Transcript Presenting the PricewaterhouseCoopers brand effectively

Agriculture & the South African
economy beyond 2010
Dr Roelof Botha
Key themes for the future
Theme 1:
Rapid technological change
Theme 2:
Rise of emerging markets
Theme 3:
Latent potential of SADC
Theme 4:
Return to a balance of power
Theme 5:
The 6% Asgisa target – myth or reality?
The World in 2015
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Genetic links of virtually all diseases have been identified
Spread of nomadic info companies leads to global taxation
GMCs surpass “natural crops”
Biochemical storage of solar energy
Voice interface for home appliances
Use of nanotechnology
Water shortages are affecting 50% of the world’s population
Population growth decelerates
The development of a digital, virtual and universal currency
Scientists have identified ways to decelerate human ageing
The World Economic League
1st Division
2nd Division
3rd Division
26 High
Income
Countries
25 Emerging
Market
Economies
Potential
Emerging
Markets
Recommended route of progress
4th Division
(a)
Small
Economies
(b)
No-hopers
Post-1980 reforms - high growth
economies
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Deregulation
Privatisation
Lower tax rates
Export promotion
Lower import duties
Separation of judicial & executive powers
Public/private partnerships
Reduction in corruption
Performance monitoring in the public sector
Transparency in public finances
Zimbabwe’s disappearing economy
(and population)
1990
US$ 5,000
US$ 480
2006
US$ 2,500
US$ 200
GDP growth
Life expectancy
Man. share of GDP
3%
60 years
30%
-10%
38 years
12%
Inflation
External debt/GDP
Capital form./GDP
White farmers
12%
64%
20%
4,000
50000%
300%
2%
100
Unemployment
20%
85%
GDP
GDP per capita
The power of the tax equation
T = t x (Economic Activity)
Composition of Government revenue
(R billion) - 2007 Budget
Skills levy - 7
Fuel levy - 24
VAT - 155
Customs duties 28
Excise duties 19
Property - 11
Individuals - 155
Companies - 163
Composition of expenditure
(R billion)
Economic
services - 84
Housing &
comm. - 42
Interest - 53
Protection - 87
General - 35
Health - 60
Education - 105
Welfare -90
The world’s top ten economies- 2005
US
Japan
Germany
UK
France
China
Italy
Canada
US $ trillion
Spain
South Korea
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4
8
12
The world’s top ten economies- 2015
US
China
Japan
Germany
UK
France
Italy
South Korea
US $ trillion
India
Brazil
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5
10
15
20
Largest emerging market populations2002
Philippines
Vietnam
Mexico
Nigeria
Russia
Brazil
Million
SADC
Indonesia
India
China
0
300
600
900
1200
Constraints facing agriculture in Africa
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Historic volatility of commodity prices
Under-investment by the private sector
Urbanisation
Decaying infrastructure
Inadequate research & development spending by
government
Outdated farming techniques
High corporate tax rates
EU & US farming subsidies
Socio-political unrest
Trends in agriculture - Cameroon
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EU debt relief of CFA 8 billion (HIPC initiative)
Subsidisation of cost inputs
Investment in agricultural diversification
Investment in infrastructure & water supply
Research & Extension Programme to reach 140,000
producers in 2007
Target sectors for productivity increases: maize, beans,
potatoes, cassava, groundnuts, coffee, oil palm, cocoa.
Trends in agriculture - Kenya
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Accounts for 60% of African cut-flower exports
Benefits from the decline in the Zimbabwean horticulture
sector
New investment in appropriate storage facilities
40% of horticulture products are lost through post-harvest
waste
Sugar industry recovery through new technologies, higheryielding cane varieties and providing farmers with access
to credit
The potential for cassava
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Yields per hectare are relatively high compared with other
crops & cassava also exhibits tolerance to drought and
degraded soils
The potential for increased production for conversion to
starch is substantial
Cassava root contains more starch, by dry weight, than
most other food crops
Can be extracted with the use of simple technologies
Cassava-based starch can be used as raw material for
ethanol production
A basic production plant can produce 280 litres of 96%
pure ethanol from only one metric ton of cassava
Commodity price changes – 2004 to 2006
Fertilizers
Food
Grains
Agriculture
Timber
Raw materials
Beverages
Energy
Metals & minerals
0
20
%
40
60
Bydrae van landbou tot BBP
% 5
4
3
2
94
95
96
97
98
99
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% van oppervlakte waarop gewasse
voorkom
Thailand
Israel
Tseggiese Rep.
Indië
Frankryk
Morokko
Brasilië
Wêreld
%
Suid-Afrika
Egipte
0
2
4
6
8
Landbougrond (ha per capita)
Suid-Afrika
Brasilië
Morokko
Frankryk
Tseggiese Rep.
Thailand
Wêreld
Indië
%
Israel
Egipte
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0.3
0.4
Vaste kapitaalvorming in landbou as %
van totaal
12
%
10
8
6
4
2
0
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
Bedreigings vir landbou in Suid-Afrika
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Grondhervorming
Arbeidswetgewing
Gebrek aan fiskale ondersteuning
Internasionale beskermingsmaatreëls
Misdaad
Skuldvlakke
Arm buurstate
Relatief hoë rentekoerse
Gemiddelde jaarlikse toename in
opbrengs per ha (1980 to 2005)
Grondbone
Koring
Tabak
Sorghum
Mielies
Katoen
Soyabone
%
Droë bone
Sonneblom
Suikerriet
0
1
2
3
4
5
6
SMME enterprises by type of economic
activity - 1998
Transport -50
Agric. -80
Catering -19
Pers. Services 87
Retail -230
Constr. -67
‘000
Manuf. -81
Bus. Services 69
Relative weighting of food products in
CPI - low income groups (total 40%)
Bread & flour -14
Other -21
Maize -8.5
Fats & oils 5.3
Red meat -10.8
Sugar -6.7
Vegetables -11.1
Other meat -14
Milk prod. -8.6
Strategiese rol van landbou in
Suid-Afrika
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Grootste enkele bron van werkskepping
Insette vir sekondêre voedselverwerking
Voedselsekuriteit
Bron van buitelandse valutaverdienste
Stabilieit met verstedeliking
Omgewingsbewaring
Bydrae tot BBP
Bydrae tot belastings
South Africa beyond 2010 – Scenario 1
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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 (populism & interventionism of
ANC partners)
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
Government dissaving
as % of GDP
%
8
6
4
2
0
'92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06
Public debt/GDP ratio
%
50
45
40
35
30
25
'84
'86
'88
'90
'92
'94
'96
'98
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'02
'04
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Trends in income & wealth
taxes/household income ratio
%
17
15
13
'97
'98
'99
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'01
'02
'03
'04
'05
'06
Real growth in household disposable
income
%
6
4
2
0
94
95
96
97
98
99
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'01
'02
'03
'04
'05
'06
Progress with meeting basic needs
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2 million houses
1000 new health clinics
Access to clean water for 10 million people
New sanitation facilities for 7 million people
4.5 million new electricity connections
Free education
Redistribution of 3 million hectares of land
Primary School Nutrition Programme for 5 million children
11 million new social grant beneficiaries
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2'
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Value of building plans passed
(Index: 2000 =100)
Index
230
180
130
80
Wholesale and retail sales trends
Index (2000 = 100)
145
Wholesale
135
Retail
125
115
3/
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4/
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3
1/
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4
2/
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4/
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105
JSE all share index (2000 = 100)
Index
240
200
160
120
80
40
93
94
95
96
97
98
99
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'01
'02
'03
'04
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'06
South Africa’s gross gold & foreign
exchange assets
Rb 400
300
200
100
0
'97
'98
'99
'00
'01
'02
'03
'04
'05
'06
Quarterly real capital formation growth
%
20
15
10
'0
7
1/
4
3
2
'0
6
1/
4
3
2
'0
5
1/
4
3
2
4
3
'0
4
1/
2/
'0
3
5
Real GDP growth
% 6
5
4
3
2
1
0
95
96
97
98
99
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'01
'02
'03
'04
'05
'06
Real capital formation in the SA
economy - pre-election scenario
Rb
110
105
100
95
90
85
80
75
70
65
60
82
83
84
85
86
87
88
89
90
91
92
93
Real capital formation in the SA
economy - post-election scenario
Rb
140
130
120
110
100
90
80
70
94
95
96
97
98
99
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'06
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2/
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3/
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4/
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6
2/
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3/
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6
Formal non-agricultural employment
7.4
m
7.2
7
6.8
6.6
6.4
6.2
South Africa beyond 2010 – Scenario 2
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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%