We are yet to fully understand the impact and financial costs of the devastation from the recent incidents of unrest in KwaZulu-Natal and parts of Gauteng in the agricultural sector. At a high level, it appears that primary agriculture was broadly insulated from the direct damage. Still, the disruptions in various sugar mills, bakeries, eggs businesses and milling facilities, amongst others, impact primary agriculture by disrupting supply chains and slowing demand from these establishments. Small-to-medium scale farms that directly supplied the retailers are also affected as their typical market channel vanished in a few days. In collaboration with provincial departments and private sector players, the Department of Agriculture, Land Reform and Rural Development should assess the scale of this damage and devise potential response measures to sustain the agricultural sector in its robust form.
While there is no consensus about the motives behind the unrest and on whether these were centrally orchestrated or not, it is increasingly evident that high unemployment and inequality provided fertile socio-economic grounds for the disruptions. Boosting inclusive growth and job creation need to be amongst the key response priorities for the country as we rebuild KwaZulu-Natal and parts of Gauteng that were affected by the unrests. With the current fiscal constraints, the rebuilding process will likely have to be led by the private sector players as the state has limited financial muscle to do so. And this is where the challenge begins.
For the private sector to increase investment, there need to be quick reforms in the security cluster, providing evidence that the government is taking bold steps to ensure that a repeat of the chaos, looting and destruction of public and private economic assets is prevented going forward. Such security reforms, as well as finding and holding those responsible for the violence, will need to be done and communicated in a convincing manner in order to build confidence.
For agriculture and agribusinesses, the stakes are high; this is a long-term investment sector. There needs to be an assurance of respect for property rights, addressing rural crime, and rebuilding the municipalities in the small towns that service agricultural businesses.
The government can utilize its national structures of engagement with the business community in this process and also provincial ones. The agriculture and agro-processing sectors are labour intensive and can absorb the least skilled South Africans. Notably, the provinces of KwaZulu-Natal, Eastern Cape, and Limpopo have underutilized land, ripe for expansion of primary agriculture. If such expansion would happen, it could be followed up with agro-processing to add value to the products produced and also provide further employment opportunities. These are all ideas that were highlighted as far back as 2012 in the National Development Plan. Some of them are resurrected within the government’s Agriculture and Agro-processing Master Plan, which will hopefully be launched in the coming months. Therefore, the Master Plan could in a way be viewed as a response measure to the recent disruptions and with a comprehensive view of ensuring additional growth in the sector.
You can read the full article by clicking here (paywall). The article was written for and first published on News24/Fin24.
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