by Wandile Sihlobo | Jul 16, 2020 | Agricultural Production
In the second week of July 2020, the Economic Transformation Committee of the African National Congress (ANC)[1] and Business for South Africa (B4SA)[2], released their respective strategy documents for the post-COVID-19 inclusive economy recovery for South Africa. Both the ANC and B4SA prioritized the agriculture sector, for its transformative potential and aligned their strategies with chapter six of the National Development Plan (NDP)[3], which reflects the commitment of both the government and private sector to the larger development agenda of South Africa.
Both plans highlight that poor infrastructure – both in the former homeland regions and in general logistics to move the produce to the ports and processing plants – is a constraint that needs urgent action; that improving agricultural finance is critical to unlocking the sector’s growth, particularly through the Land Bank; and that strengthening agriculture value chains is critical for fostering inclusive growth.
However, these ideas on how to strengthen the agriculture sector are not new. They first entered the policy arena in 2012.[4] But in the subsequent eight years, little was done on the implementation front. Covid-19 presents an opportunity to change the narrative by focusing on why implementation has lagged and how it can become more effective.
The lack of implementation of agricultural government policy and infrastructure-related constraints are down to three broad reasons. First, weak coordination and misalignment of functions and priorities between different government departments and different spheres of government. Second, a misallocation of the budget by the national and provincial governments. And finally, poor coordination between the government and private sector, which has led to a misalignment of transformation programs, incentives and in some cases, vision.
To solve these challenges, the task largely lies on the government through its various Sector Master Plans to continue working with the private sector and civil society to address the aforementioned challenges. Agricultural growth and job creation will be stimulated through the development of under-utilised land, especially in former homeland areas and underperforming land reform farms (about 400K jobs); the expansion of export-led high growth areas (250K jobs); and investment in agro-processing with integrated up-and downstream linkages (350K jobs).[5]
Additionally, the ANC’s strategy has highlighted the importance of collaboration, by noting that the state should mobilise development partners, including the World Bank, the African Development Bank, the private sector and impact funders to contribute towards developing a thriving rural economy centred on agriculture. This has become more important than ever. The 2015 Development Committee paper ‘Billions to Trillions: Transforming Development Finance,’ highlighted that the Sustainable Development Goals marked a shift from needing billions of dollars in official development assistance, to needing trillions. While the largest supply of development resources remained domestic public spending, the greatest area for expansion was unlocking the transformative potential of the private sector.[6]
There is evidence that partnerships between the private sector and government have, in some cases, piloted successful programmes to drive transformation. Some of these include projects of the Sernick Group, the Humansdorp Co-op and the Mohair Trust, amongst others.[7]
Three common themes run throughout these programmes: first, public-private-partnership structured finance, to help meet development goals; second, supporting market linkages to help agriculture play its part in creating a more inclusive South Africa and third, upgrading skills and technology through farmer training and the adoption of technology in production practices.
The task ahead, particularly the agriculture and agro-processing Master Plans, should focus on upscaling and replicating these strategic partnerships in various value chains across the country. As we have previously argued, incentives for agro-processing could be in a form of tax incentives for various agricultural hubs which will be determined by the type of agricultural activity. For agricultural production, the selection of the value chains to prioritise should follow the NDP’s view of higher growth and labour-intensive value chains, such as horticulture. In regions where this is not possible, livestock and field crops remain key subsectors for agriculture expansion.
Points of deviation
The one important point of deviation between the ANC and B4SA is land reform, which is central to actualizing agricultural expansion. To create more policy certainty for the private sector, B4SA advocated for strengthened property rights and the extension of secure tenure or tradable leases in government land to attract investment, and by extension, stimulate long-term growth. Meanwhile, the ANC, in its efforts to reduce inequality and promote equitable land distribution, advocated that the state should release land to individuals but is not clear on whether on tradable leases or another form of tenure rights will be afforded to the holders and occupiers of these land parcels. The ANC also advocated to acquire land for redistribution, the programme to expropriate land in line with the existing legal and constitutional prescripts should be continued. To further accelerate land redistribution consideration should also be given to the taxation of unused land. A position which was not shared by B4SA.
Concluding remarks
Overall, the ANC and B4SA agricultural development plans have more areas of alignment than a diversion. However, focusing on implementation, rather than just ideas, is crucial to creating inclusive growth and delivering a million jobs envisaged in the NDP. Given the current fiscal constraints, development in the sector will be private-sector driven as acknowledged by both the ANC and B4SA, but the private sector involvement will require clear policy guidance on land reform and more assurance on property rights. The release of the land the ANC argued for, will need to be on long-term tradable leases so that investment could flow, particularly in areas with better infrastructure.
Notes:
[1] ANC,” Reconstruction, Growth and Transformation: Building A New, Inclusive Economy”, June 9, 2020. Available: https://www.scribd.com/document/468680698/ETC-Document-FINAL-8-July-2020#from_embed
[2] B4SA, “A New Inclusive Economic Future for South Africa: Delivering an Accelerated Economic Recovery Strategy”, June 10, 2020. Available: https://www.businessforsa.org/wp-content/uploads/2020/07/B4SA-A-New-Inclusive-Economic-Future-for-South-Africa-Presentation-10-July-Final.pdf
[3] NDP, “An integrated and Inclusive Rural Economy”, August 15, 2020. Available: https://www.nationalplanningcommission.org.za/assets/Documents/NDP_Chapters/devplan_ch6_0.pdf
[4] These appeared in the NDP, chapter six in 2012.
[5] This is generally a view carried in Chapter six of the NDP. Available here: https://www.nationalplanningcommission.org.za/assets/Documents/NDP_Chapters/devplan_ch6_0.pdf
[6] For more information, here is a full document: http://pubdocs.worldbank.org/en/622841485963735448/DC2015-0002-E-FinancingforDevelopment.pdf
[7] I have previously narrated The Co-op work in this article: https://www.news24.com/fin24/opinion/wandile-sihlobo-a-sleeping-giant-the-eastern-cape-20191005
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Feb 11, 2020 | Agricultural Labour Market
We don’t normally bombard you with emails (or posts, for those reading this online), but since our note this morning previewed South Africa’s primary agricultural jobs situation (see here), we deem it appropriate to provide an update. Data released this morning by Statistics South Africa shows that the country’s agricultural jobs were up 1% (or 5 000) from the third quarter of 2019 and up 4% (or 36 000) from the last quarter of 2018, estimated at 885 000.
The notable jobs gains were in the Western Cape, KwaZulu-Natal, Free State and Limpopo. This was largely in the horticulture and field crops and livestock subsectors.
We believe that the Western Cape, Limpopo and KwaZulu-Natal jobs were mainly in horticulture and field crops subsectors (specifically winter crops), while the livestock subsector job gains might have mainly been in the Free State. The Eastern Cape, Northern Cape, North West, Gauteng and Mpumalanga agricultural sectors registered job losses, but this was offset by improvements in other provinces. Hence, on balance, the country’s agricultural sector registered employment net gains from the previous quarter and the corresponding period in 2018.
We are generally optimistic about the near-term agricultural jobs outlook. The potential improvement in summer crops production, following an 8% expansion in area plantings, coupled with the expected increase in wine grapes production and other fruits could lead to an increase in employment, albeit some of this could be seasonal.
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.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Oct 7, 2019 | Agricultural Labour Market
It has become fashionable in conferences to say “let’s make agriculture sexy in order to attract the youth”. I get where the sentiment comes from, after all, Africa’s farmers are ageing with an average age of 60. Here in South Africa, that number is estimated at 62.
But I have two difficulties with supporting this statement.
First, I don’t believe that agriculture is necessarily supposed to be made sexy for young people to want to join the sector — it needs to be valuable. In other words, if agriculture can have a greater reward as other sectors of the economy, young people might want to join in.
Second, I haven’t done my homework on this to actually assess if young people are really uninterested in agriculture. But there is anecdotal evidence that there are a large number of young people out there with agriculture degrees and diplomas who struggle to get jobs in this sector, specifically in the case of South Africa. I often receive emails with CVs from graduates from the universities of Limpopo, KwaZulu-Natal, Fort Hare, North West, etc. in need of jobs within the agricultural sector.
Some agribusinesses and agriculturalists argue that vocational training institutions are not efficiently producing skills needed for agriculture today, and that might be part of the reason some young people are not finding work in this sector. This then calls for more alignment between the agricultural industry and training institutions.
These anecdotes contradict the view that “let’s make agriculture sexy to attract youth” which seems to suggest that there is the scarcity of labour or people to farm.
In the Agrekon Journal earlier this year, Luke Metelerkamp of Rhodes University, published a study which covered three provinces – KwaZulu-Natal, Limpopo and the Western Cape exploring this subject of “youth interest in farming”. The study concluded that the dominant notion that young people are turning their backs on farming seems to hold true, but not because of a lack of interest.
Young people interviewed in the study noted that “jobs in agriculture were either back-breaking and financially unappealing – at the subsistence level”.
Given these observations, I think those of us who are fortunate enough to be part of this sector should showcase opportunities and various possible careers within this sector so that people are not only exposed to the physically challenging jobs. Moreover, this could help young people to know where to knock for assistance and what to study that’s on-demand in the present moment.
The rise of technology use within agriculture can also play a critical role to ease the fears that agricultural jobs are back-breaking. (Yes, there are some jobs that might be physically demanding, but there are also services jobs that aren’t that way).
Moreover, it is important that the conversation also moves beyond actual primary production and more to the entire value chain. This is where potential job opportunities could also be created.
Overall, I think the conversation about youth in agriculture should rather be focused on ways to align them with potential opportunities in the sector rather than repeating the view that people have no interest in farming. The latter leads to the situation where people spend time trying to make the sector look “attractive” instead of showcasing possible opportunities in it for young people to make their decisions if this is their desired path to follow or not.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
