20% of SA farmers expected to exit industry in the next decade

The findings of a new study, which found that 20% of South African farmers will exit the industry within the next decade, is in line with the global norm, according to Jaco Minnaar, president of Agri SA.

20% of SA farmers expected to exit industry in the next decade
Of the 450 participants in a recent study among farmers in South Africa, one in every five producers indicated that they planned to exit farming within the next 10 years.
Photo: FW Archive

The findings of a new study, which found that 20% of South African farmers will exit the industry within the next decade, is in line with the global norm, according to Jaco Minnaar, president of Agri SA.

“Since 1920, we have globally been losing half of our farmers every 15 years,” he told Farmer’s Weekly.

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“We need to keep in mind, however, that any [farmer exiting the industry] creates opportunities for established farmers to expand their properties, or for new entrants to [join] the sector.”

Minnaar said South African farmers were in constant competition with producers from other parts of the world, who generally had access to more fertile soils.

“In the end, utilising technology on a massive scale is the only way for South African farmers to remain globally competitive.”

The study was conducted by Dr Kandas Cloete, a senior analyst at the Bureau for Food and Agricultural Policy, as part of her doctoral studies at Stellenbosch University’s Department of Agricultural Economics.

“The average producer likely to exit farming over the next decade is a third-generation, 54-year-old individual with 26 years of experience and a college or university degree,” said Cloete.

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“This producer is typically still repaying long-term loans, while also using production loans and other types of debt capital.”

Cloete’s study was based on interviews conducted with 450 farmers. Among these participants, one in every five producers indicated that they planned to exit farming within the next decade.

“The data showed that producers currently aged 30 to 45 years were more likely to exit farming than those aged between 45 and 65.”

Decisions to exit farming were affected by investment costs, financial constraints and producers’ age, the study showed.

Other deciding factors included retirement without succession planning, financial problems, a lack of dependable labour, uncertainty regarding land reform policies, and concerns about rural safety.

“While no link between turnover and exit plans could be established, a larger turnover (of more than R10 million per year) could certainly play a role in the intent to stay.”

Cloete added that producers’ decisions to keep farming were also affected by business confidence and production loans.

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“It is typically a combination of different factors that determines the decision to quit farming and sell the property,” she says.

Prof Johann Kirsten, director of the Bureau for Economic Research (BER), said Cloete’s study documented the reasons for exiting very well.

“One of the major reasons for farmers [exiting the industry] is that the following generation is not interested in farming. They either want to immigrate or find a job in a professional work environment.

“However, in recent years, many farmers’ children have started returning to farms, especially in the Karoo,” Kirsten added.

“While constraints place a damper on their corporate ideals, information technology has enabled them to farm while an alternative career can be pursued remotely.”

The only concerns for this new generation of farmers were issues such as schooling and road infrastructure, the study found.