Developing Strategic Partnerships:

1
Developing Strategic Partnerships Case Studies
from Southern Africa Promoting Agribusiness
Linkages (PAL) Dr. Gary R. Mullins, Deputy
Director Ronald Ramabulana, Field Operations
Manager
2
PALs Mission
To build capacity and competitiveness of
historically disadvantaged, small and medium
South African agribusiness.
3
? National network with six provincial offices ?
13 specialized Linkage Coordinators ?
Aquaculture, viticulture (wine, fruit),
horticulture, livestock (beef, goats, wool),
sugar, forestry, natural products (fibers, meds),
starch ? All agribusiness is within PALs
scope ? Match BEE, corporations, farmers
associations, cooperatives ? Director gt
Strategy Partner Relations ? Field Operations
Manager gt Focus work plans, partner relations ?
CCA Washington-based Agribusiness Specialist ?
Agricultural Finance Specialist gt all lending
grant institutions
PAL leveraged US 24 million from US 1.6 in FY04
4
The Economic Environment An Economy Positioned
for Growth
? 45 million South Africans (2001) ? 3.9
p.a. GDP growth rate (domestically driven) ?
Rand strongest currency on global market in 2004
(27 appreciation Jan 03 July 04 ?
Inflation 3.7 ? Interest rates _at_ 22 year low
and coming down ? Foreign exchange controls
liberalized Point Stable macro-economic
environment and a Government committed to
promoting economic growth and investment
5
The Business Environment Broad-based Black
Economic Empowerment
? Governments objective an adaptive economy
characterized by Growth, Employment and
Equity ? Consultative process involving
Government, the Private Sector, Trade,
Industry, Labour ? Clear and consistent policy
guidelines AgriBEE Charter ? BEE
Scorecard Measuring progress in terms of
direct ownership equity, senior
management, preferential procurement, HR
development, etc. IMPACT An environment
highly conducive to partnership opportunities
BUT private sector seeking
direction, assistance, stewardship.
6
The Supply Chains and Strategic Business
Relationships The Double Helix Paradigm
Market
BEE Suppliers (Zanyokwe)
P
Wholesale-Retail-Export (SPAR)
Distribution
A
BEE Equity Venture
Milling Company
Financial Institution
L
Technology Partner
Farmers
Primary Production
Farmers Technology Partner
7
Growing maize markets in the North West
Province Black farmers, Monsanto, First National
Bank and PAL
32 selected maize producers in North West
Province Monsanto S.A. (Technology
partner) FNB (Financial partner) specialized
training Buhle Farmers Academy ? Negotiated
production finance through FNB ? Identified
local service providers to plough, plant, harvest
and transport ? 4519 ha.s back into
production ? Access to reliable markets and use
of risk mitigation instruments Estimated market
value US 1.35 million
8
Summary
? Fundamental business principles apply shared
view of market and the firms role in
meeting that market demand ? Lasting business
relationships are based on trust ? Real
innovation requires accepting additional risk ?
Linkage programs, e.g. PAL, can play a
meaningful role in establishing business
relationships, and, accelerating growth
of formal markets.