Written for and first appeared in Business Day.
SA is a diverse and sizeable country of 122-million hectares. But there is a commonality in challenges that farmers and agribusiness raise regardless of the provinces or municipalities. The challenge of poor service delivery by municipalities and inadequately maintained roads are among the core issues in every discussion.
A few weekends back, I joined a discussion in the Free State organised by the Sernick Group, and these matters were yet again the key points of reflection, along with broad policy themes of land reform, biosecurity and water-use regulations.
Given that these hindrances hamper the profitability of many businesses and that resources that could be invested in growth-enhancing activities within farming entities and agribusiness are increasingly diverted to public services, these issues seem likely to be raised repeatedly for prioritisation by the government.
The infrastructure rebuilding process in KwaZulu-Natal after the recent flooding should be broadened to become a nationwide effort, as all provinces face varying degrees of network infrastructure deterioration. Therefore, network industries across the country should be a priority.
This is even more urgent as the farming sector and agribusiness (along with the mining industry), which are the key economic actors in the rural towns, are coming under increasing pressure from rising input costs. The general rise in crop prices we have observed since the start of the Russia-Ukraine war is, from a farming and agribusiness perspective, largely overshadowed by higher input costs for fertilisers, agrochemicals and fuel.
These are all critical risks for the 2022/23 production season which lies ahead. In such an environment, agribusinesses can ill afford to divert scarce resources to fixing public infrastructure. In the near term there are sufficient grain supplies as farmers increased plantings in the 2021/22 season. However, input prices were already elevated, though not to the extent we are currently witnessing.
One encouraging data point has been farmers’ intentions to plant winter crops in the 2022/23 production season. These plantings commence this month in the Western Cape and in the coming month in areas such as the Northern Cape, Free State and Limpopo. Farmers intend to increase canola plantings to a record area of 120,000 hectares (up 20% year-on-year). Additionally, area plantings for wheat could increase by 3% to 538,350ha. Barley plantings could also recover by 15% to 109,100 hectares.
Numbers like these give hope that even the 2022/23 summer crop planting, when it starts in October, could maintain a decent area. There is also encouraging activity in the horticulture industry through expected large yields and continued plantings of various vegetables. Livestock is one subsector that in the near term is constrained by a range of challenges, including foot-and-mouth disease and the trade restrictions that follow. These difficulties are in a year where feed prices are elevated (as seen in maize and soybean prices).
The set of interventions the state can extend to ease the pressures in agriculture includes tackling the broad network industry challenges such as roads, water, rail and electricity. Increased investment and work in these areas are also favourable for employment in rural towns, where economic opportunities remain limited. Indeed, a thriving agriculture and agribusiness sector, supported by improved network industries function and municipal delivery, would also continue to provide employment opportunities and use some of its resources for joint-venture projects that enhance transformation in the sector.
The department of agriculture, land reform and rural development also needs to build on the positive momentum of the minister’s visit to foot-and-mouth disease-affected areas and engagement with SA’s trade partners to explore ways of opening up commerce for wool and other products affected by the trade ban. We continue to engage the government on this aspect as it is critical for a subsector that is so vital to the economy, comprising nearly half of the agriculture gross value-added, yet confronted by numerous challenges.
There are numerous challenges in the agricultural sector, and solutions to the industry-specific matters are outlined in the Agriculture & Agro-Processing Master Plan, which is yet to be launched.
Still, there are fundamental issues that are beyond the department’s ambit that should be addressed if we are to see a continuation of the recent good performance in this vital sector of the economy in the coming years. These are the rail and road network, water and electricity supply and the efficient functioning of municipalities. They are not only important for the agricultural sector but also for rural tourism and entrepreneurial activities in small towns.
These are critical for the regeneration of small towns, growth in the rural economy and alleviating rural poverty and improving the plight of marginalised communities. Municipalities need to take hands with communities and businesses to implement major plans to beautify and improve their towns.
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