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Jun 27, 2008

R24m packhouse seen as crucial to formalisation of emerging KZN farmers

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Agriculture|Construction|Africa|Eskom|PROJECT|Storage|Training|Africa|Services
Agriculture|Construction|Africa|Eskom|PROJECT|Storage|Training|Africa|Services
agriculture|construction|africa-company|eskom|project|storage|training|africa|services
© Reuse this The Ugu district municipality, on KwaZulu-Natal’s South Coast, is establishing a R24-million packhouse and processing unit to add value to emerging farmers’ produce and help merge them into the mainstream economy.



Durban-based black economic-empowerment company DGS Contractors has been awarded the contract to build the packhouse and processing unit. It currently employs 36 people on site.

The area, which comprises six local municipalities, has been given a budget to construct earthworks, bulk services, a whole- salers’ complex, retailer cubicles, a taxi rank, ripening and cold storage rooms, a composting plant, offices, ablution facilities and a training centre.

The market is the first of its kind in South Africa to develop, package and implement such an integrated business model.

Construction on the packhouse started a month ago. It is expected to be completed by the end of August and to be commissioned by October. The cold storage facilities are already fully functional.

Ugu Fresh Market marketing manager Thamsanqa Khwela says that fresh fruit and vegetables will be washed, sorted, graded and packed according to customer needs, helping emerging farmers compete with commercial growers. The agriprocessing plant will be operated as a value recovery facility.

“This means that produce that is not suitable to be sold fresh on the floor in terms of market standards will be considered for processing,” he says. “Emerging farmers will, therefore, still be paid for all the effort they put into growing the produce, thus helping to alleviate poverty and to address some of the food secur- ity issues.”

The project has been funded by various parties, including the Department of Agriculture (R8-million), the Ugu district municipality (R6-million), the Eskom Foundation (R5-mil- lion), the European Union-funded Gijima KwaZulu-Natal Fund (R2,9-million) and the Development Bank of Southern Africa (DBSA, R840 000). In addition, the Hibiscus Coast municipality has donated a plot of land valued at a R2,7-million and the DBSA has granted a soft loan of R5-million.

The Ugu district municipality council has committed a further R9,5-million over the next five years to ensure the market’s sustainability.

“Further funds are available from the Land Redistribution for Agricultural Development Programme, the Comprehensive Agricultural Support Programme, the Local Economic Development Programme and Gijima,” says Khwela.

“Other funding has been secured and more will be sought to fund the development of the supply base, the on-site activities and the downstream trading opportunities that the Ugu agricultural market will kick-start.”

Negotiations are under way to secure the second tranche of funding for the establishment of the agriprocessing plant, together with collection depots at strategic points.

Farmers in the largely rural area will be mentored in a coordinated effort between the Department of Agriculture, the Department of Land Affairs and the House of Traditional Authorities.

“The Ugu district municipality has also secured the services of two highly reputable agents who are among the biggest in South Africa and who also have vast experience in the marketing and distribution of fresh produce,” says Khwela. “This was done because we strongly believe that, for a project of this nature to [achieve] its objective, it has to be able to create a demand for produce. This, we believe, is only possible through coalitions and partnerships of this nature.”

Khwela says an intensive survey has been conducted as part of the business plan review.

“One of its key specific aims was to establish the entire status quo in terms of fresh produce that is turned over within our own district and surrounding towns. The rationale behind choosing a wider marketing area was that we want to position the market as a regional facility, as opposed to just a district project.”

As a result, the survey did not only cover chain stores but also bed-and-breakfast facilities, hotels, informal traders, green grocers, wholesalers, mini markets and spec buyers.

Edited by: Martin Zhuwakinyu
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