The sectoral agricultural plan recognises the importance of a globally competitive agricultural sector. However, in its focus on transformation, government largely ignores this aspect. And generally, there’s a huge misunderstanding of the real role of agriculture in the national economy. For many years, governments in developing countries ignored commercial agriculture. But since 2005, global trends have caught up with them.
Food prices have doubled as demand exceeded supply. Global food shortages have forced governments to rethink the meaning of food security. A s countries put regulations in place to limit food exports, importing countries have realised that food security is dependent on local production and not on imports. Suddenly policy makers have rediscovered farmers. Finance minister Trevor Manuel said that SA farmers are needed, but politicians won’t change their policies unless we provide them with a clear analysis of the role and impact of agriculture on the economy.
Direct impact
In 2007, agriculture contributed R57 billion to the Gross Domestic Product (GDP), which translates to 2,8%. But agriculture’s share in the GDP had decreased over time. In 1998, it was 3,4%. Although it has decreased as a percentage of total GDP, the gross value of agricultural production actually grew from R25 billion in 1998 to R27 billion in 2007 – a growth rate of 1% per year. However, this is clearly not enough to provide food to a growing population. griculture is a large employer. In 2002 (the latest available statistics) agriculture employed 940 000 workers. This figure has decreased from 1986 when it was 1 351 440.
Economic realities have forced farmers to reduce their payroll and rigid labour laws and regulations have made it difficult for farmers to manage labour. All this encourages them to replace manpower with machinery in spite of the higher cost. Wage determinations at higher rates than in other sectors also aggravate the problem. Farm labour differs from employment in other industries. Farmers provide housing, transport and social services to farmworkers. Traditionally, they regard farmers as their source of finance and aid in times of death and other crises. But the new wage dispensation has limited farmers’ ability to provide these services. griculture is an important earner of foreign currency.
Total agricultural exports in 2006 amounted to R27 billion and total imports to R20 billion, thus a net export of R6 billion. Wine, fruit, sugar and grapes are the main exports, accounting for 11,3%, 10,6%, 8,8% and 7,1% respectively of the total agricultural export value between 1997 and 2006. Total agricultural exports show an increasing trend while imports show a weak downward trend. O ur trade deficit has become a major source of concern in the last two years. Agricultural exports and import substitution can help to limit this deficit. There’s a clear relationship between agricultural production and net exports.
Indirect impact
Agriculture is only one link in the food value chain. Various calculations put agriculture’s impact on the GDP through forward and backward linkages at between 20% and 25%. former minister of agriculture even put it as high as 50%, which is probably nearer the mark than 25%. For example, the turnover of the dairy industry on a primary level is R7 billion compared to R26 billion at secondary level and still more on a retail level.
Agriculture indirectly provides jobs for many people in upstream and downstream industries. Conservatively estimated, one primary sector job provides more than three jobs in upstream and downstream industries. Farmers also provide and maintain rural infrastructure. In many provinces, farmers are responsible for the maintenance of minor roads. They also provide other amenities to rural communities such as small shops, sports fields and transport. E uropean countries acknowledge this multifunctional role of agriculture and farmers are paid well. In SA, farmers also have a multifunctional role in protecting the rural environment, but they are forced to fund these projects themselves.
More than the sum of its parts
Zimbabwe is a good example of what happens to a country that does not protect and develop its agriculture. But unfortunately, the realisation that commercial agriculture is the fabric of its economy has come too late. Food shortages emphasise the important role of agriculture in the total economy. Take away the farmers and chances are that you will destroy the economy. G overnment will have to seriously rethink its role in the development and support of commercial agriculture, and no political party can risk facing hungry people. Dr Koos Coetzee is an agricultural economist at the MPO. All opinions expressed are his own and do not reflect MPO policy. |fw
