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R46.5 million Emalahleni Rural Enterprise Development (RED) Hub launched

May 21, 2015

May 21, 2015: Some 574 landowners from 13 villages in Lady Frere at the Emalahleni Local Municipality are set to generate solid long-term financial returns from a R46.5 million, Eastern Cape Rural Development Agency (ECRDA) commercialisation and agro-processing drive over the next five years.

Already, R26 million has been spent in the first year of the Rural Enterprise Development Hub (RED Hub) initiative in Lady Frere with a total of 829 hectares(ha) of grain sorghum planted between December 2014 and January this year. In addition, the Department of Rural Development and Agrarian Reform (DRDAR) has funded and planted a further 90ha of grain sorghum in the area.

In practice, the RED Hub concept ensures that production is done by the community, produce is milled in the community, processed and packaged in the community and even sold back into the community with the whole process being owned by these communities. Communities benefit by contributing their own land which has been lying fallow for many years for production.

“We are excited with the R46.5 million budget from the Eastern Cape Treasury which has injected momentum into the roll-out of RED Hubs throughout the province. A total of 70% of the budget has been spent on the first season with 20% and 10% spent in the second and third seasons respectively. ECRDA expects that by the end of May two silos with a R3,5 million price tag with a storage capacity of 2,000 tons will be completed.

“In addition, ECRDA bought six tractors, a combine harvester, implements and a 1 ton bakkie to aid in production and the operations of the Emalahleni RED Hub. The Chris Hani District Municipality has also contributed R1,6 million to buy a bigger 120 kilowatt tractor which will come with its own implements,” says ECRDA agronomist Luvo Qongqo.

Qongqo says funds have also been spent to upgrade the existing Ibuyambo mill which will be for processing of the maize. The Ibuyambo mill has 3 tons per hour processing capacity. The construction of a trading centre is also nearing completion. The centre will sell production inputs such as fertilisers, seeds, agro-chemicals and livestock medicine among other things.

An off-take agreement has already been signed with Border Seed to buy all the grain sorghum which will be produced by the Emalahleni RED Hub. Once the planned Cradock bioethanol plant is operational, the grain sorghum will be sold to the plant.

Three other RED Hubs are already operational in Ncorha, Mbizana and Mqanduli located at the Intsika Yethu, Mbizana and KSD local municipalities respectively. In December 2014, the agency announced that R53.5 million was allocated to the Mbizana RED Hub over the next three years.

The RED Hub concept links three market elements of production, processing and marketing to boost the competitiveness of rural economies and communities. The result is that production receives the market support it needs to flourish and money is kept ‘alive’ and circulates within a community as long as possible.

“These RED Hub market elements make up the value chain of the rural economy with coordination, integration and marketing being the core functions of the RED Hub. Ultimately, this concept creates a platform for economic activity resulting in increased rural incomes through the facilitation of primary production, promoting rural savings, investment, processing as well as the creation of a communal and external market,” says Qongqo.

“In Lady Frere about 30,000 hectares of land is available for planting of grain sorghum. Sorghum is an ideal crop for the area because of its drought tolerant character. The area has low rainfall of 300 – 400mm per annum. Dry-land maize production would not be possible under these conditions. It needs typically 650 – 1,000mm of rain per annum,” Qongqo explains.

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