On 17 May 2018, I participated in a panel discussion hosted by Nation in Conversation at NAMPO in Bothaville. The discussion focused on the importance of the economy of scale. Stripped of all the technicalities, the question we had to answer was down to this: does size matter in South African farming?
The panel consisted of Theo Vorster of Galileo Capital, Professor Ferdi Mayer of the University of Pretoria and the Bureau for Food and Agricultural Policy, Jannie De Villiers of Grain South Africa and Francois Strydom of Senwes.
Here are some of the points I made on the topic:
- Given that South Africa has somewhat a dualistic economy – formal and informal economy – there is room for both small and big farms. Big farms are key to national food security and driving exports, while small farms continue to serve local markets, where big players can’t really get involved (not economically viable for them, etc.).
- Brazil is a good example of the aforementioned point. They have mega-farms, commercial farms, medium-scale farms and small farms – all serving different needs of society.
- To get the small farms viable, however, there’s a need for improvements in infrastructure in the former homelands, so that farmers can access the markets more efficiently.
- A point emphasised by all panellists — small farmers in communal areas should have title deeds to the land so that they can unlock investments. Title deeds are key to prosperity.
- The private sector has a role to play particularly from a knowledge sharing perspective.
- Most importantly, the national discussion on the future of agriculture should rather focus on boosting productivity across farms, not particularly farm size.
The bottom line was that South Africa needs both big and small farms as they all serve society in somewhat different ways. Improvements in infrastructure in communal areas should be prioritised. New technologies can also play a critical role in this process.
Overall, government and private sector should work hand-in-hand in ensuring the success and sustainability of the South African agricultural sector.
OK, I know I am overly simplistic in some points here – for more details — you can watch the full discussion here.
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