by Wandile Sihlobo | Jan 17, 2025 | Agricultural Environment and Natural Resource
The current supply glitch in South Africa’s avocados should not be a primary concern for consumers but a temporary inconvenience. On January 16, News24, a media organization, reported that South Africa has tight avocado supplies.
While I know some of you won’t be able to have your “smashed avocado on toast” breakfast for a week or so, there are a few reasons for this slight inconvenience, and it will ease soon.
First, one must appreciate that avocado season in South Africa runs from February through to September. Therefore, we were bound to have lower supplies around this time of the year.
Second, South Africa exported a large number of avocados in 2024 due to strong global demand, which led to tight domestic supplies. However, this is temporary; we could see supplies improving next month and prices moderating.
After all, we now have a diversified avocado industry with production in various South African regions with different yielding periods.
Importantly, we produce sizable avocados in this country, over 120,000 tonnes a year. Our production has increased notably over the past few decades due to the expansion in plantings on the back of strong demand locally and globally.
The produce is for both the domestic and the export market. We generally export about half of the harvest. Our key export markets include the Netherlands, United Kingdom, Russia, Germany, Spain, and the United Arab Emirates.
Like other agricultural commodities, the South African avocado industry wants to continue widening its export markets to various regions to diversify and support its long-term profitability.
However, I must emphasize that this export drive is not at the expense of the domestic market; that remains important while we continue to expand the export markets. There are generally sufficient supplies for the local market. Not every year, we see news of tight supplies.
So, when you read that there were ample exports in 2024, such is good. We need to see continuous exports and new markets. Plenty of trees still have yet to bear fruit in this country, and the local market will not absorb them. For that, we need export markets.
Notably, exports are key for farmers to earn revenue and sustain jobs in this industry. Better profitability levels are vital for the long-term growth of the avocado industry, job creation, and sustainability of various rural communities.
By the way, the talk of exports does not suggest that things have been smooth for farmers. We continue to see challenges of inefficient ports, poor roads, rising crime, and inept municipalities, all of which add costs to business and threaten the long-term growth of the broader agricultural sector.
So, the news of the temporary tight supply of avocados and a possible slight increase in price will not make the industry rich. As I have listed above, we should resolve fundamental constraints to agricultural growth as a country.
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by Wandile Sihlobo | Jan 14, 2025 | Agricultural Environment and Natural Resource
The Competition Commission of South Africa released its final Report on the Fresh Produce Market Inquiry (FPMI) on January 13, 2025. The authors shared our long-held views, which were clearly highlighted in the National Agricultural Marketing Council’s Report on the National Fresh Produce Markets some years ago.
So, in essence, the Commission’s Report is a valuable resource about the industry’s structure and price developments and primarily provides sensible and correct findings. The Report reaffirmed the importance of fresh produce markets in price discovery and food security.
The report also raises vital points about the deteriorating infrastructure of various municipalities and others that should maintain or reinvest resources in fresh produce markets. This confirms our long-held belief that local government is the biggest culprit in all of this.
In various ways, the service and governance of municipalities prohibit the participation of black farmers in economic and commercial activity. That is the single biggest reason these markets have few black farmers and black Agents. A case in point is Pretoria, where the operating conditions and infrastructure remain in bad shape, and the municipality — custodians of the market––needs to improve and pay closer attention to it. The lack of maintenance presents problems such as cleanliness, hygiene, food safety, and cold and ripening rooms.
However, the recommendations and some findings of the inquiry push the limits a bit by trying to be unrealistic. Some of the points raised move the inquiry outside the Competition Commission of South Africa’s mandate and the initial scope of the FPMI. The most important recommendations are in itself uncompetitive by forcing quotas in terms of volumes and numbers.
The Report correctly identifies the challenge of low participation of black farmers or small and medium-scale market producers. However, this issue is not unique to the markets; it resembles a broader challenge in South Africa’s agriculture. The government-owned agricultural land – about 2,5 million hectares – is some of the land that could help boost black farmers’ production. Indeed, not all this land is for fresh produce, but it would help.
The Report correctly recognises that the established stakeholders in agriculture would have to help with skills transfer for new entrants; these are activities that even the Agriculture and Agro-processing Master Plan already supports and has identified.
Regarding concentration and price transparency at the retail level, we see where the Competition Commission comes from, but there is no clear evidence of any wrongdoing amongst industry stakeholders. The FPMI could not find evidence that large retailers have excessive buying power over farmers when directly contracting with them. They make an interesting finding:
“….most growers appear not to be in a vulnerable bargaining position when dealing directly with large retail chains”.
One reason is the way the contracts are specified, as well as the fact that fresh produce markets provide an alternative market outlet for farmers. Retailers also do not demand exclusivity. It also confirms the vital role of fresh produce markets and why local governments must play their part.
Regarding retail prices, the extra labelling burdens retailers, but the value to consumers is unclear. We would not support this suggestion. We already see that fresh produce prices in South Africa are relatively affordable, and there is transparency in price discovery. Therefore, in our view, all the other interventions won’t add that much value except for “comparison”.
Overall, the Report is a valuable addition to deepening the understanding of the fresh produce market structure in South Africa.
Notably, the findings and recommendations are not binding, and the relevant government departments will need to assess them.
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by Wandile Sihlobo | Jan 13, 2025 | Agricultural Environment and Natural Resource
I am starting this year hopeful that South Africa can implement various plans and programmes we have designed over the past few years but never got to implement. In agriculture, nothing is more glaring than the slow release of government-owned land to deserving beneficiaries who can use it optimally.
However, President Cyril Ramaphosa has clarified that he intends to see more land release and agricultural progress. As we start 2025, the Department of Land Reform and Rural Development and the Department of Agriculture must take his words as marching orders.
In his Opening of Parliament Address in July 2024, the President stated: “We will increase funding to land reform, prioritise the transfer of state land and improve post-settlement support by strengthening the institutional capacity of responsible structures.”
This profound statement is at the heart of South Africa’s agricultural inclusive growth agenda.
Over time, the South African government has amassed about 2.5 million hectares of land that was never released to beneficiaries with title deeds. These government-owned farms, which are now underutilised, were acquired through the Proactive Land Acquisition Strategy and are in the Government Land Holding Account.
I have interacted with some of the beneficiary black farmers who have told me countless stories of pain and frustration. Their stories centre around the fact that commercialisation is proving difficult. The key to attracting investment and unlocking productivity is the security of tenure. The short-term leases the government provides them are unhelpful in unlocking capital and enabling operations. Getting this right could help promote commercialisation and yield sustainable jobs for communities.
In a few cases where farmers have succeeded despite the insecure lease arrangements, they have faced bureaucratic hurdles and, at times, cavalier attitudes from government officials. These farmers have shared stories of how corrupt government officials have unceremoniously and illegally removed them from their farms.
Addressing the security of tenure and stopping corrupt activities are key to clearing the pathway to success. My book A Country of Two Agricultures offers more specific solutions.
If South Africa is to see the expansion of the gross value added to agriculture, an increase in black farmers’ share in commercial farming, and a boost in agricultural jobs, transferring the state land to appropriately selected beneficiaries with title deeds should be a starting point.
The speech in July 2024 was not the first time President Ramaphosa had discussed accelerating land reform in South Africa and boosting the farming economy. But it was certainly one of the few times when the need to release state land to beneficiaries was clearly stated.
As we start 2025, we are working to revive the South African economy. The starting point for agriculture should be releasing government land to beneficiaries with title deeds. This will also support the Department of Agriculture’s initiatives, such as the Agriculture and Agro-processing Master Plan.
Regarding the “post-settlement support” that the President noted, the beneficiaries of the land would be individuals who could qualify for the Blended Finance Scheme. This Scheme is currently run by the Department of Agriculture, Land Bank, and other financial institutions and agribusinesses.
Regarding skills, commodity associations should also be able to lend support through training when required in some beneficiaries. We can also build on many initiatives, such as SA PALS, SerDev, etc.
President Ramaphosa provided clarity in July 2024 about the government’s policy direction on land reform and agricultural development. The President intends to continue releasing land to black farmers, vital to building an inclusive farming sector.
If done with great focus and collaboration with relevant departments and stakeholders in the sector, this may be a first step towards addressing South Africa’s profound challenge of being “A Country of Two Agricultures“.
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by Wandile Sihlobo | Jan 11, 2025 | Agricultural Environment and Natural Resource
Fertilizer prices are nowhere close to the pre-COVID level, although they have softened notably in recent months. The significant issues in 2021-22 were the supply chain disruption and the start of the Russia-Ukraine war, which led to a surge in fertilizer prices. You can read about why prices remain elevated here; I won’t discuss the reasons in this post.
I am raising this issue because, in September 2024, as South African farmers were getting ready to start the planting season, I remarked that they were experiencing better input costs. For example, in rands terms, most fertilizer product prices were down by roughly 10% year-on-year compared with the previous year.
Since fertilizer accounts for approximately a third of the grain farmers’ input costs in South Africa, such a price decline significantly improves farmers’ finances.
Also worth noting is that in rands terms, herbicide prices were down by around 20% in August 2024 compared with the same period last year. The prices of insecticides were down by roughly 15% year-on-year in August 2024.
Since herbicides and insecticides comprise about 10% of grain farmers’ input costs, declining prices help with operational costs. The stronger domestic currency, combined with the decline of these prices in the international market, was the significant factor behind the decrease in domestic prices.
While I highlighted the proportion of these products in the grain farmers’ costs, they also make a considerable share of the production costs in the horticulture sub-sector.
However, considering the input costs, fertilizer prices remain higher than pre-COVID levels. There remain some cost pressures in farming. So, yes, commodity prices, mainly grains and oilseeds, have increased. However, at the same time, input costs have also increased. Therefore, if the farmer is not receiving higher yields per hectare, there will be financial pressure on the sector.
Higher fertilizer prices are more challenging for the broader African farmers in Zimbabwe, Malawi, Zambia, and others. Last year, these countries saw far more major grain harvest losses than South Africa. The difference was that South Africa has improved seed varieties, and higher fertilizer usage is another contributing factor.
Farmers in Zimbabwe have seen high yields in recent years because of lower fertilizer usage. As prices remain at these levels, this presents continuous challenges for farmers in the region.
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by Wandile Sihlobo | Jan 10, 2025 | Agricultural Environment and Natural Resource
I have noticed that some international coverage of the cannabis industry is no longer with the excitement we used to read a few years ago. For example, on January 1, 2025, The Economist magazine ran an article with the headline “America’s marijuana industry is wilting“.
The recent surge in investment was partly due to politicians’ promises to decriminalize and reform the cannabis industry in the U.S. and other parts of the world when they were elected into public office.
But when they finally get into office, the regulations do not change much—at least, that is the American cannabis story. In addition to unclear regulations, competition from the illicit trade remains a challenge, negatively affecting the operations of formal businesses. This is partly because while President Trump has promised reforms in this industry, the negative headlines persist.
But the cannabis industry is not only seeing negative coverage in the U.S. In Europe, there is some negativity about this plant. For example, on December 29, the Financial Times ran an article titled “Giorgia Meloni cracks down on Mussolini’s crop: hemp“. The article stated that:
“Italy’s fascist dictator Benito Mussolini promoted the cultivation of hemp to reduce his nation’s dependence on imported rope and textiles before and during the Second World War.
But Prime Minister Giorgia Meloni’s Brothers of Italy party — whose origins lie in the postwar, neo-fascist movement founded by Mussolini’s surviving loyalists — now looks set to uproot an Italian hemp revival in its bid to crack down on recreational drug use.
Outraged by the proliferation of cannabis shops, Meloni’s government is moving to ban the production, processing, transport or trade of any varieties of cannabis flowers, including those from non-psychotropic, industrial hemp.”
For many in South Africa working on the Cannabis and Hemp Master Plans, these global developments are worth monitoring. The goal is to learn from the experience of these countries and enhance the South African regulatory path.
Yes, we have been slow in providing a new and clear regulatory path for this plant, and the licensing price has been somewhat prohibitive for some people.
What is often puzzling for me in South Africa is the proliferation of cannabis shops and various products that retailers place on shelves. Do people have clear regulations or licenses to put up all these stores?
(Hallo Ntate’Ramasodi, DG of the Department of Agriculture 😊. I think it’s time for us to look closely at these products in stores.)
To be clear, I am broadly supportive of the cannabis industry, but the regulations must be followed, mainly when people sell things all over shopping malls and fuel stations.
When we finally progress with regulations, I still believe that cannabis could be a catalyst for revitalizing rural communities that are economically marginalized and excluded from the agriculture value chains. It could also create opportunities for cannatourism, especially in rural Eastern Cape, KwaZulu-Natal, and Limpopo.
South Africa still can build a competitive edge in the cannabis industry even though countries such as Lesotho are the first movers. Lesotho is building its cannabis economy on the back of low-cost labour, water abundance, relatively affordable electricity and high altitude, which reduces costs associated with pest management, thereby positioning the country as a key supplier of an organic variety of cannabis.
South Africa’s competitive advantage could be built on the back of a transparent and predictable regulatory framework, an open investment regime, strong research and development support, knowledge networks that bring together university researchers, centres of excellence, and other industry players; product quality and standards authority; and low-cost licensing regime.
However, we need to consider practical ways to ensure that production and value chains don’t mainly develop in areas that have always been the leading agricultural zones and urban areas with better access to investment.
The communities of the Mpondoland region of the Eastern Cape have been growing this plant in the shadows of the law for many years and should benefit from its liberalization. But does the government have a clear plan for mobilizing investment and value chain development in these regions?
The Eastern Cape, KwaZulu-Natal, and Limpopo provincial agricultural departments should lead and lobby their national colleagues to refine and craft the regulation to encourage investment in these provinces.
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by Wandile Sihlobo | Jan 3, 2025 | Agricultural Environment and Natural Resource
The African governments must decide if they want to fight poverty in the continent or continue to plunge millions of Africans into hunger. A deliberate policy change towards boosting agricultural productivity would help us address the poverty challenge.
We can learn from various parts of the world that are busy changing their policies to increase agricultural production. For example, China, which has close relations with several governments in Africa, is advancing in boosting its agricultural sector in an admirable way, which Africa should emulate.
Amongst many interventions, China is advancing seed breeding in maize, soybeans and other staple crops. They are embracing science to boost their agricultural development. Our primary focus in Africa should be seed breeding or improving agricultural productivity.
Of course, this is not the only thing to focus on. We must also deal with land governance, enhance infrastructure across the network industries, ensure limited government intervention in trade and commodity prices, embrace large-scale farming, ease access to finance for farmers, and strengthen producer organizations, amongst other interventions.
I am highlighting seed breeding because Africa has struggled with low agricultural productivity for some time. The recent increase in output has primarily been due to an expansion in the planted area rather than a yield boost.
China’s focus on booting yields is driving them to embrace biotech seeds. On December 31, 2024, Reuters, a media organization, published an article titled “China approves more GM crops to boost yields, ensure food security“. The article stated that:
“China has approved five gene-edited crop varieties and 12 types of genetically modified soybean, corn and cotton, expanding approvals to boost high-yield crops, reduce import reliance, and ensure food security.”
The article added that:
“Over the past year, the country has increased approvals for higher-yielding genetically modified corn and soybean seeds to raise domestic production and reduce grain imports.”
While we wait to see the wide-scale commercial release of the approved varieties, we can all see that China has no aversion to genetically modified crops. China also imports genetically modified maize and soybeans.
Let us consider maize; the approval of genetically modified seeds may further lift the Chinese maize yields, which are currently at somewhat admirable levels. The fertilizer usage and favourable enviromnetal conditions also contribute to the yield improvement. Currently, China’s maize yields are comparable with those of South Africa, the United States, and Brazil, amongst others, which have long adopted genetically modified seeds.
Thus, I suspect adopting genetically modified seeds will further lift the yields. Furthermore, in countries like the United States, Brazil and Argentina, amongst others, genetically modified seeds have had additional benefits such as lowering insecticide use, more environmentally friendly tillage practices and crop yield improvement.
And yes, we can be frank: China faces a monumental task in lessening its dependency on grains and oilseed imports. The yield improvement will need to be significant to change the current reality. China is one of the world’s largest maize and soybean importers. The country accounts for roughly 11% of global maize imports and 62% of the world’s soybean imports.
Therefore, given China’s import significance, an improvement in the domestic production of maize and soybeans would have notable implications for global grain trade and prices. A reduced volume of China’s soybeans and maize imports in the global market would mean downward pressure on international prices. Enough about China; what does this all mean for Africa?
Implications for the African continent
Beyond the global price implications, African countries, which have long resisted cultivating and importing genetically modified crops, should closely monitor these developments. South Africa is the only exception that has embraced genetically modified crops since the 2001/02 season. The country has also enjoyed improvements in yields and is now a leading producer of grains in the region.
Notably, although the yields are also influenced by improved germplasm (enabled by non-genetically modified biotechnology) and improved low and no-till production methods (facilitated through herbicide-tolerant genetically modified technology), other benefits of genetically modified seeds include labour savings and reduced insecticide use as well as enhanced weed and pest control.
Hence, with many African countries currently struggling to meet their annual food needs, using technology, genetically modified seeds, and other means should be an avenue to explore and boost production. Many African governments should reevaluate their regulatory standards and embrace technology.
Implications for South Africa
The Chinese development is relevant to Africa and essential to South Africa (and yes, I know South Africa is part of Africa – I got my geography right).
South African farmers and agribusinesses should also closely monitor the developments in China. The increase in production in other parts of the world, specifically in maize, where South Africa is a net exporter, could bring increased competition and downward pressure on prices in the long term. Some of South Africa’s key maize export markets are South Korea, Japan, Taiwan, and Vietnam, and they all have proximity to China.
With that said, the most urgent matter, for now, is Africa; we must embrace science.
Note: I discussed this issue in my TED TALK last year, which you can watch here.
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by Wandile Sihlobo | Dec 31, 2024 | Agricultural Environment and Natural Resource
I have been troubled for some time by the Eastern Cape’s sluggish economic progress, higher unemployment, poverty, and poor service delivery by the provincial government.
And yes, I know there has been some good work in various regions of the province. For example, the national road network from Port St Johns to Gqeberha is in admirable condition following recent improvements. This has improved the ease of travel and supports businesses, especially agribusinesses relying heavily on these road networks. New schools and clinics have recently been built in rural regions. These have led to some green shoots in terms of education outcomes.
In areas that need enormous improvement, we must focus on municipalities that remain in a troubling space. For example, the recent reports of ongoing water challenges in Makhanda, which have been challenging for some time, are a glimpse of the failings we see in other municipalities in the province. Another area of neglect is road maintenance and service delivery in various towns, especially the former Transkei region.
The poor rural roads, water challenges, higher crime incidents, and poorly maintained towns, amongst other challenges, are all issues that slow the province’s fortunes. All these weigh negatively on farmers and small businesses that struggle to connect with clients in the business centres, leading to financial losses because of higher transaction costs.
In addition to the automotive industry, agriculture and agro-processing, various services, tourism, and agrotourism are some industries the Eastern Cape should be driving. However, the province has not made admirable progress in these areas. Even if the province did some promotion of tourism, with these long-running problems, the businesses would struggle to attract more clients into the province for a sustainable period.
Yes, we have a great province that can offer so much and, in the process, create jobs.
The Premier of the Province, Oscar Mabuyane, typically gives promising speeches that diagnose the underlying problems. But the delivery remains disappointing.
For example, in agriculture, the province still has sharp dualism. The former Ciskei regions of the province, with dominant commercial agriculture, are the engine of the provincial agricultural fortunes. Meanwhile, the former Transkei region remains at the periphery of progress.
The challenges of land governance, inadequate infrastructure (roads, water, silos, etc.), and absence of organized agriculture for training are among the challenges this region faces. As a result, there are tracts of underutilized land in regions with favourable rainfall. The province’s leadership should pull all the stops to ensure we realize agricultural growth in the province.
Progress in provincial agriculture would be an engine for addressing high unemployment and poverty. These would also be highly technical jobs in the value chain.
The other industries that could thrive as a consequence are the tourism and agritourism industry.
The Eastern Cape has the potential. However, its leadership must do its part seriously to restart the province. Once we see their efforts, the private business will follow up and invest. We can’t keep having a rural province with a “potential” never achieved while people suffer.
While I have placed the burden on the Premier’s hands, the people of the Eastern Cape must define their destiny. Pockets of fertile lands remain fallow. People seem to have lost hope in farming for various reasons, which I have discussed above. The government has also done little to build confidence and provide the necessary infrastructure and conducive operating environment to return intellectual and physical capital to the province.
Provided agriculture could be revitalized, and supportive infrastructure, agriculture and agribusiness could give far more economic opportunities than we see in some urban regions.
And yes, I know other provinces face these challenges. But my point here is about the Eastern Cape.
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by Wandile Sihlobo | Dec 30, 2024 | Agricultural Environment and Natural Resource
One of the developing stories the global media keeps reporting is the bird flu in various parts of the U.S. Ordinarily, bird flu is an issue for the poultry industry, but recently, we saw the disease crossing to dairy cattle and soon after that to people.
The U.S. continues to struggle with this disease. The government has declared a state of emergency in California following the widespread spread of bird flu. For example, the Associated Press reports, “California has been looking for bird flu in large milk tanks during processing. And they have found the virus in at least 650 herds, representing about three-quarters of all affected U.S. dairy herds.” Still, this remains low risk to the general public, but it’s a significant challenge for the dairy industry in the U.S.
Now, why am I writing about this story? I am highlighting it not because South Africa and the Southern Africa region face an apparent risk. I am highlighting it to illustrate that the animal disease issue is a global challenge and that South Africa must continue to strengthen its biosecurity system – the measures in place to reduce the risk of infectious diseases being transmitted to crops, livestock and poultry.
South Africa has faced its fair share of animal diseases, such as avian influenza in poultry, foot and mouth disease in cattle, and African swine fever in pigs. Fortunately, none of these, at least to my knowledge, have crossed humans and caused the complications we see in the U.S. with the bird flu.
Still, South African farmers have faced a heavy financial burden in the past few years. The other downside of animal diseases is that when the country or region faces an outbreak, some markets temporarily block the exports of the product from such a region. As an export-led agricultural sector, this was a great challenge for the South African red meat and wool farmers when the foot and mouth disease peaked in 2022.
For example, South Africa’s beef exports volume for 2022 was down by 16% year-on-year to 26 881 tonnes, according to data from Trade Map. This decline was primarily due to the temporary closures of various markets. Furthermore, the sheep industry was also affected by the 2022 outbreak. China, a significant market for South African wool, suspended imports. The impact of those temporary closures is visible on export volumes of wool. In 2022, South Africa’s wool exports fell 19% year-on-year to 42 239 tonnes. The significant decline in volume was in the Chinese market.
The challenges in South Africa have been the weaknesses in surveillance, animal control movement, and inefficiencies in the laboratories for vaccine production, amongst other issues. This left the country paralysed when we faced these issues.
However, the collective effort of the government and the private sector led to many improvements in the spread of the diseases. The diseases also forced us to face the reality that some national laboratories, such as the Onderstepoort Biological Products, were ineffective and required a closure rejuvenation and for the government to deal with corruption there.
We now see the fruits of the work that started under MsThoko Didiza, then Minister in the Department of Agriculture, Land Reform and Rural Development and continued under Minister John Steenhuisen in the Department of Agriculture.
On October 25, 2024, the Department of Agriculture released even more positive news, which I believe will further support the recovery path of the industry. The Department announced that the “foot and mouth disease outbreak, which occurred from 2021 to 2022, has been successfully resolved in the North West, Free State, Gauteng, and Mpumalanga Provinces. These provinces, initially impacted by the outbreak, have now completed comprehensive testing of animals on quarantined farms. The results indicate that the foot and mouth disease virus is no longer present.”
The Department added that “the World Organization for Animal Health has confirmed that the outbreak in these regions has officially been closed. However, it is important to note that the KwaZulu-Natal and Eastern Cape Provinces remain affected by foot and mouth disease outbreaks. Encouragingly, no new signs of the disease have been reported in these two provinces over the past month.”
This is admirable progress and further supports South Africa’s ambition of being a global player in red meat exports. The successful path to the export markets involves addressing the biosecurity challenges. Continuous efforts must be made to address the remaining challenges in the Eastern Cape and KwaZulu Natal.
In addition, the South African government must work collaboratively with the private sector to revive the efficiency of the Agricultural Research Council and the Onderstepoort Biological Products, which are key for vaccine production and various livestock disease management matters.
We have a window of opportunity to address these animal disease issues and revive the national laboratories’ and vaccine manufacturers’ capabilities. We must use this time before confronting a much more serious challenge in the future.
South Africa’s Department of Agriculture must also stay in constant contact with the U.S. Department of Agriculture researchers in the Pretoria office and the U.S. to get constant updates on the developments of this disease and steps the U.S. is taking to control its spread. These could be valuable lessons for South Africa in case of a future challenge. After all, animal diseases are a global challenge and aren’t constrained to particular regions.
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