by Wandile Sihlobo | Sep 9, 2024 | Agricultural Environment and Natural Resource
South Africa’s agricultural growth in the first 30 years of the democratic era has been supported by, among other things, two pivotal interventions. The first was a deliberate and concerted strategy to invest in genetics for crops, horticulture and livestock, and the second was a strong push to expand export markets. As production continues to increase and capacity for expanding production remains available, these two levers must be accelerated.
The department of agriculture must support new ethical breeding techniques that the private sector presents occasionally, as they may be vital for continuous productivity improvement. More importantly, with climate change and the increasing frequency of extreme adverse weather conditions, improved seed cultivars that cope with such environments will become critical in supporting our agricultural system. Therefore, crop and livestock breeding should remain a priority policy area for SA as an anchor for food security and agricultural production progress.
Equally important is boosting exports to new frontiers while maintaining access to the existing markets in the EU, Africa and elsewhere. Admittedly, SA is the only African country in the top 40 global agricultural exporters, with an export value of $13.2bn in 2023 and ranked the 32nd largest agricultural exporter in the world. But accessibility to these markets is not guaranteed.
In an increasingly fragmented world and various recent incidents of non-tariff import barriers, paying particular attention to nurturing existing markets and opening new ones will be vital. SA already has experience of protectionism in the EU, with barriers in citrus, and in the SA Customs Union (Sacu), where Botswana and Namibia have targeted SA vegetables and citrus.
The trade issues are not purely economic but political, which means SA’s political leadership must take a clear stand and focus on retaining the existing markets through dialogue with the political leadership of the countries where we continue to experience challenges.
The departments of trade, industry & competition, and international relations & co-operation must be at the forefront of these efforts, supported by scientific insights from the department of agriculture.
On a positive note, international relations & co-operation minister Ronald Lamola has made it clear that diplomacy must be aligned with economic interests. While in the past his department may not have played a leading role in economic discussions, in today’s world, where geopolitical tension has spilt over into trade, this department should even be more prominent in promoting SA’s economic interests.
The Sacu issues should be the first test case. At the same time, the EU challenges are now part of the World Trade Organisation processes after SA formally lodged a case against the economic bloc.
Also important in the near term is the upcoming Brics+ summit in October, which will take place in Russia. While this grouping is not a trade bloc, using the structure to push more ambitious trade matters is vital. Agriculture is one of the SA economic sectors that would benefit from deeper trade relations with the other Brics+ countries. As things stand, SA agriculture has not benefited much from trade with this grouping.
Before adding other members at the 15th summit in Johannesburg in 2023, the original Brics countries accounted, on average, for just 8% of SA’s agricultural exports. For comparison, the UK alone accounts for roughly 7%.
From 2019 to 2022 the original Brics countries’ agricultural imports averaged $255bn a year, according to Trade Map data. China and India accounted for the bulk of these imports. Despite these sizeable agricultural import figures, intra-Brics agricultural trade remained relatively low.
Remarkably, the products these countries imported from the rest of world are similar to what some Brics countries, such as SA and Brazil, produce in surplus.
This year SA’s message in Russia should focus on building on the spirit of the 2023 Johannesburg summit, which promoted dialogue about deeper agricultural trade.
Written for and first published in the Business Day.
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by Wandile Sihlobo | Sep 6, 2024 | Agricultural Environment and Natural Resource
I am writing from the Midlands region of KwaZulu-Natal province of South Africa, having spent the day with the Animal Feed Manufacturers Association of South Africa and participating in their Annual General Meeting. I presented an address alongside the giant of the poultry industry, Mr Chris Schutte of Astral.
Animal Feed Manufacturers are the critical stakeholders of our livestock and poultry industry in South Africa – a subsector that makes up roughly half of our farming economy.
Drought, animal diseases, failing municipalities, stock theft, and higher feed prices are among the recent challenges that have confronted livestock and poultry producers. If we are to be successful in this industry in years ahead, as in the past, we must focus on resolving these challenges.
Most urgently we must tackle the cases of foot-and-mouth disease, avian influenza, African swine fever, and brucellosis that continue to emerge, leading to huge costs to farming businesses. The damage to the industry is vast in terms of loss of productive animals, earnings, and high-value export markets. The damage to confidence should also not be ignored, as the sector will struggle to attract investment if there is no clear strategy for addressing animal disease.
Fortunately, the leadership at the Department of Agriculture understands these challenges. They are working collaboratively with the industry to resolve the issues and ensure that South Africa continues to play an essential role in the export markets for red meat, dairy products and wool. The focus is on finding ways to efficiently control the spread of animal disease in future and minimize the damage to the industry.
In years of harsh foot-and-mouth disease, we lost export volumes. We are now in recovery mode, and the recent outbreaks in a few areas of the Eastern Cape raise worry. For example, in 2022, beef exports fell 16% year-on-year to 26 881 tonnes. We started to see a recovery in 2013, with beef exports up 3% year-on-year to 27 675 tonnes.
Even as the beef industry confronted these challenges, it had already resolved that widening the export market would catalyze its long-term growth. There was evidence pointing to the expansion of exports. For example, between 2017 and 2021, South Africa’s overall beef exports averaged 31 169 tonnes. This was notable progress as the beef exports had averaged 26 670 tonnes five years prior. The spread of animal diseases threatened this export growth.
As we progress with addressing the animal disease, the relentless focus should be on widening the export markets to the Middle East, Asia and parts of Europe. For example, the conversations with China about beef exports this week are appropriate as China is an important market for South Africa that has yet to grow, along with greater potential benefits in the likes of Saud Arabia.
We must also focus on improving the efficiency of the municipalities, reducing stock theft, improving roads and rail function, and the inefficiencies at the ports. These form an essential foundation for a thriving livestock and poultry sub-sector.
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by Wandile Sihlobo | Sep 3, 2024 | Agricultural Environment and Natural Resource
After a robust expansion of 13,5% quarter-on-quarter (seasonally adjusted) in the first quarter of 2024, South Africa’s agricultural gross value added contracted by 2,1% in the second quarter.
This is unsurprising. South Africa’s agriculture has gone through the severe impact of the El Niño-induced drought in February and March, which weighed on crop yield. For example, South Africa’s 2024-25 summer crop harvest is down 22% from the previous season, estimated at 15,69 million tonnes.
Moreover, the livestock industry, which accounts for nearly half the sector’s value, faces relatively higher feed costs and lingering animal diseases (particularly foot-and-mouth disease), which all explain the underperformance this quarter.
The drought impact has already weighed on sentiment in the sector. For example, the Agbiz/IDC Agribusiness Confidence Index (ACI) remained depressed in the second quarter of 2024, reaching 38 points from 40 points in the previous quarter, the lowest level since 2009, the global financial crisis.
In sum, these driving factors of the sector’s fortunes in the second quarter will likely shape the broader performance for the year, with a likely strong recovery in 2025.
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by Wandile Sihlobo | Sep 2, 2024 | Agricultural Environment and Natural Resource
On various occasions, I have highlighted South Africa’s agricultural sector’s gains in the first three decades of democracy. The sector has more than doubled in value and volume terms. Better seed varieties in crops, vegetables, and fruits, as well as improved genetics in livestock and poultry, have, among other interventions, been the catalyst for output growth. The opening up of export markets over the years has also created a solid demand that today, we export roughly half of what we produce in value terms. Our agricultural exports amounted to a record US$13,2 billion in 2023.
In appreciating this progress, some often ask about the black farmers’ contribution. The data on this is shaky, but based on various industry research, we can state that black farmers account, on average, for around 10% of the commercial agricultural output. This gives one an indication of their contribution to exports. The matters of why black farmers account for this much produce thirty years in democracy and how we could build an even more inclusive agricultural sector are issues we discussed at length in our recent book, A Country of Two Agricultures. We encourage all caring South Africans to read the book.
However, another critical discussion is the issue of gender dynamics in South Africa’s agriculture. As a country, we should continue to improve this area. The data about the current state of women’s participation is also shaky. Still, one can lean on a few indicators, such as the recent census of agricultural statistics from Statistics South Africa, to make a point. The census report found that we have about 40k commercial farm units in South Africa. To be super clear, the census only considers farmers registered for VAT (the threshold is a turnover of R1 million a year). Therefore, there are many more farmers not accounted for in this figure who are involved in commercial farming as their primary source of income and those who practice farming as a secondary source of income.
Still, if we go with the 40k farming units, about 20% are owned or operated by women. However, we also know anecdotally that women’s participation in the subsistence farming sector is perhaps much larger in various areas.
In such cases, the question remains: what can we do to ensure mobility where women can progress to the commercial level if they aspire to do so?
Another vital aspect is jobs, where women accounted for roughly a third of the 896k jobs in the second quarter of 2024. More could be done to improve women’s participation, particularly in agro-processing.
Let’s all agree that agriculture, as an important sector of the economy, could still deliver more jobs and expand in underutilized land. This makes the gender discussion even more valuable.
The South African government has about 2,5 million hectares of land acquired through the Pro-Acitive Land Acquisition Strategy. This land should be released to beneficiaries with title deeds and help boost inclusion in the sector and growth, such as growing the South African agricultural pie.
In selecting the beneficiaries of the land, the government will have to be guided by the existing Beneficiary Selection and Land Allocation Policy. One important aspect of this policy that is less talked about is its focus on boosting women’s participation in agriculture. It states that 50% of land redistributed must be transferred to (black) women. If we follow this approach as a country, along with ensuring that there are financial instruments to assist, perhaps we could improve in the coming years in racial and gender inclusiveness in the sector.
There are many young women interested in agriculture that one sees online, and some even write to me enquiring about a range of agricultural matters. This means there is interest amongst women in joining agriculture and playing a meaningful role in addition to the gains we have made as a country. The policy environment is also supportive.
We will need to ensure that commodity associations, particularly at the development level, continue to encourage women’s participation so that also when the time comes for land release, they can get the land and help ensure that in the next agricultural census, we see an improvement in farms operated (or owned) by women.
I must stress that agricultural matters are not only about farmers; the jobs in various organizations, agribusinesses, commodity organizations, universities, firms and laboratories all form a significant share of women’s continuation to South Africa’s agriculture, food, fibre, and beverages industry.
Inde’lendlela (this is a long journey), but we are moving forward as a country.
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by Wandile Sihlobo | Sep 1, 2024 | Agricultural Environment and Natural Resource
From October 2024, farmers and farm workers across South Africa will be hard at work, tilling the land. We will start the 2024-25 production season for maize, soybeans, sunflower seeds, sorghum, groundnuts, and dry beans.
However, the soil preparation activity in October will primarily be in the eastern regions of South Africa. The western areas of the country will start the planting in November. This variation, in part, is caused by rainfall patterns.
The start of the 2024-25 season also means we are now back to closely monitoring the weather conditions. Some global weather forecasters have indicated the possibility of La Nina this coming season. Such a weather event typically brings above-normal rainfall. And this would be a relief after a drier season.
However, there remains uncertainty about the intensity of this weather event.
Over the weekend, the South African Weather Service also released an update in its monthly Seasonal Update report, indicating that:
“The El Niño-Southern Oscillation (ENSO) is currently still in a Neutral state and is predicted to weaken further. Current predictions indicate the development of a La Nina state during the start of the summer season, however, there is still significant uncertainty in the predictions. It is advised to monitor the ENSO system, as significant changes in the system may occur after the winter period due to increased prediction skill. Current predictions focus on the spring and early summer seasons and indicate wetter conditions along the south-eastern coastal areas during spring and the central parts in early summer.”
We are emerging from a tough season of mid-summer drought that resulted in significant crop losses in South Africa and the Southern Africa region. For example, South Africa’s Crop Estimates Committee forecasts 2023-24 summer grain and oilseeds at 15,69 million tonnes, down 22% from the previous season because of the yield losses resulting from the midsummer drought. This figure comprises maize, sunflower seeds, soybeans, sorghum, and groundnuts.
Thus, we are all looking at the weather forecasts with optimism that we may receive above-normal rains that most areas of the country badly need. Favourable rainfall would provide much needed relief and a period of recovery in agricultural production in South Africa, and across the Southern Africa region.
As farmers prepare for the start of the season, we will need to monitor these weather forecasts closely. For now, the indications remain optimistic.
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by Wandile Sihlobo | Aug 19, 2024 | Agricultural Environment and Natural Resource
Having spent a week in the Karoo amongst farmers, attending meetings, and interacting with market agents, it would be fair to say this region is one of the most in need of agritourism promotion. The region has something to offer – great cuisines, landscapes, and history.
However, agritourism would also be a lifeline for some regions that previously relied on railway activities. There is now reduced economic activity. Thus, unemployment is rife, leaving some towns exposed to potential instability.
In the case of farmers, they do their part and create employment in their regions. Therefore, proper marketing of the unique and premium Karoo Lamb that most produce would bring the much-needed revenue, which would be reinvested in the farms, and ultimately, increased economic activity in the regions and job creation.
The marketing of the Karoo Lamb requires societal support and is viewed as South African heritage food. This means that as we shop at our various retailers across South Africa, we must ask the store managers about the Karoo Lamb, great South African wines, fruits, and our other high-quality regional foods.
The restaurants should also do their part and stop marketing any lamb, such as the Karoo, when they haven’t bought it from a certified abattoir or supplier.
Municipalities, particularly in the province of the Northern Cape side of the Karoo region, must do their part in beautifying towns, keeping them clean, and fixing municipal refuse dumps. Investing in proper recycling efforts will assist in creating valuable income for the poor and job opportunities for the locals. Importantly, when people drive across the country and notice the cleanliness, beauty and care given to these towns, they may stop, spend money or even think of investing in such towns.
The provincial government also has a vital role in improving the road networks and ensuring that municipalities are functioning effectively. This is vital in ensuring the success of tourism in the province. The issue of crime also needs a constant eye to ensure the safety of these towns. When towns are carefully maintained clean, roads are constantly fixed, and crime is low, economic activity will recover over time.
But we can all agree that the small towns of the Karoo are small microcosmos of the bigger problems in municipalities across South Africa. Perhaps the neglect of infrastructure in other towns is even more stark. Here, I think of my home province, the Eastern Cape, where we read regularly about corruption. At the same time, we know that for some villages in the province, life has not improved much, at least in terms of connectivity, roads, water infrastructure, and safety.
So, agritourism and tourism in its entirety will not improve much and yield greater economic benefits for the Eastern Cape if such neglect continues. I am bringing the Eastern Cape issue here because, as I drove through some small towns in the Karoo and saw a sense of hopelessness and despair in the streets amongst the unemployed, I could recognize those difficulties from the Eastern Cape.
The issue of failing and weak municipalities is a nationwide challenge in the North West, Free State, and Gauteng. The proper functioning municipalities and roads are vital for the farming sector – these are the linkages to markets and routes utilized to bring various inputs to farms and across agribusinesses. The inadequacies lead to increased transaction costs and weigh on multiple businesses and, ultimately, job creation. I know of dairy farms in the Eastern Cape that bleed cost-wise because of the poor roads and water infrastructure and the failure of the local government to improve it after several attempts to engage them.
Therefore, to meaningfully support the broader Karoo region and its people, the first step is to buy their high-quality products. The second part lies with the regulators ensuring they keep an eye on food fraud in restaurants and other outlets that inappropriately market their products as Karoo, misleading consumers.
More importantly, the provincial and local governments should consistently improve the road and water infrastructure, keep the towns clean, and deal with crime. This same approach must apply across all small towns of South Africa.
Our country has many opportunities – let’s embrace them and consistently build communities.
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by Wandile Sihlobo | Aug 15, 2024 | Agricultural Environment and Natural Resource
The Karoo lamb we loaded on August 9 is now being slaughtered at the abattoir. There, it will be classified according to the meat regulations. It may either be an A1, A2, A3, or A6 lamb – depending on the fat quality, amongst other attributes of the meat. In addition, for Karoo Lamb, the abattoir must verify that the lamb is from a registered farm in the Karoo (in alignment with the Karoo Lamb Geographical Indication regulations published under the Agricultural Products Standards Act).
In the agricultural industry, there are also many private standards that retailers and processors introduced, which must be paid for by the private role-players. These include things like certified organic, natural, free-range, environmentally friendly, etc.
Most of the general standards and classifications specified for different products under the Agricultural Products Standards Act, including the new regulations for Karoo Lamb, are all in the public interest.
Today’s dispatch will highlight some economic principles underlying the critical government function of setting public standards for agricultural produce.
Agricultural markets cannot function without institutions or what is commonly known as the ‘rules of the game’. The State, therefore has an important duty to ensure that institutions (the rules) are in place and enforced. In agricultural produce and food products in general the most important ‘institutions’ include grading systems, food safety legislation, and sanitary and phytosanitary systems. Other examples include the bylaws and rules on municipal markets, information systems in agricultural markets in general and the futures markets in particular.
Grades and standards in agricultural commodities and food products are absolutely vital for efficient price discovery and efficient functioning of markets. Setting grades and standards jointly between industry associations and government is one matter but more important is the effective regulation, application and enforcement of grades and standards by government. In the recent past, it has become clear that enforcement and coordination as well as the mechanism of enforcement are problematic and costly to farmers, food processors, retailers and consumers.
Why are grades and standards in agricultural and food products important? We all know that agricultural and food products have specific attributes – you only know the quality and taste of the product when you consume it. This is typically referred to as ‘credence attributes’. In essence it implies that the information about the quality (or weight, size or grade) of the product is not evenly distributed between producer and consumer. The consumer will only know about the quality (and taste) after consumption and therefore needs to be guided by some classification standards or labelling to make the purchase decision. Hopefully the Class 1 or A class or Free-range product will carry the quality or taste of the product that the consumer anticipated.
In addition, there are critical areas where consumers can be short changed. The 7kg of potatoes only weigh 6.6 kg, the animal carcass is graded as A1 but it should actually be A3, the sizes are incorrect and not according to the label when it says small potatoes.
In South Africa the Agricultural Products Standards Act (Act 119 of 1990) regulates most agricultural produce from dairy, to meat, to fresh produce, etc. For each product there is a set of regulations that specify the product definition, the classification and the various grades within each product. Even claims on labels and packing that relate to origin and production practices (such as West Coast or Free Range) need to be clearly defined by production protocols and be audited.
In most countries of the world these regulations are enforced by a well-staffed ‘agricultural inspection services’ within the Ministries of Agriculture. However, in South Africa these inspection, auditing and enforcement functions are outsourced to so-called ‘assignees’ who are appointed under the APS act.
No one disputes the importance and role of the “assignees” and their functions but over the course of the last few years there has been increasing discomfort within the agricultural industries about them. It sometimes relates to the qualification of the staff, the way the assignees got appointed but most importantly it resolves around the fact that the role players in the food supply chain must pay for the inspection and auditing services of the assignees. In essence the cost of inspection and auditing services inflates the price of the final product at the retail end and at the same time the producer earns less.
Many of our colleagues that are concerned with the increases in retail price of food, often forget about the large costs passed on to retailers, processors and farmers in order to comply with agricultural product standards. We estimate that the total cost added to the food supply chain in South Africa by these assignees exceeds R500 million. Why must the role players in the food supply chain cover these costs when in fact it should have been the task of the State? This is a fundamental flaw in our agricultural system!
Let us illustrate how bizarre this situation is. The assignees will perform an audit or inspection at the various critical points of control in the supply chain. Then they send an invoice to the retailer, packer and fresh produce market for the services performed. If they do not pay the invoice, they will be delisted as traders in the product. More interesting – it will be not in any of the assignees’ interest to let the specific role player fail the audit because they will be delisted and therefore not a client in the next inspection round. So, in essence you would rather do ‘light inspection’ to avoid you losing ‘places for invoicing’. There is a conflict here.
The main point here is that there is no guarantee that the regulations on product standards are properly enforced as the incentives and systems are not aligned and will naturally lead to opportunistic behaviour which ultimately will be to the detriment of the credibility of our product standards. This needs to be fixed by the Department of Agriculture – the Department should relook this process!
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by Wandile Sihlobo | Aug 9, 2024 | Agricultural Environment and Natural Resource
On August 7, I joined farmers to see how they market their Karoo products. First, we walked about 5 km or so in the morning, collecting a herd of sheep from various camps – through the rocky veld and in the chilly wind of the Karoo morning. We finally got them to the kraal for sorting and selection – see picture. The next task was to wean the lambs from their mothers and to keep the young females for continuous reproduction. The males were ready for the market.
In the farmers’ quest to operate sustainably and not expose the fragile grazing veld to too many sheep, given the low rainfall season, some lambs are taken to the feedlot to prepare them for an unknown meat market.
However, some that have grown well in the veld are transported to the abattoir for slaughter. In this photo, some are now loaded on the truck to the abattoir. They will be slaughtered and marketed as true Karoo lamb. They were born and raised on a registered Karoo farm without feeding or any other intervention. The meat is of superior quality because of the region’s attributes — clean air, clean water, extreme cold and extreme heat, all contributing to reducing diseases without interventions. Moreover, the carcass is of good quality, and fat is ingrained in the meat, giving it a unique taste, flavour and tenderness.
Within two days, the carcasses will be loaded on a refrigerated truck to the Western Cape, where a boutique butchery will prepare them to be sold as Karoo lamb to appreciative consumers across South Africa (although limited in some regions and we continue to see restaurants marketing any lamb as Karoo – bad behaviour). Those will be consumers who appreciate and support the Karoo lamb production and farmers – as a heritage food product of South Africa.
This production unit of 800 ewes may seem big and could be classified as a large-scale commercial farmer. However, the commercial turnover in rands and cents is far below R5 million, a cutoff for small and micro businesses in South Africa. This is a real family farm; we have many family farms in South Africa. In our previous work on the Oxford Handbook of the South African Economy, we estimated that there are roughly 200,000 family farms of various shapes and sizes among the black and white farming community of South Africa. Today, I experienced the life of a family farmer.
This farm has a dual-purpose sheep breed production, which produces superior wool and meat products. Therefore, the remaining sheep will continue the production process. In September, we will be in the shearing season for wool. The wool will then be transported to Gqeberha. In this City, the wool will be auctioned to buyers, who export it to various markets. The primary buyer of South African wool is China. They buy wool and process it – washing and spinning –then sell it to the top-making and fashion industry. Some consumers will see their final product: beautiful jerseys, scarves, suits, etc. Thus, we always emphasise the strong interlinkages between agriculture and fashion — farming is fashion.
Notably, China is a major global buyer of wool. As in South Africa, we export about 70% of our wool to China. Thus, when there are temporary closures in this market, the sheep farmers feel burned more than most. For example, in 2022, when South Africa experienced foot-and-mouth disease, the Chinese market was temporarily closed to South African wool, although the disease was only in cattle.
The impact of those temporary closures is visible on export volumes of wool. For example 2022, South Africa’s wool exports fell by 19% year-on-year to 42 239 tonnes. The major decline in volume was in the Chinese market. Fortunately, the engagements between the South African and Chinese authorities to reassure them of the safety measures in place to ensure that there is no spread of disease led to the resumption of exports. In 2023, South Africa’s wool exports recovered 18% year-on-year to 49,715 tonnes.
In essence, farming is a challenging and yet satisfying endeavor. There are domestic and global challenges that farmers have to face at various stages. Thus, we all must support the South African heritage foods and agricultural products, which ultimately means supporting the farming communities of our great country.
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