To add local capacity

A worrying trend is taking hold in South Africa – the importation of processed agricultural products.

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South African exports of processed agricultural products as a percentage of all agricultural exports declined from 53% in 2002 to 47% in 2011. This is according to a recent report by the Agricultural Business Chamber. Over the same period, the composition of agricultural imports changed dramatically – more than three-quarters of the imports were processed agricultural products last year against two-thirds 10 years ago.

According to the report, South Africa imported almost R4 billion worth of processed agricultural products more than it exported processed agricultural products.

Why is this worrying?

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South Africa is a country plagued by unemployment. Official figures put the unemployed at 23,9% of the total workforce in the last quarter of last year. This translates to 4,2 million people without jobs. If you add people who have given up seeking jobs, the number rises to 6,5 million people – one in every three economically active people are without jobs.

This endemic joblessness can be tempered through a traditionally high jobs absorber called manufacturing. Investment in processing agricultural products needs to be accelerated.

But how can this be done?

Firstly, agricultural processing needs to lower its input costs. One discretionary cost is wages. Negotiating with organised labour is imperative in this regard and a deal similar to the one struck by the textile sector should be reached. This deal entailed that entry-level workers receive 30% less than the minimum wage. Agricultural processing has the ability to absorb thousands of low-skilled workers and give them an initial footing in the jobs market.

Secondly, a renewed focus on the emerging middle class of other sub-Saharan African markets should be a cornerstone of any agricultural manufacturer. Africa is a market with almost 1 billion people, of which a growing percentage is changing their nutrition along with their changing income. Exports of processed agricultural products should focus heavily on the rest of the continent.