I did an unusual thing while preparing to write this column. I invited regular readers on Twitter to offer their opinion about key aspects they feel my last column for the year should address.
Their responses showed, first of all, that many South Africans are already in holiday mode. But among the many points that were raised, the potential for cannabis production in SA, as well as red-meat price increases, were mentioned more than once, so I will reflect on them for now.
I have previously written about cannabis production, but it is worth delving deeper into the matter as the discussion is gaining momentum, not only in SA but globally.
Countries such as Canada are making great strides in exploiting cannabis for economic purposes and job creation. On December 3, Kristine Owram, writing for Bloomberg, noted that “there has been a spike in postings for jobs at cannabis growers and retailers in Canada. And next year will see even more demand for labour as the country expands the number of legal cannabis products to include edibles and concentrates. In addition, the Canadian cannabis industry could create roughly 125,000 jobs in the first year after legalisation.”
Here at home, there has recently been an expo in Pretoria, focusing on education and innovative products and businesses serving the cannabis industry and its medicinal, agricultural, financial and lifestyle aspects. Given that SA has an exceptionally high unemployment rate at 27.5%, any industry that promises job creation should receive some attention from policymakers.
Be that as it may, the economic prospects must be balanced with the need to ensure public safety. In this regard, legal development is required to specify the conditions under which a responsible cannabis industry can be developed.
Following an essay I wrote on November 20 about SA’s potential “dagga-belt” in the former Transkei, there has been growing interest from agricultural policymakers who promise to study this plant closely in the coming months so that we too can have a cannabis industry that makes a productive contribution to the SA economy, but in a responsible and controlled manner.
At the moment, cannabis has been decriminalised in SA for private use, but the conditions and boundaries still need to be developed. To attain the jobs gains seen in Canada, the focus should be on international trade and processing the plant to export products in a form that is acceptable and legal in export destinations that are further along the line than we are.
Globally, there is a long list of companies that are involved in this plant that SA could look to as a target market, in addition to other destinations where it has been legalised for medicinal purposes.
There is a need for clear legislation work in SA to outline the production conditions if cannabis were to be permitted for international trade.
Aside from cannabis, I was somewhat surprised by the concerns about red-meat prices given that there has been a deceleration in price inflation in the past couple of months, driven by an increase in cattle slaughtering activity. Data from the Red Meat Levy Admin shows that SA farmers slaughtered 220,534 head of cattle in October 2018, up by 13% from the previous month and by a percentage point from the same period in 2017. This was partly responsible for a deceleration in meat prices of 2,8% in November. So meat prices are still increasing, but at a much slower pace than the double-digit increases that we saw a year ago.
Overall, there is likely to be a further increase in livestock slaughtering and meat supply in December, which could suppress price inflation further, a welcome development for SA consumers looking to have a braai or two this festive season.
*Written for and first published on Business Day on 20 December 2018.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
