Is farming in SA worth the risk?

I recently asked Agbiz CEO, Dr John Purchase, whether or not, all things considered, he would, in good conscience, advise someone with no current investment in agriculture to go ahead and buy a farm in South Africa.

By Denene Erasmus
December 17, 2016 3:00 pm

Stripped of nuance, Purchase’s answer basically boiled down to another question – how much risk are you willing to take?

According to the Agbiz Agribusiness Outlook for 2017, the current investment environment in South Africa is defined by risk and uncertainty due to the deteriorating political situation.

This includes anti-white rhetoric and dangerous and inflammatory political statements from the EFF on illegal land grabbing and the nationalisation of land without compensation.

As a result of these political statements, racial tensions in South Africa seemed to be on the rise, Purchase said. The situation was made even more precarious by the “wanton and reckless abuse of state institutions” and “palpable self-interest” of political leaders right from the top down.

In addition, policy uncertainty and the country’s deteriorating political economy had resulted in agricultural GDP and agribusiness confidence being significantly negative for most of the year, according to Purchase. Unexpected international events, such as Brexit and the election outcome in the US had exacerbated domestic uncertainty.

Both of these events, he said, would be likely to carry long-term implications for South Africa’s key agricultural export markets.

But, Purchase concluded, crisis situations created opportunity. Potential investors needed to keep in mind that the success of investment in turbulent, high-risk environments depended on how well they managed to navigate those risks.

While acknowledging these risks and uncertainties, the Agbiz outlook for 2017 maintained a rather optimistic outlook, saying that in the last quarter of 2016 there had been evidence of some recovery in the Agbiz and Industrial Development Corporation’s Agribusiness Confidence Index. “With good rain falling in key production areas, this has indicated a potential turnaround situation,” Purchase said.

The threats farmers face are, however, not only economic and political in nature. Farming communities also have to deal with serious, physical threats. The article on improving safety measures on farms (16 December issue) is a stark reminder of how we have come to accept the high incidence of violent crime in South Africa as normal.

The year is fast drawing to a close and as we enter a phase of reflection, I want to appeal to you not to allow stories of violence and corruption in South Africa to simply wash over you. We must allow ourselves to feel devastated and outraged by the everyday accounts of violence.

We cannot just accept that violence, thuggery, corruption and cheap politics are now part of life in South Africa.