The challenges agriculture and agribusiness stakeholders face are the same across SA. I recently spent time with agribusinesses and farmers in the Eastern Cape, along with colleagues at the Agricultural Business Chamber of SA (Agbiz).
The Eastern Cape is an important agricultural province, accounting for about 6% of the sector’s annual gross value added, roughly the same as Limpopo, North West, and Gauteng.
The broad challenges that continue to weigh on agribusiness leaders’ minds in this province are the threat of deteriorating municipal service delivery, corruption in public offices, and failures in the network industries (roads, rail, water, electricity, and ports).
These inefficiencies lead to increasing costs of doing business in the province and taking investment away from productive agribusiness activities to maintaining roads and other infrastructure.
Beyond these challenges are regulatory constraints such as the dysfunctional State Veterinary Service and the need to modernize the Fertilisers, Farm Feeds, Agricultural Remedies, and Stock Remedies Act.
For an extended period, SA embraced science and led the continent in agricultural productivity, benefiting from the adoption of critical agrochemicals, seeds, and livestock remedies.
However, the country is drifting from this positive path. We lag behind our competitors due to delays and large backlogs in the registrar’s office, resulting in crucial productivity-enhancing inputs not being released to the agricultural industry. The failures in national vaccine production also remain an issue, and the livestock industry is again at risk as the rainy season starts.
The agribusinesses we engaged with also highlighted the need for SA to expand export markets to accommodate the growing fruit and livestock output.
Moreover, there needs to be an improvement of relations between industry and shipping companies so that the Eastern Cape ports can also receive prominence in services. There have been occasions where the province’s ports have struggled to get shipping lines essential for the movement of agricultural products to export markets.
The need for agricultural finance, particularly developmental finance for the new entrant farmers and the need to build trust and accountability, as well as implementation, monitoring and evaluation of various sector plans, was also highlighted in the engagements.
Interventions
These challenges are cross-cutting and are not limited to the functions and responsibilities of the department of agriculture, land reform, and rural development. This means the form of engagement with the government will also need to be broad and include the likes of the departments of public works and transport, among others.
The agribusinesses have been engaged in discussions on these issues through various national platforms and direct engagements with Transnet and other stakeholders. Agricultural sector role players are in regular conversations with Transnet regarding the effectiveness and efficiency of the ports. So far Transnet has been open to engagements and efficient in resolving challenges such as rebuilding the Port of Durban following the destructive floods.
Going forward, private sector role players want to explore possibilities of better partnerships in the various nodes of the ports, which could help improve efficiencies, not only for agriculture but a range of industries such as mining and automobile, among others. Admittedly, the push for export growth has become even more urgent as agricultural output consistently improves and the country has limited capacity to absorb new produce.
As I have pointed out previously on these pages, SA exports half its products in value terms. Therefore, government and industry efforts to boost domestic production should be underscored by the expansion of export markets. Japan, China, India, Saudi Arabia, Bangladesh, the Philippines, and South Korea remain the key markets in which SA agribusinesses are interested in expanding their presence.
I continue to highlight these markets to the relevant government departments and the presidency. The presence of agricultural role players in the recent SA-Saudi Arabia engagement stands as an example of what we need for cooperation and championing “SA Inc” agricultural products as a country. This should now be followed by technical government engagements to open the path for exports of SA agricultural products.
Regarding agricultural finance, the focus was on the recently launched blended finance instrument by the department of agriculture, land reform and rural development, and the Land Bank. This is a necessary product and will positively contribute to the sector’s growth and to servicing the needs of some new entrant farmers.
Moreover, the department has drafted the blended finance instrument for the broader financial service and agribusiness sector. It will be an additional pillar that further cushions the sector and provide a necessary resource for expansion.
Overall, the challenges agribusinesses and farmers face across SA are similar. These are also well understood by both government and various industry stakeholders. SA needs a plan of action, particularly on improving efficiencies in the network industries, municipality delivery, rooting out corruption, and legislative reforms within the department.
The Agriculture & Agro-processing Master Plan lays out the policy framework that provides a comprehensive view of the sector’s challenges and proposes some solutions. It is not a perfect plan, but it could improve the sector’s operational conditions if implemented effectively and efficiently by all stakeholders.
As agriculture is one of the sectors that will help grow the SA economy, there needs to be increased attention to the reforms necessary to unlock inclusive growth and job creation.
Written for and first appeared on Business Day.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
