Water efficient agro-processing solutions
Water efficient agro-processing solutions
Business Model Description
Provide water saving mechanisms to ensure water security in agro-processing by (i) retrofitting water supply and distribution infrastructure at end user facilities; (ii) processing improvements and equipment upgrades to reduce water use per unit of output; and (iii) delivering effluent reuse systems (treating the final effluent to potable standards for onsite reuse, typically for non-product contact purposes) with or without energy recovery (biogas).
Expected Impact
Reduce water supply risks and contribute to environmental sustainability as well as agricultural productivity.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- South Africa: Gauteng
- South Africa: KwaZulu-Natal
- South Africa: Eastern Cape
- South Africa: Limpopo
Sector Classification
Food and Beverage
Development need
To reach its targets for SDG 2 - Zero Hunger, South Africa requires sustainable and resilient food production, equal access to land and technology, and access to markets across the agricultural value chain.(2) Three million households still ran out of money to buy food by the end of 2016, the large majority (90.8%) of whom were black South Africans. Further, there is a lack of nutritious food evidenced by the prevalence of underweight children under 5 years old in South Africa (16% in 2017).(1),(2)
Policy priority
Investments in sustainable agriculture will increasingly play a significant role in securing food sources in responsible ways, reducing climate change and protecting scarce natural resources (particularly arable land and water) for generations to come.(7)
Gender inequalities and marginalization issues
During April 2020, the estimated nominal cost of the National Agricultural Marketing Council's (NAMC’s) 28-item urban food basket increased by 1.5%. This occurred in an environment where women are losing their incomes the most, and when children are at home and not benefitting from the school-feeding scheme.(19)
Investment opportunities introduction
The sector is fairly resilient to economic shocks, has high potential for job creation particularly in emerging and rural farming, has large multipliers due to its extensive links to the rest of the economy, and is important for export led growth.(4)
Food and Agriculture
Development need
South Africa's agricultural sector plays a significant role in food security, job creation, international investment and exports: 95% of local food is produced by 3% of large industrial farms, 5% is produced by small scale farmers.(11) With a significant rise in the cost of energy and insecurity of supply, commercial farmers and agri-businesses are becoming increasingly pressured from export markets and consumers to reduce carbon emissions and to offer low-carbon agricultural products.
Policy priority
The agro-processing industry is a significant water user and heavily reliant on water, with estimated usage of 130 million kilolitres per year (kL/year). Many major agro-processing companies are situated in municipalities facing current and future water supply risks.(7)
Gender inequalities and marginalization issues
37.2% industrial farm workers are women.(9) 70% of smallholder farmers are women.(9) Providing targeted support to current female food producers, especially in the informal agricultural sector, is necessary to prevent them from exiting the sector.(19)
Agricultural Products
Pipeline Opportunity
Water efficient agro-processing solutions
Provide water saving mechanisms to ensure water security in agro-processing by (i) retrofitting water supply and distribution infrastructure at end user facilities; (ii) processing improvements and equipment upgrades to reduce water use per unit of output; and (iii) delivering effluent reuse systems (treating the final effluent to potable standards for onsite reuse, typically for non-product contact purposes) with or without energy recovery (biogas).
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
Total realisable investment of an estimated R6 billion in water technologies in key agro-processing sub-sectors over the next 4 to 6 years in South Africa (14)
Indicative Return
< 5%
Water savings of approximately 30 million m3/year (14)
Investment Timeframe
Short Term (0–5 years)
The timeframe is less than 3 years for low cost interventions.(16)
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Business - Business Model Unproven
Capital - Limited Investor Interest
Market - Highly Regulated
Impact Case
Sustainable Development Need
South Africa's water sector is and will continue to be under pressure with its high dependence on strained fresh water sources, increasing consumer demand, an under-capacitated national department of water and sanitation, and rising pollution levels.(1),(2),(3),(6),(7)
The agro-processing industry is a significant water user and heavily reliant on water, with estimated usage of 130 million kilolitres/year (kL/year). Many major agro-processing companies are situated in municipalities facing current and future water supply risks.(19)
The industry also employs over 200,000 people whose jobs are at risk when there is restricted water supply.(23) It faces increasing pressure to meet or exceed environmental standards.
Gender & Marginalisation
37.2% industrial farm workers are women, 70% of smallholder farmers are women
Expected Development Outcome
Water savings (14); increased energy recovery through the treatment process by capturing and using biogases (14); cost savings for the agro-processing industry; increased environmental benefits through sustainable water management practices in the agro-processing industry; increased job creation and security potential; improved climate smart agriculture
Gender & Marginalisation
This investment opportunity area can provide targeted support to current female food producers to prevent them from exiting the sector.(19)
Primary SDGs addressed
2.4.1 Proportion of agricultural area under productive and sustainable agriculture
N/A
The Agricultural Policy Action Plan (2015–2019), the Integrated Growth and Development Plan (2012), and the Strategic Plan for the Department of Agriculture Forestry and Fisheries (2015–2020) provide the overarching framework for strengthening the government’s commitment to support smallholder producers.(2)
6.3.1 Proportion of domestic and industrial wastewater flows safely treated
6.4.1 Change in water-use efficiency over time
6.4.2 Level of water stress: freshwater withdrawal as a proportion of available freshwater resources
Proportion of water containing waste safely treated and lawfully discharged (domesticated indicator): 52% (2017) (2)
USD 3,439 / m3 (2018) (2)
Data from the Food and Agriculture Organization of the United Nations (FAO) shows that in 2017, South Africa’s water stress level was at 62% (a sharp rise from 40% in 2000). Fresh water withdrawals (% of total renewable water resources) were 37.7% in 2017.
Secondary SDGs addressed
Directly impacted stakeholders
Planet
Corporates
Indirectly impacted stakeholders
People
Outcome Risks
There are health concerns over contaminants that are not currently monitored under the SANS 241 water quality standard that could pass through to consumers' wastewater reuse in agro-processing.(10)
Impact Risks
Unexpected impact risk: The treatment of effluent through reverse osmosis results in highly concentrated brine which can be difficult and expensive to dispose of legally.(14)
Impact Classification
What
Important, positive outcome: water savings. This investment could assist in providing sustainable water efficiency solutions that reduce water usage in a high water usage industry.
Risk
High risk
Impact Thesis
Reduce water supply risks and contribute to environmental sustainability as well as agricultural productivity.
Enabling Environment
Policy Environment
National Water Resource Strategy: The National Water Policy and Water Services Act are the key legislative documents that outline the management of water resources and the delivery of water services. These documents are strategically implemented through the National Water Resource Strategy and the Strategic Framework for Water Services.(19)
Financial Environment
Financial incentives: Most large companies finance water projects off balance sheet, or access existing lines of credit (effectively unsecured), and prioritise projects with a payback period of less than 3 years.(14)
Regulatory Environment
Wastewater discharge regulations and charges : These instruments are often a driver for investment, because companies that discharge wastewater into the municipal sewer system require a licence.(14) Discharge limits are also relevant for brine discharged into municipal sewerage systems. Accordingly, liquids and saline wastes will no longer be processed at landfills.(18)
Marketplace Participants
Private Sector
Tiger Brands, Pioneer Foods Group, AVI Ltd, Oceana Group, RCL Foods, Tongaat Hulett, Rhodes Food Group, Astral Foods and Clover Industries (14)
Multilaterals
Department of Trade, Investment and Competition (DTIC), Industrial Development Corporation’s (IDC) Agro-Processing and Agriculture Strategic Business Unit, Land and Agricultural Development Bank of South Africa
Non-Profit
Water users’ associations, emerging catchment management agencies, sector associations engaged in advocacy on standards and requirements
Target Locations
South Africa: Gauteng
South Africa: KwaZulu-Natal
South Africa: Eastern Cape
South Africa: Limpopo
References
- (1) South African Government (2019). South Africa Voluntary National Review: Empowering people and ensuring inclusiveness and equality. https://sustainabledevelopment.un.org/content/documents/23402RSA_Voluntary_National_Review_Report___The_Final_24_July_2019.pdf
- (2) Statistics South Africa (2019). Sustainable Development Goals: Country Report 2019 - South Africa. http://www.statssa.gov.za/MDG/SDGs_Country_Report_2019_South_Africa.pdf
- (3) Statistics South Africa (2019). Towards measuring the extent of food security in South Africa. http://www.statssa.gov.za/publications/03-00-14/03-00-142017.pdf
- (4) Business for South Africa (2020). Post COVID-19: A new inclusive economic future for South Africa – Delivering an accelerated economic recovery strategy.
- (5) Deloitte (2020). How COVID-19 has affected South African Grocery Retail Consumer Sentiment: Consumer insights pre- and during lockdown. https://www2.deloitte.com/content/dam/Deloitte/za/Documents/za_Deloitte_BrandsEye_Consumer-Sentiment-report_May%202020.pdf
- (6) Nakedi, L. (2020). Project Steering Committee Meeting. April 30 2020.
- (7) Kushke, I.(2020). Sustainable Agriculture Market Intelligence Report. https://www.greencape.co.za/assets/AGRICULTURE_MARKET_INTELLIGENCE_REPORT_WEB.pdf
- (8) Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., Fuller, G. and Woelm, F. (2020). The Sustainable Development Goals and Covid-19. Sustainable Development Report. Cambridge University Press. https://dashboards.sdgindex.org/#/ZAF
- (9) National Science Technology Forum (2019). National Development Plan. http://www.nstf.org.za/wp-content/uploads/2019/04/All-The-NDP-1.pdf
- (10) Le Roux, A., Arnold, K., Makhanya, S. and Mans, G. (2019). Green Book. South Africa’s urban future: Growth projections for 2050. Pretoria: CSIR. https://pta-gis-2-web1.csir.co.za/portal2/apps/GBCascade/index.html?appid=3c4901e8681244d1a7989e8ed2ace1f9
- (11) Industrial Development Corporation (2019). The case for investing in South Africa. https://sainvestmentconference.co.za/wp-content/uploads/2019/11/The-case-for-investing-in-South-Africa-2019-Executive-summary-31-October-2019.pdf
- (12) Sustainable Infrastructure Development Symposium South Africa (2020). Sustainable Infrastructure Development Symposium South Africa. https://sidssa.org.za/
- (13) GreenBook (2019). Story maps. https://greenbook.co.za/story-maps.html
- (14) GreenCape (2020). Sustainable Agriculture Market Intelligence Report. https://www.greencape.co.za/assets/AGRICULTURE_MARKET_INTELLIGENCE_REPORT_WEB.pdf
- (15) SDNSA (2019). Global Index: South Africa - Sub-Saharan Africa. https://github.com/sdsna/2019GlobalIndex/blob/master/country_profiles/South%20Africa_SDR_2019.pdf
- (16) Food and Agriculture Organization of the United Nations (2020). Aquastat. http://www.fao.org/nr/water/aquastat/data/query/index.html?lang=en
- (17) International Finance Corporation (2019). South African agri-processing resource efficiency. https://www.ifc.org/wps/wcm/connect/d9c48096-a57f-41a7-94f6-6cff88831cd4/202001-South-Africa-agri-processing-resource-efficiency.pdf?MOD=AJPERES&CVID=m-vr2oo
- (18) Email correspondence with Raldo Kruger, GreenCape, 30 July 2020.
- (19) United Nations Development Programme (2020). South Africa Report 2020: Covid-19 Rapid Emergency Needs Assessment for the Most Vulnerable Groups. https://www.za.undp.org/content/south_africa/en/home/library/rapid-emergency-needs-assessment.html
- (20) Proxa. About Us | Water Treatment Specialists. https://www.proxawater.com/about-us/