I’ve written the article on South Africa’s food supply chains amid the rioting and looting in Kwa-Zulu Natal province for The Conversation. You can access it by clicking here (no paywall).
My previous post was on failing municipalities across South Africa and the impact on agriculture and agribusinesses.
This evening, Mr JP Landman covered a similar problem in his newsletter, highlighting that “163 of the 278 local authorities in SA are in financial distress, and 40 are in serious financial and service delivery crisis. In a display of wishful thinking, 102 have adopted budgets they cannot fund.”
We have a big problem! You can read JP Landman’s piece by clicking here.
And oh, I have another essay on this issue, narrowing deeper on the agricultural challenges emanating from poor performing municipalities. I’ve also proposed some suggestions on the way forward. The article will be published on The Conversation soon, hopefully, June 18.
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On June 9, I presented at the South African Cane Growers Association’s annual general meeting. My talk was, titled South Africa’s agriculture in the economic reconstruction and recovery narrative.
I reflected on South Africa’s agricultural performance over the past decade, which has been fantastic. The volume of production has expanded by 19% between 2010 and 2020. Over the same period, the value of production has grown by 44%. This growth has been widespread across all agricultural subsectors – horticulture, livestock, field crops and animal products. The only weakness over this period is that inclusion – share of black farmers participation – has remained negligible in several subsectors, at best averaging between 5-10%, according to data from the National Agricultural Marketing Council. The only subsectors with encouraging numbers are the sugar and livestock industries, where commercial share contribution by black farmers is over 20%.
We all know that effective partnerships between commercial farmers and new entrants into the sector have been one of the ingredients for this success. But this is not a focus of this particular note.
At the end of the presentation, we had an open discussion about a range of issues from land reform, climate change and trade matters, amongst other aspects. But what stuck to my mind is a concern expressed by some producers (farmers) about the failing small towns across South Africa. The poor service delivery by municipalities is driving business away and leading to ghost towns. We have recently learned of a similar situation with Clover leaving Lichtenburg because of poor service delivery by municipal officials. This challenge is not unique to Lichtenburg but familiar across many towns across South Africa.
In 2019, following a farm tour I did in the Eastern Cape, I recounted my experience there in a blog post. My reflection drew from a 2017 essay by Phumulo Masualle, former Premier of the Eastern Cape. In it, Masualle called for the revitalisation of rural, small towns.
In short, he argued that the demise of South Africa’s rural small towns stems from the lack of economic opportunities and declining quality of life owing to poor infrastructure and a lack of new private investment. This is partly a result of the reluctance to transfer excess public land to black South Africans and also the fact that the South African government have failed to transfer land rights to land reform beneficiaries, and also address the tenure issues in communal land, amongst other factors.
Importantly, the reluctance to transfer ownership to land reform beneficiaries also means that the municipalities cannot levy rates and taxes. In this sense, the tenure arrangements are starving rural municipalities of their ability to raise their own funds and makes them overly reliant on the equitable share from the National Treasury. In Metros, where title deeds are commonplace, the municipalities are for the most part self-sufficient as they can raise their own revenue via the Local Government: Municipal Property Rates Act. As long as the majority of land continues to be owned by the state (e.g. the former homeland areas), there is no legal basis for municipalities to leverage rates & taxes from occupiers.
In that same 2019 fam tour, I stopped at Cradock, a small Eastern Cape town, to give a brief talk at a farmers’ meeting. Thank goodness the town at the time didn’t precisely fit Masualle’s description of the situation in other small rural towns across South Africa. The only factor differentiating Cradock from some small rural towns until this day is its vibrant wool, beef, dairy, fruit, lucerne, and mohair industries. The commerce and services that occur in the city centre are one way or another linked to the health or sustainability of the agricultural businesses, which in the recent past have not been smooth sailing. (By making this statement, I am not ignoring the drought challenges facing the southern regions of the Eastern Cape at the moment. The good rains that most regions of South Africa enjoyed since the start of the 2020 summer season didn’t reach much of the province).
Drawing from conversations with farmers in Cradock in 2019; climate change, biosecurity, water regulations, and land reform were amongst the factors that keep some farmers up at night. Sadly, we have not made much progress in all these aspects three years down the line. Covid-19 has also done its fair share of disruption from the work plan of both industry and government.
Still, the important thing is that these matters are within the regulator’s or government’s control, which I hope will continue to have close cooperation with organised agriculture groups in addressing them. Such progress should happen while pursuing the transformation objectives in the agricultural sector at the same time. An avenue to address all these challenges is the Agricultural and Agro-processing Master Plan, which is at its final stages. All social partners are currently at consultation stages with their constituencies about it. I hope that there will be broad consensus on its vision and unity to push for its implementation, right after the publication which I hope will be within the next two months.
A practical implementation of the Agricultural and Agro-processing Master Plan, coupled with the government’s intention to release land rights to the proper beneficiaries — not the politically connected and the weekend farmers’ crowd — would be a step in the right direction towards revitalising the small rural towns. But also crucial in the process would be to focus on beneficiation of some agricultural products, particularly in the former homelands’ small towns where the only economic activity seems to be retail on the back of remittances and government social support finances.
So, to former Eastern Cape Premier Phumulo Masualle’s proposition of revitalising rural small towns. I would present to him, as I did in 2019, that this should start with the revitalisation of agriculture and, in the process, enticing agribusinesses to expand operations to such towns, then focus on beneficiation. Importantly, the revitalisation of agriculture will help nothing if the management of small towns are not improved. Such improvement in the management of small towns requires a qualified financial officer, qualified civil engineer and electrical engineer, proper billing, a non-corrupt mayor and councillors and a reduction of the large bill and salaried staff to the bare minimum so that money can be used for waste removal, waste management, sewerage systems, roads, water provision, etc. These are tough decisions but all essential if we are serious about transforming South Africa’s small towns from “Ghost towns” status to vibrant towns.
These improvements need to happen simultaneously and not before or after agriculture revitalisation, which will be supported by the Master Plans. Crucial to remember is that the beneficiation of agriculture (locally) can only happen if the towns are functional. The same for businesses – they cannot operate if the basics are not in place. So, if, as South Africans, we are serious about creating employment, and boosting economic growth in rural areas, the key will be the local towns, not agriculture on its own.
This essay first appeared in the Sunday Times, 13 June 2021
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This blog post aims to share the latest results of the sentiments indicator in South Africa’s agriculture and agribusiness sectors. This is data we, at the Agricultural Business Chamber of South Africa (Agbiz), released earlier today. Below is a brief text from the formal statement, and I have linked the data and full statement at the end of the post.
“South Africa’s agricultural sector has not, in the recent past, had a season as good as the current one. This is evident from the Agbiz/IDC Agribusiness Confidence Index (ACI), which in the second quarter of this year reached a record high (since its inception in 2001) of 75, from 64 in the first quarter of 2021. These results reflect favourable conditions for all subsectors of agriculture, with various crops set to reach record output levels. Importantly, this comes at a time when commodity prices – domestically and globally — are at relatively higher levels, mainly supported by growing demand from China, combined with dryness in parts of South America. Such an environment of large yields and higher prices is not a usual occurrence in South Africa and has boosted farmers’ incomes and sentiments about business conditions. This second-quarter survey was conducted in the first two weeks of June 2021 and covered agribusinesses operating in all agricultural subsectors across South Africa.”
The complete statement and data are accessible by clicking here.
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This week I joined The Finance Ghost and Mohammed Nalla (Moe-Knows) to discuss the investment opportunity in the South African agricultural sector. You can listen to this session on Magic Markets by clicking here.
Disclaimer:
This episode of Magic Markets is brought to you by Olive Venture Capital Company, a s12J-compliant investment vehicle that is welcoming new investors until the s12J window closes at the end of June 2021.
Olive VCC is an authorised financial services provider.
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I recently sat down with Ms Mbali Nwoko for wide-ranging conservation about South Africa’s agricultural economy, policy, career, writing and more.
You can listen to the 52-minutes long conversation by clicking here.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
CNN International investigated the untapped potential of agriculture in Africa in its regular series Connecting Africa.
You can watch my brief conversation with the Network’s correspondent, Ms Eleni Giokos, by clicking here.
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SA’s agricultural sector is finalising the sector master plan. The final consultations with constituencies of various social partners — comprising industry, government, labour and civil society — will soon begin, after which the master plan will be signed off. This document will serve as a guide for inclusive growth in the sector.
An important pillar of the master plan should be an effective communication strategy and a clear monitoring and evaluation framework. This is important for ensuring there is a shared understanding of its ultimate objectives, and that the achievement of these is continuously monitored.
Every partner to the master plan should take responsibility for how this is communicated with farmers and industry groups. The government has a greater responsibility to share information and create awareness, especially in former homelands areas where organised agriculture and formal farmer forums are not a dominant feature.
In these areas, farming is predominantly on a small scale and farmers are often on the margins of policy processes and do not have powerful organisations to represent their voice. Most of these farmers are in the Eastern Cape, KwaZulu-Natal and Limpopo. These are likely to be future pivots of growth for the sector because they possess abundant land that is underutilised and holds promise as the country’s food basket.
An effective communication strategy that reaches out to these underserved areas could create the needed confidence and encourage production. It is also important that farming communities in the former homelands know about the government’s future plans. The government can tap into various platforms such as radio and imbizos — with Covid-19 regulations observed, and flyers in local languages.
Collaborative effort
The master plan communication strategy should aim at bridging the information gap between the government and farming communities. Human resource constraints within the government make achieving such a feat difficult. Thus, this communication strategy should be calibrated across different provinces with priority given to those areas that have the highest potential for expansion.
It is of little help to plan in Pretoria while stakeholders on the ground are not well apprised of their area’s developments. Such a lack of clear communication risks creating a scenario in which local farmers and stakeholders would view the growth interventions of the master plan as something that is imposed on them, rather than a collaborative effort to help their areas develop.
In areas with formally organised agriculture groups, the provincial government might also need to amplify Pretoria’s message and ensure farming communities understand the policy goals and how these will be carried out. Support for the government’s efforts by various constituencies hinges on clarity in articulating policy goals. It is difficult for farmers and industry groups to support something they don’t understand.
The lack of communication is, in part, what usually leads to resistance and pessimism about the government’s programmes in various sections of the country. Organised structures do not represent all farmers or agribusinesses that the government interacts with in Pretoria. For such categories of farmers or agribusiness, it is the government’s responsibility to communicate its policies clearly and seek buy-in for public-private partnership approaches to development.
Understand focus
The vehicle of public-private partnerships is the main delivery instrument for supporting the growth and inclusion of previously marginalised farmers in the agriculture sector. This is an opportunity for the government to share the master plan effectively and convince the farming community that this is a plan for all farmers and stakeholders in the sector, not for a particular grouping.
Policymakers and senior government officials should also remember that effective communication is not “a nice to do” but an integral part of policy-making. In its final stages, the master plan will therefore have to be communicated widely to ensure all those involved in agriculture understand the sector’s focus for the near to medium term.
Only when there is such a common understanding and vision between the government and social partners will the sector be able to progress in implementing policies effectively and delivering on the objective of sustainable and inclusive growth.
This essay first appeared on Business Day, 18 April 2021
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
Wandile Sihlobo is the Chief Economist of the Agricultural Business Chamber of South Africa (Agbiz) and the author of two books, “A Country of Two Agricultures: The Disparities, The Challenges, The Solutions” and “Finding Common Ground: Land, Equity and Agriculture“.
He is a Senior Lecturer Extraordinary at the Department of Agricultural Economics at Stellenbosch University.
Sihlobo is also a Visiting Research Fellow at the Wits School of Governance, University of the Witwatersrand, and a Research Associate at the Institute of Social and Economic Research (ISER) at Rhodes University.
Sihlobo was appointed as a member of President Cyril Ramaphosa’s Presidential Economic Advisory Council in 2019 (and re-appointed in 2022), having served on the Presidential Expert Advisory Panel on Land Reform and Agriculture from 2018.
He is also a member of the Council of Statistics of South Africa (Stats SA) and a Commissioner at the International Trade Administration Commission of South Africa (ITAC).
Sihlobo is a columnist for Business Day, The Herald and Farmers Weekly magazine.
His weekly podcast, “Agricultural Market Viewpoint with Wandile Sihlobo“, is available on all podcast platforms.
He holds a Bachelor of Science degree in Agricultural Economics from the University of Fort Hare and a Master of Science degree in Agricultural Economics from Stellenbosch University.