kan nie net top-down hanteer word nie. • Landbou (in die algemeen) se vermoë om aan die sosiale en ekonomiese verwagtinge van die meerderheid te voldoen is baie beperk. (Regering moet waak teen onredelike verwagtinge.) • Grondhervorming is ‘n baie emosionele kwessie en politieke retoriek, simboliek en mitologisering moet met groot omsigtigheid hanteer word. • ‘n Pragmatiese eerder as ‘n ideologiese benadering moet vooropgestel word. • Suksesvolle grondhervorming is gelyk aan die suksesvolle bestuur van die dialektiek van: Politieke Stabiliteit (Politieke mobilisasie en verwagtinge) vs Ekonomiese volhoubaarheid (Ekonomiese stabiliteit; produksie vermoë ens.) AMT Conference 2007

18. Andre DuvenhageGrondhervorming: Die pad vorentoe Staat: • Ontwikkelingsrol. • Kapasiteitskepping. • Deursigtigheid en verantwoordelikheid. • Veiligheid en sekuriteit. • Bevordering van `n demokratiese etos en praktyke wat met goeie regering verband hou. Kommersiele landbou: • Samewerking met ander rolspelers. • Investering en groei. • Strategiese vennoot met regering/ owerhede. • Brugbou (sosiale) kapitaal. • Opleiding en Mentorskappe. AMT Conference 2007

19. Johan van den Berg Climate Outlook Bottom line Strongest La Nina development with associated normal or cooler than normal Indian Ocean in the past few decades AMT Conference 2007

20. Steve HochfeldSafex APD Free Markets CANNOT operate without a PRICING mechanism. Need FUTURES Market for “Price Risk Management” AMT Conference 2007

21. Higher Yielding Nitrogen Utilization Drought Tolerance Herbicide Tolerance Yield Per Acre Increases Insect Protection …and Beyond Early Next Decade Mid Next Decade Commercialized Molecular Breeding Forms the Solid Base to Build in Seed Enhancement Kobus LindequeScientific Advancement Resulting inCurrent and Future Yield Enhancement Advances Assisting in Protecting and Boosting Yields Commercialized Products Insulate farmers from extreme weather and insect infestations Future Products Boost yield while maximizing the seed for use in feed, food and fuel AMT Conference 2007

22. Johan WillemseForecast for Agricultural Industries • Most agricultural industries experienced declining prices during 2003-06,linked mostly to the stronger rand/international supplies. • Prices increased strongly during 2007, grains & livestock, as a result of fundamental international market changes, while South Africa became an importer of most basic commodities-with high international prices working through the domestic market. • Domestic production costs continue to increase ( Labour, energy, packaging, transport, interest payments, property taxes.)-reducing underlying competitiveness. • Current imbalances in world demand/supply of most basic agriculture products/with record prices-affects the SA economy negatively, via reduced wealth effect (higher food prices and loss of economic activities in rural areas were work is needed). • Unsupportive government policies towards commercial agriculture,deter investments and growth in the sector. The idea of food security based on imports, should be re-thinked. • Most agricultural product prices will remain high for most of 2007/08, even increasing further, as world and local imbalances in supply and demand is expected to continue. AMT Conference 2007

23. Conclusions • Many challenges: • Politics beyond 2009 • Economics beyond 2010 • Orientation of Organised Agriculture • Focus to lobby (reactive) versus focus to position agriculture strategically • Market orientation • Horisontal Thinking versus Supply Chain Thinking • New markets (China, etc) • Improve market instruments • Climate • Short run positive • Long run? • Product • Positive prices • Cooperation • Address issues that will unite sector • Need strong, dynamic, intellectual leadership on all levels AMT Conference 2007

24. Acknowledgements • The Speakers • You the Audience • The Exhibitors • The Sponsors • Senwes • ABSA • Landbouweekblad • Monsanto, DBSA, Mutual and Federal, Sanlam, Insectscience, Falling Feather Inn, Mondis Guest House, Casa Toscana, Pebblefountain Guest Lodge, Penguin Tours, Kejafa and African Outfitters • AMT personnel AMT Conference 2007