Agro-Industries

Packing the produce for sale

The IDC's Agro-Industries Strategic Business Unit provides support for a wide range of food and non-food production activities in the agricultural value chain.

Agro-Industries are often based in rural areas and provide on-site job opportunities to turn raw products into consumable goods.

Investing in these industries is critical to the economic direction of the country's development plans, encouraging ongoing economic growth, job creation and reducing poverty among those who deal with food security.

Our Agro-Industries unit provides funding in a number of sub-sectors of the agricultural value chain.

These include: agro-processing (food and non-food), which can include on-farm, first-tier processing (such as packing and sorting) and also backward integrated agro-processing projects; beverages (alcoholic and non-alcoholic); and aquaculture.

We do not, however, fund:

• Primary agricultural projects/applications – these will be referred to the Land Bank;
• Pure land-based transactions/acquisitions;
• Hard liquor, including any drink with an alcohol content of more than 12% vol;
• Any tobacco and tobacco products;
• Refinancing of existing activities;
• Pure acquisition transactions; and
• Biofuels – this falls under the Green industries Strategic Business Unit. 

Who should apply for finance?

New or existing South African companies operating within the agro-industries sector are welcome to apply for funding. Two key factors will be taken into account:

• The project must create jobs; and
• The funding request must be for at least R1-million.

New or existing companies operating in the agro-industries sector in the rest of Africa are also encouraged to apply for funding. Again, there are a number of provisos:

• The project must facilitate the development of new industrial capacity;
• The project must be of direct benefit to South Africa in the form of, among other things, exports of South African capital goods and/or South African shareholding; and
• The size of the project (total funding requirement) must be at least:
  • ZAR 5-million for members of the Southern African Customs Union;
  • USD 3-million for countries in the Southern African Development Community (SADC); and
  • USD10-million for countries outside SADC. 

Funding criteria

To be considered, your application for funding must be supported by a comprehensive business plan that shows economic merit in terms of profitability and sustainability.

Businesses, projects or credit applications must be commercially viable from a technical, marketing and financial perspective, and must be environmentally sustainable.

We strive to maximise the development impact of each potential investment.

We prefer not to fund more than 60% (50% for investments outside South Africa) of the total funding requirement of a project.

Applications can include start-ups and expansions projects. However, risk-sharing from operating private-sector investment partners is non-negotiable.

Our Agro-Industries unit prefers loan funding, but will consider equity where there is a strategic reason to do so. Funding requirements from the IDC should be more than R1-million for debt funding and R5-million for equity (or equity-related) funding for South African businesses.

Exclusions

There will be no straight acquisition of shares without expansion and no refinancing made available.

Applying for funding

We consider each application carefully.

In addition to the specific requirements of the Agro-Industries Strategic Business Unit, please make sure that your application meets the IDC's minimum requirements.

The unit runs a relief scheme to help businesses that were struck by floods or drought during the 2010/2011 financial year. Some R500-million has been made available to assist businesses that fall within the agro-industries sector.

Again, specific criteria apply:

• Businesses must be viable and demonstrate that their distress was a result of the floods or droughts from 2010 and 2011;
• Funds must be applied to finance working capital shortfalls as well as infrastructure/asset rehabilitation (of non-insured assets);
• Interest on these funds will be charged at prime less 3%; and
• Applications must be made before 31 March 2012.

An amount of R250-million has been loaned to the Land Bank to assist affected agricultural businesses in the primary agriculture sector.

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