Extending the ABP

CHICORY INDUSTRY SUPPORT INITIATIVE:

Background:

CDM's participation in the ABP process, commitment to local economic development and awareness of the massive skills and employment shortages in the CDM area has mobilized the Planning Unit (CDM's PU) to draft and formalize a strategic plan to enhance a particular component of the agricultural sector.

After lengthy consideration it was decided that Chicory Industry should be the focus area for analysis and possible supportive interventions.

The intention of the CDM is to assist with investigations relating to the following:

• Alternative land identification;
• Identification of required infrastructure (agricultural and civil);
• Alternative product marketing strategies;
• Alternative uses for existing infrastructure;
• Create opportunities for interaction with and investment of relevant stakeholders.

Why the Chicory Industry?

All roasted chicory produced in South Africa is cultivated within a 200 km radius of the town of Alexandria.  Roasted chicory production is thus unique to the Cacadu District and the Ndlambe Local Municipality.

Alexandria falls within ‘Key Focus Area 3' as identified by the ABP / LAA and is part of the Ndlambe Local Municipality. 

Raw chicory is processed in Alexandria, by Chicory SA, into roasted chicory.  Ninety-six percent of the roasted chicory is sold by Chicory SA to coffee-producing companies in South Africa.

The Ndlambe area has suffered extensive job losses recently with the decline of the pineapple industry and the shift of commercial farmers from the chicory enterprise due to various strategic reasons.

This situation and the following factors underpin the CDM PU's desire to formulate a strategic plan in relation to the Chicory Industry:

• The uniqueness of the product to the CDM area;
• Chicory production is by nature labour intensive thus having the possibility of job creation;
• The product also demonstrates increasing opportunities for alternative uses and innovative marketing strategies.

It is from this premise that the CDM PU is proposing to utilize the content of the ABP/LAA to investigate and develop the following issues further:

• The potential of current Land Reform Projects in the area for chicory production;
• The Agricultural Infrastructural Requirements of establishing a chicory farm;
• The Civil Infrastructural Requirements of maximizing the economic benefits of chicory production in the Ndlambe area;
• Solutions to industry specific challenges such as labour issues, value adding and variations to product marketing.

It is anticipated that the information derived from these investigations could be formulated into a Strategic Plan in co-operation with Chicory SA, for Chicory Production within the Cacadu District.

The proposed plan would allow chicory production to be exploited to its full economic potential to the benefit of the area concerned.

Current Situation in the Chicory Industry:

Chicory SA is the only processor of chicory in South Africa. The processing plant in Alexandria has been operational for over 40 years and has 4 dryers each of which cost R 11 million to install.

The following factors have had a negative effect on the South African Chicory Industry since the deregulation of the marketing boards in 1993:

• The industry faces international competition from other chicory-producing countries which do not have minimum wage restrictions and have the benefit of government incentives;

• Chicory is labour intensive, especially in-season. Many producers have chosen to attend to other means of production which are less labour intensive due to the negative impacts labour unions and action such as strikes;

• The strengthening of the maize price caused many chicory producers to plant alternative crops;

• The high cost of new entrants in terms of crop establishment and infrastructure requirements.

The above situation has resulted in Chicory SA experiencing a shortage in the supply of chicory since many producers have let the market.  Further, the recent dry conditions have resulted in the lowest production tonnage for 2008/2009 in the history of Chicory SA. 

Possible interventions to improve the current situation include:

• Increase chicory production under irrigation - costly in terms of infrastructure inputs and costs;
• Identify more producers, especially dry land production within close vicinity of the processing plant;
• Educate current producers to obtain maximum yields;
• Encourage current producers to plant more hectares of chicory;
• Determine alternative uses for the processing plant;
• Re-engineer the marketing of chicory in terms of the raw product and alternative product uses;
• Investigate the possibility of organized labour in the form of teams that are coordinated and managed by Chicory SA.

Chicory SA's supply restrictions are viewed as an opportunity to target emerging farmers with access to suitable land as identified via the ABP / LAA. 

For emerging farmers, this presents an opportunity to access the technical and management skills associated with chicory production in addition to a secured market for their product.

Discussions with Chicory SA:

With reference to the above, CDM's PU met with Chicory SA on Tuesday, 22 September 2009.

The meeting identified two primary avenues which require investigating in order to revitalize the Chicory Industry in Alexandria and surrounds:

i)    Marketing:

This intervention is two fold, namely,

a)  Marketing of the industry to potential producers:

The Marketing of the actual industry will look at promoting the benefits of chicory production in terms of a secured buyer of the product, extensive technical support to producers etc.

This will focus on land owners (existing land reform beneficiaries) and previous chicory lands (potentially those farmers who need to recoup from unsuccessful diary ventures) - Southwell has been identified as a possibility.

Marketing will be formalized and channeled through banks, existing area based study groups, farmers unions and organized commodity groupings.

b)  Marketing of the product:

A marketing campaign needs to be devised around chicory as an independent consumer product (beverage).  Particular focus needs to be on the health benefits.

ii)     Land Identification:

There is a chronic need to identify land for chicory production.  Chicory SA is unable to provide sufficient product to South African Clients who have been forced in previous years to import from India (inferior product).

It is proposed to identify focus areas based on past, current and future chicory farms in Alexandria and Bathurst.

The intention is to cluster 10 ha units to minimize input costs and risk and maximize profit potential.

Way Forward:

Chicory SA has provided the Planning Unit with spatial information relative to current and past chicory farms.  This information has been plotted using GIS and will be utilized to approach potential producers on viable properties to cultivate chicory.

Further, the Planning Unit is collaborating with the CDM's Department of Economic Development to ensure that Chicory is piloted as a prominent product in the formulation and launching of CDM's Trade and Investment Interface.

Previous page

PrintExportBookmark