Access Agri Rural Development Corporation (AARDC), serving the agricultural sector, is a wholly owned subsidiary of African Access Holdings (Pty) Ltd which is itself a 100% black owned company established in 2003 belonging to a new era of empowerment that has seen the creation of a number of self-sufficient and successful black-owned companies and which is one of the Top 200 companies in southern Africa.

The main objective and strategy of AARDC is to manage and drive agriculturally based projects which can act as catalysts in successfully achieving the government s broader aims of rural development, namely, sustainable rural growth, poverty eradication and broader economic growth.

The business processes deployed by AARDC are based on the supply of a turnkey project/process management model ensuring a one stop Rural Development service provision. The approach followed by AARDC is based on the promotion and implementation of best practice project and programme management principles as well as appropriate technology based technical solutions within all levels of the Programme. The necessity of a project management based model is enclosed in the diverse nature of rural development making it impossible for any one business entity to have all the specialist resources available inhouse. The advantage is that accountability is accepted and all specialist services and inputs are controlled and streamlined to achieve a mutual objective in the most cost effective manner. It furthermore enables the utilisation of expert skills on an sub contractual basis for a specific need over a pre determined time frame and costing.

These processes essentially involve Government and Public Private Partnerships (PPPs). Among the specialist services offered by AARDC and referred to in the document are Agricultural Viability Studies (including Business Modelling and Planning and Project Planning and Management)

and Training and Mentoring (including Land Reform process Management, Technical Applications and Finance and Risk Management). Furthermore, diagrams are included to illustrate Project Management Processes and particularly the Project Initiation Process.

Rural Development

The President and Government have realigned their focus, as stated during the President's State of the Nation s speech, to Rural Development rather than Land Reform exclusively. The Budget allocation of R590 million being made available for this purpose underlines this reality. Interpreting this in respect of opportunities created, it is thus clear that any engagement by the private sector should be geared to address more broadly based Rural Development rather than solely on more limited small-scale agricultural reform.

The most important issue regarding Rural Development is achieving self sustainability. Small-scale micro agricultural

Economic systems must be established in rural areas combined with infrastructure development in the area to ensure outside investment through availability and accessibility of resources. A combination of Government

resources for the development of infrastructure combined with private sector resource to optimise the utilisation of resources is necessary for successful Rural Development. In many instances this goes directly against the existing monopolised mass production and processing economy in South Africa. However, small locally based production and processing abilities will be crucial in ensuring that available money remains within a rural microcosm whilst simultaneously providing an affordable alternative to the larger local area and population as well as the optimisation of local resources in order to ignite local micro economic units or systems within rural areas. This will simultaneously enhance entrepreneurial job creation opportunities within such a local community.

In the present economic climate, the successful implementation of sustainable rural development will mostly depend on the optimal utilisation of a range of resources in a combination of production, processing and local distribution.

AGRICULTURE (THE CATALYST)

The catalyst for rural development must nevertheless be agriculture as this is the single most important economic activity in rural areas and the most commonly available resource in which Government has already invested huge amounts of capital through Land Reform initiatives. Agriculture is therefore poised to become the instrument, a means towards an end, for Rural Development. Any knowledgeable person understanding the Land Reform Processes, Restitution; LRAD and Pro Active Land Reform as well as the Agricultural Industry, knows that the profit margins and risks involved makes the agricultural industry a high risk low return business.

The buzz word in the agricultural business domain is scale of economy , combined with value addition to any produce before it is sold to the market place. The creation of mere subsistence farming operations within rural areas has proved not to have the characteristics needed to ignite the local rural micro economy. Local areas require commercial farming operations as anchor projects to which subsistence farming operations could be linked to ensure their viability.

The agricultural produce market structure in South Africa is not designed to accommodate subsistence farming operations, and the high capital intensive equipment required for effective farming, combined with high input costs, make subsistence farming non viable on its own and unable to ignite or kick start broader rural development.

Therefore, if agriculture is to be the catalyst for rural development, fully commercial farming operations, and not simply subsistence farming, should be created to ignite the local micro economy of the area. This requires skilful planning based on accepted agricultural norms applicable on scales of economy, depending on the type of produce, and with substantial diversification within such a commercial operation to address the volatility of markets. A good combination of crop cultivation, stock farming, poultry, etc., will be required. Skilful and well experienced agricultural economist and specialists will be required to design and develop such commercial farming operations.

It should also be understood that commercial farming is a business per se and should adhere to business principles. For this reason it would be better left in the hands of the private sector rather than Government. Owing to Land Reform, South Africa is in a privileged position of having a vast number of skilled and experienced farmers without land that could be utilised in managing the establishment of suitable commercial farms whilst simultaneously transferring skills. Food security and rural development is too important to be blindly subjected to black empowerment alone. It needs rather to be purpose driven utilising all available manpower and other resources including PPPs. As an initial phase in rural development the following services should be supplied by government and private sector agricultural divisions:

• Conducting of Land Audits
• Compilation of Agricultural Business Plans
• Conducting of Agricultural Viability studies
• Compilation of Commercial Agricultural Project Plans
• Risk Management and Assessments for securing of finance
• Provision of specialist agricultural project management
• Farm Management
• Community integration and development

PRODUCTION AND PROCESSING

Agricultural production and processing have become scientific technologically advanced activities mainly in order to optimise costly resources. The market structure with regard to processing agricultural produce, in which the middle man adds value to produce and has become the main beneficiary, has forced farmers to look at ways to add value to any produce before selling it. Such processing has also developed into monopolised corporate entities.

The high costs of technological advanced capital equipment and the scientific production processes required, combined with the existing market composition, makes it difficult to successfully establish a sustainable commercial farm. The key to unlocking this, should agriculture be utilised as the catalyst for rural revival and development, is the optimisation of resources.

The creation of rural development technology hubs could be the answer for the optimal utilisation of resources. A resource centre, providing all the equipment and specialist skills required, should be established in an area based on the type of produce in that specific area and the extent of

land available. Equipment manufacturers, fertiliser/chemical distributors, etc., should be invited in take part in setting up such resource centres (Hubs). These hubs will then provide the skilled services to the local community within the area. Equipment suppliers therefore do not sell a tractor for example, but rather a ploughed and prepared land, chemical suppliers do not sell chemicals but rather a pest control programme. These are then the products which lead to cost saving, the provision of skills and make the development viable. Simultaneously the essential involvement of private sector will be guaranteed.

Part of the function of the production and processing resource centres (Hubs) will be the value added processes. Creating locally based processing plants such as maize mills, drying facilities, etc. will be created and made available to the community.

Scale of economy, optimisation of resources, availability and transfer of skills and lower input costs required in respect of essential capital equipment will be the characteristics of these hubs. These hubs will be the engine rooms of rural development.

INFRASTRUCTURE

Any development should be supported through the provision of an adequate infrastructure. If rural development is to be successful it should be supported by a solid backbone of infrastructure. This is presently lacking in the South Africa s rural areas. Local Authorities fight for survival and in many cases they are exploited by the private sector at present.

The resources hubs which are created could and should also be available to local authorities complimenting their resources in delivering infrastructure development services and having the necessary skills and equipment readily available.

This should enable local authorities to ensure that tenders executed by local service providers thus keeping the money within the local micro economy rather than being lost to the wider economy outside the area or region.

The local hub could provide the following services in respect of infrastructure maintenance and development:

Roads Gravel roads scraping and filling of pot holes Fencing along roads Vegetation Control next to roads Maintenance of road signs Fire Brake Management Electricity - Vegetation control for Eskom Water and Sanitation Vegetation Control of river beds Development of water and irrigation reticulation networks Bulk service provision Housing projects

The optimum utilisation of equipment and skills available within the resource centre (hub) will ensure the viability of such hubs and ensure the involvement of the private sector owing to the scale of economy applicable and the constant flow of business.

BUSINESS PROCESS

The concept as explained here provides for a turnkey service provision consisting of a streamlined core entity utilising skilled sub contractors for the execution of tasks. The business process required in enabling this opportunity will be as follows:

Land Audits

• This should be envisaged as a stocktaking process. The economy is tight and comprehensive research will be required before any rural development can commence as there will be no room for failure. A land audit of the status quo, determining what is available and what could be done, will determine the success. There is a strong government involvement required here together with the utilisation of the private sector.

• Microcosm Rural Development Planning Once the Land Audit has been completed, the Rural Development Plan based on the three pillars as explained, Agriculture Resource Hubs Infrastructure Development, needs to be compiled. A tender process to identify competent service providers is then implemented.

• Establishment of Hubs and Project Implementation Process the production and processing of business plans and the implementation and co-ordination of operational aspects. The emphasis here falls on the private sector.

STAKEHOLDERS

The following are the main stakeholders:

• National Government
• Provincial Government
• Regional Governments (Municipalities/Local Authorities)
• NGOs
• Banks
• MAFISA Fund
• Insurance Institutions
• Suppliers
• Rural Communities
• PPPs
• Access Agri Rural Development Corporation

BENEFITS TO THE COMMUNITY

The benefits to the local communities, regional structures, the government and the private sector will be substantial and may be summarised as follows:

• Investment in agriculture through Private Sector Participation.
• Transforming Subsistence to Commercial farming operations
• Local Value Added Production and Processing
• Expanded markets and increased returns for all participants

• Community Empowerment through hub development
• Infrastructure development within local areas
• Local Job creation and transfer of skills
• Optimal utilisation of land and equipment
• Stimulation of micro and macro economy
• Rehabilitating Land Reform projects
• Enhanced Food Security

Conclusion

The development of subsistence farming alone cannot act as a catalyst for rural development. Markets may exist for produce but the subsistence scales of economy are too small and not worthwhile to the current market structures. The basic concept is, therefore to create a commercial farming system which subsistence farmers, with their land, can lock into through becoming part of the commercially orientated hubs that are created. They will the grow themselves both in terms of their skills sets and production volumes. This, together with the development of infrastructure in the area will ignite rural development.

Government does not have the necessary expertise or skills, indeed even the mandate, to farm.

It will be essential for the private sector to establish, develop and manage Hubs and to develop infrastructure required to initiate rural development.

The current concept of establishing Co-Ops, financed by government, has not really been successful. However, the creation of hubs by the private sector will enable the independent development of a resource hub. After a period of time, say five years, this hub can become a fully fledged, independent, self sustainable Co-Op.

The Hub is the way to the successful implementation of sustainable local
Co-operatives.