Is South Africa’s agriculture under siege?

Is South Africa’s agriculture under siege?

For some time, there has been an emerging narrative that South Africa’s agriculture has not performed well recently.

Inept municipalities, poor road infrastructure, stock theft, and port inefficiencies all contribute to this narrative of failure and despair. Stories of the failings of land reform farms also add to this sentiment of regression in agricultural progress.

The government’s failings over the past decade and the lack of implementation of many development policies also catalysed this narrative.

But this narrative is far from the reality of the South African farming sector. Regardless of how experts feel about the state’s capacity and the government’s policy stance since the dawn of democracy, the one undeniable fact is that the sector has grown tremendously – and certainly not failing.

Data from the Department of Agriculture shows that domestic agricultural output in 2023/24 had more than doubled the size in 1994. A few sectors did not drive this expansion, but it has been widespread; livestock, horticulture and field crops have all seen strong growth over this period.

The higher production levels have mainly been underpinned by new production technologies, better farming skills, growing demand (locally and globally) and progressive trade policy. The private sector has played a major role in this progress.

I use “progressive trade policy” to highlight South Africa’s standing in global agriculture. According to data from Trade Map, the country was the world’s 32nd largest agricultural exporter in 2023, the only African country in the top 40 in value terms.

This was made possible by a range of trading agreements the South African government had secured over the past decades, the most important ones being with African countries, Europe, the Americas, and some Asian countries. The African continent and Europe now account for about two-thirds of South Africa’s agricultural exports, and Asia is now also an important market.

The agricultural subsectors that have contributed most to this progress in exports are fruits, wine, wool and grains. South Africa now exports roughly half of its agricultural products in value terms, reaching a record $13,2 billion in 2023, according to data from Trade Map.

Robust food security levels

The increase in agricultural output is why South Africa is now ranked 59th out of 113 countries in the global food security index, making it the most food-secure country in Sub-Saharan Africa.

I recognise that boasting about this ranking when millions of South Africans go to bed hungry every day may ring hollow, as I pointed out after a few presentations where I cited these statistics.

However, it is essential to note that many South Africans lack access to food due to the “income poverty challenge” rather than lack of availability due to low agricultural output, as is the case in other parts of Africa. South Africa produces enough food but does not export all of it. A lot is kept domestically for the local market.

To address poverty, South Africa must ensure employment and that households have sufficient income to buy food.

The global food security index balances the four elements (affordability, availability, quality, and safety) to arrive at a rating that covers matters at a broad national level.

Inclusiveness

As I argued in my recent book, A Country of Two Agricultures, South Africa still has a long way to go regarding inclusiveness.

“Nearly three decades after the dawn of democracy, SA has remained a country of ‘two agricultures’. On the one hand, we have a subsistence, primarily non-commercial and black farming segment; on the other, we have predominantly commercial and white farmers.”

The book adds that:

“the democratic government’s corrective policies and programmes to unify the sector and build an inclusive agricultural economy have suffered failures since 1994. The private sector has also not provided many successful partnership programmes to foster black farmers’ inclusion in scale commercial production. It is no surprise that institutions such as the National Agricultural Marketing Council estimate that black farmers account for less than 10%, on average, of commercial agricultural production in SA.”

This lacklustre performance by black farmers in commercial agriculture cannot be blamed solely on historical legacies.

“While this paints a bleak picture of transformation in the agricultural sector, what we can also not ignore is the anecdotal evidence pointing to a rise of black farmers in some corners of SA. We see this in field crops, horticulture and livestock in provinces such as Free State, Western Cape, Eastern Cape and other regions.”

Still, plans and programmes are in place to sustainably increase the number of black farmers in the sector.

To be super clear, the plan doesn’t entail replacing the existing farmers with new black farmers. The government has around 2.5 million hectares of land to distribute with title deeds to black farmers.

This will be “growing the agricultural piece“. The land reform process will continue under the current market principles. There will be no land grabs, as I argued and clarified the confusion about the recent Expropriation Act here.

Concluding remarks

The stories we tell about ourselves and the country are essential. While the emerging narrative of the sector under siege is gaining traction, we must highlight the sector’s gains, protect it, and address the domestic challenges that may threaten this robust progress.

Inept municipalities, poor road infrastructure, stock theft, and inefficiencies at the ports, among other things, require stronger focus and improvement to support the long-term growth of South Africa’s agriculture.

This will require the efforts of the government, organised agriculture, and the private sector. Addressing these issues must start with boldly telling the positive story of this sector, protecting the fortunes it has created for South Africa, and emphasising that property rights are intact in South Africa.


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What can Farmers and Agribusinesses harvest from the SONA?

What can Farmers and Agribusinesses harvest from the SONA?

President Cyril Ramaphosa’s State Of The Nation Address (SONA) has given us some nutritious nuggets to chew on. You see, although South Africa’s agriculture has grown tremendously over the past three decades (more than doubled), it faces some challenges.

Governance

Some of the challenges confronting the sector include port inefficiencies, deteriorating roads, rural crime and stock theft, rising global protectionism, and inept municipalities.

President Ramaphosa outlined the government’s plans to address many of these challenges in his State of the Nation Address. The need for professionalization of civil servants, planned improvement of water infrastructure and simplification of regulations, ongoing reforms of Operation Vulindlela in the broader network industries, interventions on logistics, and improving safety and reducing crime are some areas the SONA highlighted.

The President captured the core of agricultural matters by stating, “By supporting our farmers, improving our logistics network and rural supply chains, and opening new export markets for products, we can significantly expand our agricultural sector.”

Social

We believe South Africa’s agriculture will see its gross value added (fortunes) expand by 30% in the coming years, creating more jobs.

Still, we think the one fundamental area that the President should have highlighted is the urgent release of the 2,5 million hectares of state land for agriculture to appropriately selected beneficiaries with title deeds.

The release of this land, combined with the reforms outlined in the SONA and the opening of the export markets, would help us grow the sector and end the dualism that has made South Africa a “Country of Two Agricultures.”

This disparity limits the sector’s growth potential and must be addressed urgently. The Agriculture and Agro-processing Master Plan outlines the appropriate approach for inclusive growth.

A more inclusive sector would have a much stronger shared vision and possibly grow faster. The land currently in the government books is one area where the inclusive approach could be kicked off, including more young people and women and closing racial disparities.

Environment

Another point that is silent in the SONA but broadly discussed in agriculture is sustainability. You see, South Africa has already made inroads in improving the farming methods. We must continue caring for our farming environment to ensure the land sustainably serves the next generation.

Our efforts to improve farming will also provide continuous access to key markets such as the EU, where environmental issues in agriculture are becoming a big debate.

Closing remark

Overall, while the agricultural statement was brief in the SONA, the President addressed the fundamental matters.


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Why We Need a South Africa-Middle East Agricultural Trade and Investment Strategy

Why We Need a South Africa-Middle East Agricultural Trade and Investment Strategy

Given the fragmented trade and South Africa’s quest to diversify its exports, we must explore a range of regions. The Middle East is one such interesting region, and it is deepening its economic ties with Africa.

In March 2024, The Economist magazine published an article titled “The Gulf’s scramble for Africa is reshaping the continent.” The article focused on growing geopolitical ties and significant investments in infrastructure projects, such as ports, in various African countries.

The leading countries are the United Arab Emirates (UAE), Saudi Arabia, and Qatar. For countries like South Africa, which has diverse interests worldwide, the Middle East’s growing interest in Africa requires proactive engagement, mainly to attract investments and open up the market for exporting sectors of the economy.

Investment need

Agriculture is one sector that needs investment and a broadening of export markets. Consider the eastern regions of South Africa and the former homelands.

These areas typically are on the periphery of agricultural progress because of poor land governance and weak infrastructure, which effectively isolate them from the formal value chains of the food, fibre, and beverage sectors.

In some areas, the transaction costs of moving agricultural produce to the consumption points become too high due to the lack of roads, rail, and storage facilities.

In the regions, part of the established commercial farming sector, the deteriorating network infrastructure—including roads, rail, water, dams, storage facilities, and on-farm infrastructure—is also increasingly a significant cost driver for businesses.

It is in these areas of South Africa’s agriculture, food, fibre, and beverages value chain that one should ask whether it would be worthwhile to assess whether Middle-East countries seeking investment opportunities would not form commercially viable business ventures that respond to the above challenges with the help of local stakeholders.

Some investments would involve partnering with South African agribusinesses and farming enterprises that aim to expand their operations and require capital for such activities.

Significant funds in these Middle Eastern countries also involve the government in some way. The South African government, particularly the Department of Trade, Industry and Competition (DTIC) and the Department of International Relations and Cooperation (DIRCO), should lead the formulation of a “Middle East-South Africa Agricultural Investment Strategy.”

Such a strategy would help formally start a conversation with Middle Eastern stakeholders and introduce South African firms and farming businesses.

Export drive

Beyond the investment need and the challenges South Africa’s agriculture faces, the country is export-oriented, with exports reaching a record US$13,2 billion in 2023, according to data from Trade Map.

The Middle East region is increasingly important in the South African agricultural trade. For example, in 2023, Asia and the Middle East accounted for 28% of South Africa’s agricultural exports, the second largest region.

South Africa primarily exports citrus, apples and pears, beef, fresh berries, grapes, and sheep and goat meat to the Middle East. These industries have a potential for growth in South Africa and, therefore, prospects of large volumes for exports to the Middle East.

Still, if one focuses on the key economies in the Middle East, South Africa plays a peripheral role in agricultural markets. For example, Saudi Arabia imported US$29,5 billion of agricultural products in 2022, according to data from Trade Map.

South Africa was a minor exporter, accounting for a mere 1% of Saudi Arabian imports. It ranked 31st in the agricultural importers list.

Similarly, the UAE imported US$23,3 billion of agricultural products in 2022, with South Africa capturing a mere 2% market share as the 16th largest supplier.

Qatar, which imported US$3,9 billion of agricultural products in 2022, with South Africa playing a small role, ranked 10th in the list of suppliers and with a 2% market share in Qatar’s agricultural imports.

India, Brazil, Australia, the United States, Canada, New Zealand, the United Kingdom, Denmark, the Netherlands, Italy, Spain, Argentina, Russia, and France. generally held the largest market shares in these Middle Eastern countries

Regarding the products, the Middle East primarily imports various meat products, grains, oilseeds, and fruits, amongst other products.

This means South Africa would benefit from increasing its market share, which is only possible through targeted product promotion and marketing. Government support would also help nudge Middle Eastern countries to address any remaining phytosanitary barriers for South African products in these countries.

Ultimately, the DTIC and DIRCO should formulate a Middle-East-South Africa Agricultural Investment and Trade Strategy with the Department of Agriculture. This Strategy would help rank the priority list of investment products and map out any barriers that should be addressed within the government’s official channels, with timelines.

The document would also outline possible investment paths aligned with industries highlighted in the Agriculture and Agro-processing Master Plan, as well as the opportunities presented on PLAS land and in the former homelands, amongst other opportunities.


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How should South Africa’s agricultural community view the recent global trade disruptions caused by the Trump tariffs?

How should South Africa’s agricultural community view the recent global trade disruptions caused by the Trump tariffs?

Some doubted whether US President Trump would implement all the tariff plans he promised during his election campaign, especially for Mexico and Canada.

In the case of China, the possibility was high as it would not be the first time that the Trump Administration imposed tariffs on China. We saw such steps in 2018 when the Chinese government retaliated, mainly targeting various agricultural products that the US exported to China.

Well, we were wrong. Over the week, President Trump pushed ahead and imposed 25% tariffs on goods from Canada and Mexico and 10% on China. These duties will be added to the existing tariffs. The Trump Administration accuses these countries of allowing the smuggling of fentanyl to the US and the immigration issues.

There have already been some developments, with Canada intending to retaliate by imposing 25% duties on various products imported from the US. Like China in 2018, Canada also targeted some agricultural exports from the US for the duties it would impose. These include beer, wine, bourbon, fruits, and fruit juices. China also intends to retaliate, and we will learn more about its actions in the coming days.

South Africa was also not spared of the headlines. Overnight, President Trump incorrectly stated that there is “confiscating” land and the country is “treating certain classes of people very badly”. This, of course, is not what is happening, as I recently outlined the implications of the Expropriation Act here.

So, how should South Africa’s agricultural community view these trade developments?

Our best guide is when President Trump first imposed tariffs on China in 2018. China retaliated, targeting partly the US agricultural sector, which Canada is doing right now.

The US soybean, maize, and pork farmers were among the most negatively affected by China’s retaliation policies in 2018. The switch in orders saw the demand for US agricultural exports to China decline. China started buying more agricultural products from South and some Central American countries.

Therefore, it is plausible that if China targets US agricultural exports again, soybean, maize, and pork farmers would be negatively affected. This would add to the Canadian tariffs on fruits, wine, and fruit juices.

Under such a scenario, as observers and agricultural stakeholders in South Africa, we will likely see the early impact through the global grain and oilseed prices. The US is a significant producer, and when its grain market activity is disrupted, the impact tends to be felt globally.

Moreover, the US farmers could also start exploring other export markets where they have not been as present to hedge against China’s risks.

Still, avoiding China on any global agricultural product will be hard. China is a dominant player in the export and import of agricultural products. In 2023, China was a leading agricultural importer, accounting for 11% of global agricultural imports.

According to Trade Map data, China spends just over US$200 billion annually on agricultural product imports. The US is China’s second-largest agricultural supplier after Brazil. Other suppliers include Thailand, Australia, New Zealand, Indonesia, Canada, Vietnam, France, Russia, Argentina, Chile, Ukraine, the Netherlands, and Malaysia.

Indeed, if one examines China’s agricultural imports, the top products include oilseeds, meat, grains, fruits and nuts, cotton, beverages and spirits, sugar, wool, and vegetables. The US has significant exposure to oilseeds and meat. The same can be said about the wine, fruit, and fruit exports to Canada.

Implications for South Africa

South Africa is a small player in global grains and has undoubtedly not been a participant in the US grains and oilseed markets. The major risk is when the US farmers divert their products from China, depending on the level of Chinese retaliation tariffs, to South Africa’s traditional markets in the Far East. This could further recreate more competition and downward price pressures. This is something we will have to monitor closely.

Similarly, the US fruit, wine, and fruit juice exports could also start looking to widen their export markets to areas similar to South Africa, which would present more competition.

And yes, I know some, like the economist Nimrod Zalk has hinted that South Africa must push ahead and market its wine in Canada and Mexico. This is something I am not particularly opposed to.

Anyway, I remain optimistic that the current US tariffs will have minimal direct impact on South Africa, and the confrontation seems far from us.

Whether the US imposes any other import tariffs that could directly affect the South African farming community in future remains to be seen. We live in strange times and can’t be sure of anything these days.

I want to emphasize that the current trade fragmentation further solidifies my view that South Africa must work to diversify its agricultural export markets. In a fragmented world like today, an export-oriented sector like South Africa’s agriculture should spend more time and resources on broadening export markets and diversifying risk.

After all, South Africa’s long-term agriculture growth prospects hinge on the country’s success in creating as many export markets as possible and improving the efficiency and quality of its domestic logistics (roads, rail, and ports).


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Farmers suffer as South Africa’s land reform talk drags on

Farmers suffer as South Africa’s land reform talk drags on

The South African agriculture and land policy discourse risks entering a period of stagnation like much of the country’s developmental agenda.

More than three years ago we knew that government had over the years acquired about 2.5-million hectares of land through its Proactive Land Acquisition Strategy.

Much of this land was previously used for various farming activities, but some is now underutilised, and some is under short-term leases to farmers who struggle to access the capital required to unlock the land’s potential.

Whenever we consider the long-term growth prospects for agriculture we assume this land will be fully used productively to boost agricultural output and add jobs.

On various occasions over the past three years President Cyril Ramaphosa and then agriculture, land reform & rural development minister Thoko Didiza pushed for the establishment of a Land Reform & Agricultural Development Agency, which would drive the release of land to appropriately selected beneficiaries with title deeds, address finance challenges, and lean on organised agriculture and private sector skills.

The process has taken inordinately long. Still, there has been some progress in setting up the agency, with conceptual work completed, driven primarily by the leadership of the department of agriculture, land reform & rural development. The release of this land with title deeds to appropriately selected beneficiaries has the support of the presidency.

In his opening of parliament address in July Ramaphosa stressed the importance of this process when he stated: “We will increase funding to land reform, prioritise the transfer of state land and improve postsettlement support by strengthening the institutional capacity of responsible structures.”

The department of land reform & rural development should therefore accelerate the process of establishing the Land Reform & Rural Development Agency and ensure that it begins its work this year.

There is always a temptation to indulge in elaborate consultation and dialogue about land matters. In fact, over the past three decades SA has spent more time talking than on policy implementation. This year land reform & rural development minister Mzwanele Nyhontso and his director-general should strive to avoid the allure of these elaborate, unproductive meetings and consultations, and rather move ahead with the programmes established by the previous administration, tweaking and improving as they implement.

Failure to begin will result in another year of discussions while farmers on the ground, and the sector as a whole, continue to suffer.

If the government cannot move ahead and release more land and support for farmers there is a real risk to the long-term growth prospects of SA’s agriculture and rural economy. The success of other government programmes such as the Agriculture & Agro-processing Master Plan hinges on the progress of land release. When the work begins the approach should not follow the practice of the past few years, in which a land parcel is allocated to numerous beneficiaries. The policy focus should be a deliberate attempt to support and nurture a new cohort of individual commercial farmers, not groups.

The “Better Few, But Better” concept should be the running theme as we build the agricultural sector and rural economy. This entails selecting a few and better cohort of commercial farmers to support.

Focusing on creating and nurturing a new cohort of farmers does not mean the government can ignore smallholder farmers. They should continue receiving the necessary support as they play a vital role in household food security.

Deliberate support for commercial farming will also ensure there are farmers in each region who could be aggregators for the surrounding smallholder farmers who wish to access noncommercial value chains.

This year must be a period of implementation and progress in land reform and agriculture. It will ensure that the goodwill that exists within organised agriculture to collaborate does not wane while also boosting the farming economy.

–Written for and first appeared in the Business Day.


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Some Notes on South Africa’s Agricultural Trade Narrative

Some Notes on South Africa’s Agricultural Trade Narrative

I am still largely away from my desk, seeing some South African agricultural stakeholders and our members in the country’s central regions. Amongst many things we get to discuss, we continue to talk about the need for South Africa to widen its agricultural export market beyond the countries we currently export to.

In this export growth conversation, one minor but essential theme is emerging in some conversations: the risks around BRICS. I guess the recent comments by US President Donald Trump, who had a “tough talk” towards this group of countries, partly explain the emerging worries.

There is a consensus that the BRICS should be an area of expansion for South Africa’s agricultural exports. The region accounts for over US$300 billion in farm product imports annually.

However, our emphasis on the BRICS must not be at the expense of other markets that have long supported South African agricultural exports. Indeed, the BRICS region accounts for less than 10% of South Africa’s agricultural exports, which were about US$13.2 billion in 2023 and possibly over US$14.0 billion in 2024.

The longstanding vital markets to South Africa’s agriculture are the likes of the African continent, the EU, the UK, parts of Asia and the Middle East, and the Americas. Therefore, we must emphasise the need for South African authorities to maintain sound and warm relationships with these regions.

Equally, South Africa’s association with the BRICS grouping must not be viewed as “siding” with particular countries. Like India, South Africa can maintain friendship and trade relations with various countries. However, this requires that the South African political leaders visibly maintain relationships with everyone.

In today’s fragmented world, it is easy to be drawn into conversations about which side one supports. Still, as a developing country with broad and varied interests in export markets and attracting foreign direct investments, I guess some level of what I would call “constructive ambiguity” is necessary when engaging with the world.

So, while some stakeholders may worry that BRICS brings certain risks, much depends on how South Africa presents our association with this grouping. We should emphasise the economic possibilities more than other interests.

From a purely agricultural perspective, there is much potential for expanding our exports. Indeed, at the moment, the BRICS is a political group that requires formal economic ambitions.

The major agricultural challenges are the higher import tariffs and phytosanitary barriers some countries impose on South Africa and other BRICS members. As a result, there is quite a low intra-BRICS agricultural trade. But with this group expanding, with Indonesia and Nigeria recently joining, it makes sense that we stay on. We continue to push for low import tariffs and some form of agricultural trade agreement in this group over time.

Broader access to this grouping while maintaining our agricultural export markets is vital for South Africa’s long-term agricultural growth.


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A Word About the Ongoing Worries About the Expropriation Act in South Africa

A Word About the Ongoing Worries About the Expropriation Act in South Africa

I am on the mini roadshow, seeing some of the Agricultural Business Chamber of South Africa (Agbiz) members in central regions of the country. During the long drives, I have listened to many talk radio shows. As it happens when one crosses from one region to another, the radio stations tend to change in frequency, and I have found myself tuning into various radio stations. The one theme I have heard consistently across most stations is the commentary about the “Expropriation Act” South African President Cyril Ramaphosa recently assented to law.

The commentary is interesting. However, I think some confusion is emerging, where some view this Act as a new direction for land reform. This is not the case – land reform policy in South Africa hasn’t changed and is still under the three pillars of (1) restitution, (2) redistribution, and (3) tenure.

The government is still buying land from the open market for land reform processes, amongst other things. This is unlikely to change as expropriation is no ‘shortcut’; it is a long and cumbersome process, and the law provides a safeguard that it may only be used where attempts to purchase the property on reasonable grounds have failed. The other important thing to underscore is that South Africa is not unique in having an Expropriation Act; most countries have one. Notably, the Expropriation Act per se is not new; we see an update from the 1975 existing piece of legislation here.

So, what is the Expropriation Act about if that is the case?

Drawing on my work with my colleague at Agbiz, Annelize Crosby, let me state that the first thing to highlight is that the Expropriation Act’s provisions are subject to the provisions of section 25 of the Constitution of the Republic of South Africa, which has not been amended. This section requires that compensation be just and equitable, striking an equitable balance between the public interest and the rights of those affected with regard to all relevant circumstances.

Although the new Expropriation Act now explicitly refers to the possibility of (Rands/R) Nil compensation to be awarded, the result must be just and equitable. The term R Nil compensation implies a calculation that considers all relevant factors, including those listed in the Act and the Constitution. The application of relevant factors will have to be justified.

Also important to note that section 12(3) of the Act states that it may be just and equitable to award R Nil compensation, which makes it clear that it is only a possibility where the balance of circumstances justify it; it is by no means a foregone conclusion that compensation will amount to Nil and the courts will have the final say on compensation where an offer is disputed.

A calculation will have to be done considering all relevant factors. Awarding little or no compensation will have to be justifiable in an open and democratic society, and the state will have to show precisely how and why it arrived at an offer of Nil Rand’s compensation. There will likely be a lot of litigation over the Nil Rand compensation clauses, and jurisprudence will develop over time regarding what is just and equitable in this regard and what is not.

The new Act contains many checks and balances, including a provision that an agreement must be attempted before the state decides to expropriate and an opportunity to object to the intention to expropriate. The Act guarantees that expropriation can only be used as a last resort after all other attempts to buy the property have failed. It also provides for the possibility of mediation in the case of disputes over compensation.

With that said, I must agree that the definition of expropriation remains a concern, and we will need to watch closely how it is applied and interpreted by the courts. This definition may exclude all instances where the state does not acquire the property but nevertheless limits the owners’ rights to such an extent that it becomes of no value.

It opens up the possibility of all sorts of regulatory limitations on the property with no compensation where the state does not acquire the property but rather limits the use and enjoyment of the property by the owner or any other party with a right in the land (i.e. a lessee, mortgagor, occupier etc.).

Another crucial point often missed in this conversation is that the state’s right to expropriate still exists, even without this Act. The state’s power to expropriate land for a public purpose or in the public interest is derived from the Constitution itself. More than 200 other pieces of legislation provide details on the type of property that can be expropriated, the conditions under which it can be expropriated, and the state entity with which this right vests.

The Expropriation Act is merely procedural. It grants no expropriation powers to anyone other than the Minister of Public Works and Infrastructure and only for purposes connected to his/her mandate. In all other instances, the powers to expropriate already exist in other legislation, such as the Restitution Act, Labour Tenants Act, and the proposed Redistribution Bill.

While we should not blow the potential impact of this Act out of proportion, people’s concerns are understandable, as South Africa recently had a robust conversation about Section 25 of the Constitution of the Republic of South Africa. But this is not that discussion, and the Expropriation Act is not unique to South Africa. In the coming months and years, we will have to watch closely the developments and how the Act may be applied, as all that will offer valuable lessons.

The South African agricultural sector is on solid ground for now, and we shouldn’t be as worried but vigilant.


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