New plan needed for South Africa’s agriculture success

New plan needed for South Africa’s agriculture success

SA’s political leaders often mention agriculture as one of the sectors that will boost our economic fortunes and create jobs in rural areas. For a long time, this has been stated without a clear practical execution plan.

The National Development Plan (NDP) is one of the few documents that comes close to providing a framework for achieving this ambition. This is through its identification, in chapter six, of agricultural subsectors that should be a key focus for development — mainly horticulture — and the processes to be followed to unlock the value of agricultural production. There is a need for irrigation systems, market linkages and increased investment.

There is now an opportunity to transform the NDP view into an implementable plan through the government’s sectoral master plans, which are now being drafted. In the past week trade, industry & competition minister Ebrahim Patel released a poultry master plan. This has been met with enthusiasm by some private sector participants and various stakeholders and is an important signal of broad-based support for what the government is suggesting.

The positive collaborative view needs to extend further than only one subsector. Poultry is a perfect example to illustrate this point due to its linkages to other subsectors, such as the maize and soya bean industries. A holistic approach in the form of a comprehensive set of broad-based measures in the agricultural economy is critical for the country. Developing this set of measures requires the government and the private sector to be fully engaged at the drafting stages of the agricultural master plan, underlined by a common vision about its final outcome.

In its recent economic policy paper “A Contribution Towards a Growth Agenda for the SA Economy”, the Treasury rightly notes that “innovative joint ventures have been shown to boost agricultural production and promote agrarian transformation and should, therefore, be supported”.

I concur with this view after having spent a great deal of my time interacting extensively with farmers and agribusinesses across the country. The sentiments expressed in the Treasury policy paper align with the sentiment I get from my various engagements with agriculturalists.

Some commercial farmers are increasingly realising that they cannot stand on the side in the face of rising unemployment and inequality in the rural areas, as it might indirectly affect their businesses. But some have expressed frustration that there is no clear and practical path about how to contribute to the vision of building the SA rural economy hand in hand with the government.

The agricultural master plan that is being developed should respond to this “gap” by identifying priority subsectors, rules of engagement, priority regions for development and available incentives, among other matters.

Some of the aspects that could be included in the thought process is what the Treasury already started to hint at, highlighting that agricultural development requires “creating an enabling environment for investment, including financing solutions for farmers; adequate and affordable agricultural insurance; improved extension services for smallholder and emerging farmers; enhanced trade promotion, market access, and access to water for irrigated agriculture; as well as investment in establishing innovative market linkages for smallholders”.

The agricultural master plan should then provide a practical framework for operationalising some of these ideas.

Admittedly, government resources, specifically financial, are limited. It is clear that against this reality the government will not be able to single-handedly drive rural development. This is where private sector participation should come in, either on partnership approaches or any form of investment. Last week I attended an Eastern Cape agricultural conference organised by co-op Humkoop, which showcased various agricultural development initiatives that are taking shape in the province, partially driven by private sector investments, the government and the community.

Other provinces also have such initiatives, and these approaches should be reflected in the thinking for the agricultural master plan. Most importantly, other line departments such as human settlements, water & sanitation and trade, industry & competition, should align their agriculture-related work to what the department of agriculture, land reform & rural development is envisaging or planning. There needs to be better coherence and coordination at the national and provincial level.

Written for and first published in Business Day on 12 November 2019.

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Land, water and agriculture in South Africa

Land, water and agriculture in South Africa

I spent my day in Free State where I participated in the South African Stud Book and Animal Improvement Association AGM. My presentation reflected broader themes of South Africa’s agricultural economy – production trends, trade, and policy.

But the discussion that followed was centred on three themes: water regulations and infrastructure, land reform policy; and compliments to the National Treasury’s economic policy paper, with the key focus on the agricultural section of it.

Water regulations and infrastructure

A few people expressed frustration at the slow and ambiguous process of water licensing and shared concerns about the water infrastructure. Fortunately, I had positive news that this matter has been elevated at national policy structures and work on easing the process is underway through bilateral discussions between business and government. The National Treasury economic policy paper released on October 30 also touched on this matter. Moreover, the Water and Sanitation Master Plan that is currently being drafted might address some of the dominant concerns in society.

Land reform policy

Most people needed to know about the current process on the land reform policy, and some asked if it is still a priority or has been shelved?

I think it is still a priority, but there are other pressing issues that have dominated the headlines over the past few months, most notably Eskom matters.

In my response to the question about the current process of land reform policy, I indicated that after consultations across South Africa in 2018 following the resolution by Parliament that there must be an assessment of whether section 25 of the Constitution should be amended, the outcome was that it should be amended.

But this process provided no specific wording on what the amendments should be. Hence, parliament set up another committee to advise the specific wording of section 25 of the Constitution. This committee will report back on 31 March 2020, upon which a draft Constitutional Amendment Bill will be tabled in parliament outlining the proposed amendments to Section 25.

At this point, it is unclear what the outcome of the process will be. Worth noting, however, is that there is no political party, I think, that has enough votes to singularly amend the Constitution of the Republic of South Africa, as all have less than 66% votes in the National Assembly. Any amendment would require that either the Economic Freedom Fighters or the Democratic Alliance votes with the African National Congress. More on this will be clear in 2020, but it is certainly an aspect to watch.

Another equally important process within land reform policy is the report of the Presidential Advisory Panel on Land Reform and Agriculture, which I was privileged to be part of. The Panel finalised its report earlier this year and the Presidency made it available to the public in July 2019. The report was presented to the Cabinet and to the Inter-Ministerial Committee which might draw from it as it works to formulate the land reform policy direction. Again, the work is still underway and it is an equally important aspect to keep an eye on in the coming months.

National Treasury paper

The compliments were music to my ears. The attendees were particularly happy about the proposed approach of joint-ventures for agricultural development. But there was an equal concern that if broader policy questions such as land reform are not addressed, the potential positive impact of the National Treasury suggestions on agricultural development might be minimal.

I indicated that there are plans underway here also: an Agricultural Master Plan and Blended Finance model. It is not clear so far how these will look as the work is still in elementary stages. But for the plans to succeed, there must be a buy-in of both private and public sector to a clear set of rules and timelines for the process.

Concluding remarks

Overall, it was good engagement, although the sentiment is somewhat down because of both policy matters and also drought in the region of the Free State. On the latter, there are hopes for rainfall soon which could improve conditions. On the former, more work is needed. These are interesting times.

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Amid the grim news, SA agriculture bears fruit

Amid the grim news, SA agriculture bears fruit

It has been 25 years since the dawn of democracy and the general mood in the country is pessimistic owing to poor economic fortunes and elevated joblessness, among other long-standing challenges. As an agricultural economist, it is not unusual to hear statements that suggest SA’s agricultural sector is in bad shape compared to the past few years because of uncertainties over land reform policy, water rights, biosecurity risks and the changing climate, all of which make agriculture increasingly risky.

While all these points have some validity, it is important that we never lose sight of the progress SA’s agricultural sector has made since 1994. Total agricultural output — field crops, livestock and horticulture — has nearly doubled over the past 25 years. The gross value of the sector has increased nine-fold since 1994 and was about R277bn in 2018, according to data from the department of agriculture, land reform and rural development.

While a number of factors have contributed to this progress, technological advancement and “progressive trade policy” have been central. The technological advancement has been both biological, such as the adoption of genetically engineered seeds, among other advancements, and mechanical, with the use of machinery that has resulted in an increase in productivity in some crops.

As far as trade is concerned, SA rejoined the world after 1994 and secured a range of trading agreements, the most important being the African, European and Asian regions. We have become a key player in the global food market. In 2018, SA was the world’s 32nd-largest exporter and the only African country within the world’s top 40 agricultural exporters in value terms.

Europe, Asia and the rest of Africa now import almost 90% of SA’s agricultural exports. About half of all of SA’s agriculture production is exported, with the horticulture, wine, wool and grain subsectors leading the way.

But the picture is not all rosy. While SA’s agriculture production has increased, food security is still challenging at a household level. My sense is that such a challenge is caused by lack of income rather than quantity or quality of food. Tackling this requires a broader macroeconomic and social protection discussion to determine how we can better protect the most vulnerable households, rather than just the agriculture sector.

In addition, we must continue to support the transformation of SA’s agricultural sector. While data is a significant challenge in assessing the integration of black farmers into the sector, there is anecdotal evidence that the sector is transforming in different parts of the country. We see this in field crops, horticulture, wine and livestock.

Just last week in the Eastern Cape I visited black farmers who are supported by agribusiness and running viable enterprises in citrus, sheep farming, lucerne, pineapples, peppers and blueberries. In Matatiele, a municipality in the northern part of the Eastern Cape, there has been a rise of black grain farmers, who were able to export their produce for the first time in 2018.

While anecdotal evidence is encouraging, we need to support policies that promote more widespread and sustainable inclusion. The Treasury recently released an economic strategy policy discussion paper that highlights priority areas that can drive diversification of the sector: improving access to finance for smallholder farmers; providing sufficient and affordable agriculture insurance; strengthening technical assistance and extension services to smallholder and emerging farmers, and improving market access. A similar theme is evident in the national development plan.

At a time when economic pessimism runs high, as shown by various indices, we should celebrate the progress SA has made in boosting agricultural fortunes since 1994. The sector has become more productive, exports have reached unprecedented volumes, the workforce is becoming more diverse and the sector is becoming a source of livelihoods for those in rural areas.

As we look to the future, we must build on that and ensure the dualism within the sector is eradicated, food security is no longer a pressing concern or households, and that we continue to improve productivity. All this needs a stable and predictable policy environment to attract investments.

Written for and first published on Business Day on 01 October 2019.

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