by Wandile Sihlobo | Sep 17, 2019 | Agricultural Trade
Farmer’s Weekly carried an article noting South African farmers’ concern that Botswana’s ambitions to export live cattle which could end up in South Africa, would add pressure on prices. This is an understandable concern given that the South African beef industry has experienced financial pressures because of the ban on exports earlier this year following an outbreak of foot-and-mouth disease. Exports to a couple of markets have resumed since, but the industry is not completely out of the woods. Rising feed costs on the back of a poor maize harvest is another challenge.
But there is another way of looking into this Botswana live cattle exports story, which I will try to illustrate by highlighting three points.
Firstly, these countries (South Africa and Botswana) are part of the same trade block — The Southern African Development Community – which means there is a free movement of goods amongst member states.
Secondly, Botswana’s cattle herd is six times smaller than that of South Africa – as illustrated in Figure 1 below – at 2.1 million. This is according to data from the Food and Agricultural Organization of the United Nations (FAO).
Figure 1: South Africa and Botswana cattle herd
Source: FAO, DAFF, and Agbiz Research
Lastly, Botswana is generally not a major exporter of live cattle. Over the past five years, the largest exports amounted to US$2.9 million according to data from the Trade Map. By way of comparison, the value of South Africa’s live cattle exports averaged US$19.9 million over the past five years.
My sense is that if Botswana sends some of its live cattle to South Africa, it is conceivable that there might be a blip on cattle and beef prices, but the impact might not be notable as feared. Only time will tell.
My sense is that South Africa should increase its focus on expanding its export markets. This would ensure that there is no supply glut in the domestic market even if Botswana suddenly exports more live cattle to South Africa than we have seen in the past. The South Africa red meat industry and government have already made notable strides over the recent past, as illustrated in Figure 2 below.
Figure 2: South Africa beef trade
Source: Trade Map, Agbiz Research
The one and most important thing for government, working with industry, is to increase investments in biosecurity so that South Africa’s beef export zeal is not interrupted as was the case earlier this year. So, my personal humble take on this matter is that we should monitor developments in Botswana, while at the same time increasing our efforts on the export expansion for great South African beef, folks.
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by Wandile Sihlobo | Aug 29, 2019 | Food Security
If there was ever a time when incentives could help reduce the spread of animal disease, it is probably now in South Africa. Since April 2019 there have been 14 reported outbreaks of African swine fever in South Africa. All are in areas of the North West, Mpumalanga, Gauteng and Free State. These outbreaks were mainly among smallholder farmers. A few cases in wild boars have also been reported.
Local authorities responded by quarantining and controlling the movement of pigs in affected areas. But the industry remains concerned that farmers may give in to the temptation to rush the rest of the herd to the market when they realise that some of their pigs are dying because of African swine fever. This would present a risk of further spread of the disease (which spreads by contact). This leads us to the point of incentives for areas that have been affected by the disease.
While we understand that government finances are constrained, farmers should be incentivised to report the outbreaks so that the disease can be successfully controlled and avoid major devastation like what we now see in China and Vietnam. The incentives could take the form of government payments to farmers of a portion of the market value of pigs to be culled because of the disease, as provided for in the Animal Diseases Act.
While it is unclear what the costs of this exercise would be (I anticipate it won’t be much as it is mainly smallholder farmers affected thus far), the risk of the disease spreading to the commercial sector could have far bigger and costly implications for the South African pig industry.
Also, having observed that the most affected areas are the smallholder farmers in informal and rural areas, where pigs are for self-consumption and sales in informal markets, the disease could have social implications if pigs die or farmers are forced to cull their herds with no compensation.
Aside from incentives, increased education and awareness of African swine fever should also be prioritised, specifically among smallholder farmers. Hence, we were encouraged to learn over the weekend that Minister of Agriculture, Land Reform and Rural Development, Thoko Didiza, has set up a task team to urgently look into ways to curb the spread of the disease to other provinces.
From a human consumption side, there are no threats posed by consuming pork products for two reasons.
First, the spread has largely affected smallholder farmers whose produce does not end up in the retail chains. Second, even if the commercial sector was to be affected and not detected until the meat reaches consumers, African swine fever reportedly has no effect on humans, although consumption of affected pigs is not encouraged (I have briefly discussed the science side African swine fever here).
Moreover, combating African swine fever is key to improving South Africa’s self-sufficiency. South Africa is a net importer of pork meat of about 26,000 tonnes a year. This is a trend the country intends to change, but that requires tackling any disease that could derail the country from improving its pig production. The first point to start with is the present outbreak of African swine fever.
Written for and first published on the Daily Maverick on 26 August 2019.
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by Wandile Sihlobo | Aug 11, 2018 | General Comments
THE WEEKEND ESSAY: By Wandile Sihlobo and Professor Johann Kirsten
Some of the successful land reform programmes in the world took place in countries where the beneficiaries were those who occupied the land at the time of the reform. This may be true for the provision of secure tenure to occupiers living under legally insecure tenure arrangements in communal areas, however, the context is quite different for the redistribution and restitution programmes in South Africa.
Because of the long history of dispossession, the land redistribution and restitution programmes will naturally involve the displacement of current land owners in favour of the resettlement and relocation of beneficiaries. Such processes require that clear criteria and principles be established at the outset, in order to guide participation as well as to achieve the objectives of the programme. In the case of the restitution programme, the criteria have always been clear since it was linked to those families, communities or their successors that have previously occupied the specific piece of land as verified by oral or documentary history and via the land claims process.
This is in contrast to the redistribution of agricultural land, currently owned under free hold arrangements, where clear criteria for selecting beneficiaries are needed. Section 25 of the Constitution places an obligation on the state to take reasonable legislative and other measures, within its available resources, to foster conditions which enable citizens to gain access to land on an equitable basis. The Constitution does not prescribe which citizens need to be prioritised as this detail was left to the policymakers, however, it is generally accepted that equitable access should enable previously disadvantaged citizens to access land on an equal footing.
During the design phase of the land reform programme back in the mid-1990s, Johan van Rooyen and Bongiwe Njobe documented[1] the criteria formulated for beneficiary selection but was never fully applied nor captured in legislation. Hence, we have decided to revisit their original work in our attempt to start a conversation about the selection of beneficiaries for land redistribution.
The main aim of the land redistribution programme is to redress the impact of past wrongs. For this reason, the programme would generally support aspirant black farmers. However, a programme of this nature will not make an agricultural producer out of every participant although it should go a long way in creating an inclusive and viable rural economy within which agriculture and the related linkages can develop.
There exists a rather obvious trade-off between having bureaucratically administered criteria that could be exclusionary or a broader-based programme that could allow for self-selection among the potential beneficiaries themselves. International experience highlights the limitations of officially administrated programmes where bureaucrats select the beneficiaries, while the pure reliance on the market mechanisms alone also has its disadvantages. Therefore, there is a need to have a balance between criteria setting and self-selecting processes.
In a market-driven land reform process (which was anticipated in 1996) the market will do the selecting, generally favouring those already empowered, albeit on a limited basis and leaving out the poorest and landless of the poor. It is, therefore, logical to assume that the market alone is not enough to do justice. At the same time, there are imminent dangers in relying solely on bureaucratic institutions to effectively distribute land.
Experiences in Mexico, Zimbabwe and now also in South Africa, as highlighted in our previous article on June 11, demonstrate that in addition to the opportunity for corruption, it also takes a long time to carry out effective administrative functions related to land reform. As a consequence of the history of South Africa, four sets of principles for the selection of beneficiaries are relevant. These are:
(i) Victimisation and disentitlement: It is obvious that one needs to consider those South Africans who were historically disadvantaged and victimised through disentitlement and denial of access to land and support services, to be beneficiaries.
(ii) Poverty and need: a land reform programme should provide the rural poor with access to opportunities for income generation, employment and self-employment. It becomes critical therefore to incorporate criteria which give preference to the poor and the landless amongst the previously disadvantaged as beneficiaries.
(iii) Productivity and sustainability: It is recognised that productivity in agriculture is a determining principle for participation in the land reform programme, particularly in relation to designing the level of support services needed to enhance the productive capacity of the beneficiaries.
(iv) Participative processes: International experience shows that problems almost inevitably arise when groups are moved on a top-down basis into land-based schemes with unrealistic expectations as to what is involved in resettlement, with unclarity in what they are expected to do for themselves and what will be done for them. The expectations therefore of the beneficiaries, once identified, need to be anticipated and fully integrated into the planning process and subsequently dealt with in the implementation stage.
One of the key objectives of the programme to redistribute agricultural land has become the need to ensure the productive use of the land to promote agricultural growth, food security and exports – as was recently echoed in the ANC’s December 2017 resolution on land reform. In this context and in light of the principle of “productivity and sustainability” we need specific criteria to select the best beneficiaries to transform the commercial agricultural sector and at the same time ensure productive use of the land.
There are the obvious elements such as good health; age between 30 and 45; education (not always formal but also years of experience); and gender (ensuring that women are included as beneficiaries). Moreover, Njobe and Van Rooyen highlighted specific criteria that have been shown through international experience to improve ‘agricultural success’:
- Net financial worth. This is a useful criterion to target the poor but also helps to identify those beneficiaries that exhibit strong repayment ability as well as willingness to increase the size of the holding and other assets. Obviously imbedded in net financial worth are the principles of financial leverage and secure rights to land.
- Previous farming experience. Many studies have found that successful farming experience and acquired skills are strongly predictive of good performance. The main argument here is that previous farming experience and the understanding of the farming environment could ensure a productive and sustainable use of land. These aspects include: formal or informal training in farming practices; the previous existence of a viable black agricultural community; the existence of (indigenous) knowledge of viable farming; those who have lived and or worked on white-owned farms have through practice acquired knowledge of farming; and women involved in food production activities.
- Entrepreneurial skills. Modern farming is a business like any other business but with far greater (external) risks. Entrepreneurial and business skills are therefore critical for the financial success of the commercial farming enterprise (i.e. to make money and a living from agriculture). These skills include: the cultivation of cash crops and marketing of the crops/livestock; the inclination to grow more cash crops; a desire to increase landholding; a more positive orientation towards training; employment of other people; exposure to agriculture and other information through the media; openness to the advice of fellow farmers, co-operatives and extension officers; the desire to contribute to the decision making process; awareness of the need for insurance; forward planning; a good knowledge of and a willingness to apply modern crop and cattle farming practices; some form of previous management training.
- Managerial aptitude. This has always been a major factor influencing the success of commercial farming ventures. Many white commercial farmers faced bankruptcy in the past due to their inability to manage risk, finances and marketing. It is for that reason that our Professors spend a lot of time talking to farmers (during the 1970s and 1980s) about the importance of management (financial, human resources, water, risks, markets). Farm management became a core of the agricultural curriculum at most universities and agricultural colleges as it became clear that the managerial skills of the farmer are critical for the success of any commercial farmer.
Overall, the criteria for selection of beneficiaries is critical when one thinks about the ideal scenario to fast-track sustainable land reform. A parallel process can be followed that combines the streamlined benefits of a market-led approach for aspiring farmers to purchase commercial land through blended finance products and a decentralised process led by local institutions, such as District Land Committees to ensure that the landless and resource-poor are not marginalised.
These committees would have to make use of the aforementioned criteria for beneficiary selection to ensure the allocation redistributed land is equitable and just, but at the same time ensure that there is a productive use of land and food security. This is a juggling act, but which can be mastered through the application of a well-designed set of criteria.
Wandile Sihlobo is head of agribusiness research at the Agricultural Business Chamber of South Africa (Agbiz) and Professor Johann Kirsten is the Director of the Bureau for Economic Research (BER) at Stellenbosch University.
Written for and first published on Business Day on 25 June 2018.
[1] For the full text see Johan van Rooyen and Bongiwe Njobe-Mbuli (1996). Access to land: selecting the beneficiaries. Chapter 18 in Agricultural land reform in South Africa: Policies, markets and mechanisms edited by Johan van Zyl, Johann Kirsten and Hans Binswanger, Oxford University Press, Cape Town.
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by Wandile Sihlobo | Aug 10, 2018 | General Comments
The United States Department of Agriculture has just released its World Agricultural Supply and Demand Estimates report, which covers most major grains and oilseeds estimates for the 2018/19 production season. The broader global theme remains roughly unchanged from last month. There is less wheat in the world due to drought in parts of the European Union and Black Sea region. Meanwhile, maize, soybeans and rice production estimates are relatively higher than last season due to expectations of large yields in the US, Asia and South America, amongst others – I know I am skipping a lot of important details, will come back to this next week.
From the South African side, the agency left its estimates for 2017/18 season, which is a crop that is currently being harvested, unchanged from last month at 13.8 million tonnes. While higher than the average production of 12.5 million tonnes, this is well below the previous season’s record harvest of 17.6 million tonnes due to a decline in area planted and expectations of average yields in some areas.
The key message from these numbers is that South Africa’s maize market will be well supplied in the 2018/19 marketing year, which ends in April 2019. Total maize supplies could reach 16.7 million tonnes, well above the local demand of 10.8 million tonnes per annum. The maize supplies figure combines opening stocks and expected production. This essentially means that during the 2018/19 marketing year, South Africa’s maize exports could, at the least, amount to 2.5 million tonnes – slightly lower than the volume exported in 2017/18.
Furthermore, the agency placed Zambia’s maize production at 2.4 million tonnes, down by 34 percent from last year’s record crop, and down 20 percent from the 5-year average. This decline is on the back of a reduction in area planted, as well as expected lower yields due to unfavourable weather conditions earlier in the season. Drought prevailed in Zambia’s maize production areas from December 2017 through January 2018. The extent of January’s drought also occurred during the critical pollination stage which adversely affected yields.
Although the expected production is 14 percent lower than the country’s annual maize consumption, Zambia’s maize supplies are still in good shape, thanks to large stocks of over a million tonnes from last year.
This generally means that maize prices in South Africa and Zambia could remain at fairly lower levels in the near term. The key risk is the expected El Niño — chance of another drought in the coming summer season — but we will get more reliable estimates about this in the coming month or so.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Aug 10, 2018 | General Comments
Today I am working off-site in a small coffee shop in my neighbourhood. I’ve just ordered coffee and asked also for a glass of water. For some reason, the waiter brought water, saturated with cucumbers and lemon, which was not what I longed for, but it was surprisingly refreshing. (Thanks to him).
Anyway, this reminded me of a post I shared a few months back about the history and production trends in South Africa of this widely cultivated “vegetable”, related to both the melon and squash families, which is technically a fruit. So, I will re-post it as a way to celebrate this ‘cucumber-laden glass of water’.
In terms of history, it is unclear when this crop was first introduced in South Africa. But, its origin can be traced from South Asia between the Bay of Bengal and the Himalaya. In terms of production, however, China is on the lead, accounting for 77 percent share of global cucumber production in 2016, according to data from the Food and Agricultural Organization of United Nations.
Trailing behind China is Russia, Turkey and Iran, each respectively accounting for 2 percent share in global production.
As you can imagine, South Africa is not a very big producer of cucumbers. Our production accounts for 0.03 percent of global output. With that said, South Africa’s cucumber production has increased significantly in the recent past, partially driven by an uptick in consumption – not sure if in salads or gin and tonic – you never know these days.
Between 1994 and 2016, South Africa’s cucumber production increased by 82 percent to 27 797 tonnes. Cucumbers are produced in almost all the provinces of South Africa. However, the cucumber production is more concentrated in Western Cape, Eastern Cape, Free State and KwaZulu Natal Provinces.
Overall, South Africa is a net exporter of cucumbers, mainly destined to the neighbouring countries.
In terms of South Africa’s market structure, the cucumber industry uses fresh produce markets, restaurants, processors, wholesalers and retailers as channels of marketing of their products.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
