Groenewald was speaking in Stellenbosch at the first of a series of roadshows organised by Standard Bank’s Agribusiness division and aimed at engaging major role players in agriculture in discussions around current trends in the sector.
“The pivotal economic role agriculture has always played has now expanded into a much deeper social and political responsibility. Consequently, agricultural role-players need to reorganise the way individual operations are structured to minimise risk and increase profitability in this new, dynamic landscape,” Groenewald said.
According to Groenewald a co-operative or similar business model could benefit smallholder farmers who were going to find it increasingly difficult to achieve the economies of scale necessary to improve margins while increasing production. But, he added, these co-operative type models could not simply mirror the co-operatives of the past, which tended to focus on storage and marketing via the regulatory marketing channels.
“That focus is too narrow for today’s agricultural sector. But the principle of operations that grouped farmers with similar interests for mutual advantage is a good one.” He said that the emphasis for agriculture in the next five years would be on size so that farmers could benefit from economies of scale and greater negotiation strength. “That does not mean that each farmer has to scale up. Collaboration confers size far more easily,” he said.
Another option available to farmers to increase profitability was to become increasingly involved in the value-chain through on-farm value addition, said Groenewald.
