by Wandile Sihlobo | Sep 15, 2020 | Daily Notes
Some analysts, myself included, did not anticipate that the 2019/20 harvest and agricultural performance would be as robust as we have witnessed. This is clear from one of the essays I wrote for Business Day on December 10, 2019, which was titled – Another grim year ahead for the despondent agricultural sector (see here).
At the time, there was a high probability of drought in midsummer and the fresh outbreak of the foot-and-mouth disease in Limpopo which had reintroduced all the risks of export bans of animal products and meat. This was overwhelming evidence to convince one that we were perhaps heading towards another fairly bad season. Some regions which were supposed to have planted by December 2019 hadn’t progressed much because of dryness.
This depressing picture only changed from January 2020 when most regions of the country suddenly received good rainfall which enabled plantings. Thereafter, good growing conditions which led to the recent bumper harvests. This delay in plantings is evident through the maize harvest and producer deliveries, which was delayed by nearly a month this year because of the late start of the season on the back of dryness.
So, why am I bringing this up?
My intention is not to introduce doubt to the current favourable rainfall forecasts for the 2020/21 production season, but rather to reflect on the scars of the previous year. While most regions received late rains and proceeded well, parts of the Eastern Cape did not get sufficient rains to improve dam levels. This was muted until recently, with now increasing reports of a potential “day zero” in Port Elizabeth and surrounding areas.
While the average provincial dam level is 51% as of September 14, 2020 data; which is marginally higher than 2019, a closer look at various dams in the province is frightening. The water levels are too low (see here).
In various conversations I had with farmers in the province yesterday, I learned that the critical areas, at least from an agricultural perspective, are around the Amathola mountain watershed and on the Keiskamma dam where water levels are very low; and of course, Port Elizabeth. The aforementioned dam levels data corroborates this view. Also, I am told that Gamtoos farmers have very little water.
With this worrying picture, I am hoping that the forecast of La Niña rains could be a relief to the province (see here). The recent indications from the South African Weather Service suggested that we could receive the first rains towards the end of this month, specifically the eastern and southern regions of South Africa. So, aside from the government interventions that are needed in the province; one looks up with a hope of rains to ease conditions to the Eastern Cape.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Nov 6, 2019 | Agricultural Production
I am in the Eastern Cape today, attending The Co-Op/Landbou Weekblad conference. The main theme of the conference is Opportunities for Farming. The inputs or presentations from various farmers showcase the good work that’s currently being done across the province.
The common catalyst across all the successful farming business and projects discussed thus far focuses on the importance of joint ventures for agriculture development. This eases access to additional capital from established agribusinesses to be blended with State resources that supports some developing farmers. But most importantly, is the pass-through of the “know-how” from commercial farmers to the new entrants.
This message is in line with the view in the National Treasury’s recent economic policy paper – Towards a Growth Agenda for the South African Economy. The question now is how to replicate the successful projects (or farming businesses as farmers insist, should be called that way). The hope is that the Sector Master Plans that are currently being developed across various ministries will respond to the aspirations of the people on the ground as that could result in real progress or development.
The other points that came out in the discussion are the land reform, access to finance and water regulations. These are points that were discussed also in Free State last week (see here).
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Oct 29, 2019 | Agricultural Labour Market
I just went through Statistics South Africa’s Quarterly Labour Force Survey data for the third quarter of 2019. The primary agricultural numbers were a pleasant surprise, showing a 4.5% y/y uptick to 880 000. I say “surprise” because the third quarter of each year is usually a quiet period on farms in most parts of South Africa.
These jobs gains were mainly in the livestock, horticulture, field crops, as well as aquaculture subsector. I think this could have largely been underpinned by the replanting in parts of the horticulture fields following a drought season that caused damage in the fields in provinces such as the Western and Eastern Cape. Other provinces that showed job gains are KwaZulu-Natal, Gauteng and Mpumalanga. Meanwhile, the Northern Cape, Free State, North West and Limpopo saw a reduction in agricultural employment.
The question I have received thus far from people was whether this optimism will hold given the current drier weather conditions?
One thing to point out is that while it is currently dry across the country and summer crop plantings have been delayed somewhat, there are prospects for favourable weather conditions in the near -term, which should support agricultural activity and subsequent employment. The South African Weather Service forecasts above-normal rainfall between November 2019 and January 2020. Be that as it may, a recovery in weather conditions alone might not lead to notable job creation in agriculture that far outpaces the trends we have witnessed over the past few years, hovering around 850 000 jobs.
The broader policy questions should be: how to ensure that South Africa’s agriculture sector delivers to the promise of job creation?
This will require a combination of factors. These include a boost in agricultural productivity, an improvement in the rural investment climate, expansion of export markets, promotion of labour-intensive agriculture subsectors, and expansion of area farmed where possible.
Also, the underutilised land in the former homelands and some land reform farms will also need to be revitalised to see an increase in employment. As my colleagues and I at Agbiz, have consistently pointed out, the provinces containing former homelands that still have tracts of underutilised, arable land that can be prioritised for agricultural expansion are KwaZulu-Natal, the Eastern Cape and Limpopo. These provinces collectively have between 1.6 million to 1.8 million hectares of underutilised land, according to a 2015 study by McKinsey Global Institute.
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by Wandile Sihlobo | Oct 16, 2019 | Food Security
As we commemorate World Food Day on 16 October 2019 in honour of the founding of the Food and Agriculture Organization of the United Nations (FAO) in 1945, we should take a moment to reflect on South Africa’s standing on the global food security ladder.
Food security is achieved when three objectives are met: (1) food is available; (2) food is accessible; and (3) food quality ensures appropriate nutritional uptake for all citizens at all times. In 2018, South Africa has ranked the 45th most food-secure country out of 113 countries measured in The Economist Global Food Security Index, which was a one point lower than the previous year.
This was relatively good, compared to BRICS countries – Brazil, Russia, India and China. For example, although South Africa’ average income – as ranked in gross national income per capita of 2018 – was 25 spots behind Russia, 23 behind China and 19 behind Brazil, the country’s food security status was quite comparable to other BRICS countries – Brazil, Russia, India, and China. In the Food Security Index, South Africa has ranked just 6 spots behind Brazil, 3 spots behind Russia, one spot ahead of China, and 31 spots ahead of India.
What is worth reiterating is the fact that despite South Africa’s relatively lower average income compared to BRICS partners, the country still manages to punch above its weight in terms of food security. This is a testament to the country’s competitive agricultural sector, and its ability to supply food at a relatively lower cost and socio-economic initiatives.
Although the Food Security Index indicates South Africa is food-secure, there are pockets of food insecurity within the country when you consider a household-level perspective. This speaks to the general inequality in the country, where some households are food secure, and a sizeable portion of other low-income households are not, primarily due to affordability. This scenario is more prevalent in Limpopo, KwaZulu Natal and the Eastern Cape, according to Stats SA.
While there are a number of interventions that can assist in supporting households’ access to nutritious food, one form of intervention that can boost rural households’ income and therefore nutritious food is job creation in the agricultural sector. There is anecdotal evidence in parts of the Eastern Cape that in areas where government and the private sector have collaborated in agricultural development, some level of success in terms of job creation could be achieved.
With agriculture having gained prominence as one of the sectors that could bring about rural economic development and job creation in South Africa, the government’s approach to realising this vision should be regionally focused. Meaning, the aforementioned provinces should be the key priority in resource allocation, as the frontiers of agricultural expansion. Such an approach not only makes sense in terms of reducing poverty but also in exploiting the potential of underutilised land, as well as targeting resources effectively.
Limpopo, KwaZulu Natal and the Eastern Cape combined arguably have about 1.6 million to 1.8 million hectares of underutilised land which could be sustainably farmed for increased food security and livelihoods over the long-term. This is according to a 2015 study by McKinsey Global Institute.
Admittedly, the current land governance system – communal land – has been cited as one of the hindrances in agricultural development in these provinces, as it hamstrings investment. Naturally, solving such matters can take a long time and land reform policy is still being debated across the country.
The near-term practical approach that could make a difference is structuring an innovative agricultural finance instrument – such as blended-finance – which pulls in the capital and human capital from both private and public sectors.
In parts of the Eastern Cape, some agribusinesses are currently engaged in such arrangements with the provincial government and in areas where projects have been implemented, there has been some level of success. What is needed is designing programmes that are self-sustaining and viable where communities take ownership.
These are some of the approaches that are needed to boost household incomes and rural livelihoods in a manner that ensures nutritious foods are available in the near term and in the future. Meanwhile, broad developmental policies need to be put into operation.
Written for and first published on Business Day on 16 October 2919.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Sep 27, 2019 | Agricultural Production
On September 25 and 26 I visited the Eastern Cape on the invitation of The Co-op – an agribusiness based In Humansdorp. I also used the visit to scan the agricultural activities in the province, with an intention to assess whether there is an increase in activity (and transformation).
My first stop was at The Co-op’s head office, where I received a broad overview of the province’s agricultural performance and also inclusive growth projects they are involved in.
We have been observing the Eastern Cape’s dam levels from a provincial average perspective and they seemed healthy at levels over 50%. The reality though is that a number of dams close to agricultural areas have not been in good shape for months (see a photo here for example). And thus, it has taken a toll on the agricultural sector.
Aside from dryness over the past few months, the variation or timeframe of rainfall occurrence has changed notably over the past few years, and therefore affecting the optimal planting dates for various crops. This is a theme that links to a broader climate change story, and consistent with what we have been observing across South Africa in the recent past.
Eastern Cape’s agricultural contribution
The Eastern Cape is typically seen as a non-starter when it comes to agriculture, but in reality, the province is a notable player in a number of commodities, including:
- About 31% of South Africa’s milk;
- Roughly 27% of South Africa’s citrus;
- And about 39% of South Africa’s wool.
This production and other agricultural enterprises not mentioned above are what has ensured that 12% of South Africa’s agricultural jobs were created by the Eastern Cape in the second quarter of 2019.
Policy matters
Similar to what we hear from agribusinesses in other provinces, land reform and water policies remain at the centre of discussion. The Co-op and the Eastern Cape farming community at large are engaged in the debates and hoping for positive outcomes that would ensure the sustainability and growth of the agricultural and agribusiness sectors.
Observations at farm-level
A testimony of this was clear in my second day of the visit. I met with commercial black farmers who are involved in citrus, lucerne, sheep, pineapples, peppers and blueberry farming. They are all running commercial entities – exporting some of their produce – and have created jobs for a number of people.
When I spoke to each one of these farmers, they acknowledged government and The Co-op’s support and viewed this joint venture approach as central to their successes. The government assisted with availing the land and equipment, while The Co-op supplied production finance, technical advice and managerial skills.
Anyone who has travelled across the Eastern Cape would attest that there are areas that have limited economic activities, with the only prospect of bringing livelihood being agriculture.
A case in point is Keiskammahoek (Qoboqobo), where we stopped by a 65 hectares farm, community-owned and supported by The Co-op. It farms blueberries and peppers and currently employs about 85 people. Indirectly, this means the farm benefits 595 people if assumed that each person supports an average family of 7. This brought vibrancy and economic activity to the villages that typically depended on remittances from the cities. (Please see photos here, here and here)
The good news is that the Eastern Cape can create many more “Keiskammahoeke” because of the abundance of underutilised land (see here). This is specifically the case if one considers the former Transkei region of the province. Of interest, the former Transkei is not as dry as what we have observed in the former Ciskei region. This is positive for agricultural development and stimulating inclusive growth.
This “agricultural development promise” cannot be achieved in a vacuum. It needs government, community and private sector engagement and a common vision. This is a theme that is starting to emerge from policymakers’ documents, most recently the National Treasury economic policy discussion paper which highlighted the need for a joint-venture approach to South Africa’s agricultural and rural development.
This is a path to explore not only through the rest of the Eastern Cape but nationwide.
Written for and first published on Business Day on 27 September 2019.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
