Mike Burgess reports that if it was up to him, Karaan would send South Africa’s brightest to the world’s fastest-growing cities to learn about their markets and to make deals for local companies.
What is the fundamental problem in the government’s approach to international markets, and what can we learn from the New Zealand and Australian approach to Asian markets? The biggest reality to me is the lack of market intelligence; we play a catch-up game with the rest of the world. I have just been to New Zealand and Australia, and I believe that the biggest difference between us and them is that they know so much more about the market than we do. The truth is that market intelligence is what distinguishes you in the marketplace. Compared to our southern hemisphere competitors we are still very attached to old markets and have not grown significantly in newer markets, so the patterns of trade here are largely what they were 10 years ago.
The Australians and New Zealanders always have people in their new markets – they probably spend more time in the East than anywhere else. This explains the major trade shifts in these countries, especially New Zealand, how successful they are and how well they are managed. They start a year or two in advance and identify the countries they want to have bilateral agreements with. They study the imports and exports of these countries and negotiate agreements that are to their advantage. We did sign a bilateral agreement with China, but now there are complications with costs and non-tariff barriers. With technical (marketing) issues, on the whole I don’t think we are very sharp. Market intelligence means being able to provide solutions for tomorrow’s problems.
Many would argue that government failure puts South Africa at a serious disadvantage in terms of global markets. Do you agree? The truth is, whether it is land reform, BEE, exports, promotion, or trade, in this country (compared to our competitors) there is massive government failure. It’s not easy to acknowledge, but it is important that we do acknowledge it and find a way to address it. And that way is to be less dependent on government, not more. I have just come from a meeting with some of the biggest fruit exporters, and I invited the top people from government to attend. The government officials who asked for this meeting arrived four hours late. At the moment I am struggling at the marketing council to get my budget increased. Everybody says, “You can have as much money as you want”, but in the end there is no progress.
Productive land reform – an issue not shared by Australia and New Zealand – is of vital importance to the future of the agricultural sector in South Africa. What do you believe to be a critical flaw in the productive transfer of land? It is a dilemma. It’s not possible to pass on land to new beneficiaries who know too little about agriculture to be really successful, who have too much of a capital cap to farm [land] successfully, and whom we pressurise to become viable. That’s not going to work. I am a black farmer myself and believe me it takes a long time to start a farm from nothing and then make it successful.
Not even a PhD in agriculture can make you an instant success in farming – just ask me! We need additional systems that will nurture farmers through experiential learning, preferential market access, concessionary finance and other enabling measures and safety nets. What counts in South Africa’s favour, and how can we compete more successfully with, say, Australia and New Zealand? These countries have labour shortages and the biggest impression I got from walking through their markets and seeing what they pay for a familiar product is that we are, and can be, a lower-cost producer of quality products.
We must anticipate what markets want and try to become a lowercost and higher-value producer to the world. We have to move on from the failure of fair multilateral trade to a world of bilateral agreements. We must now sit down with China, India, Bangladesh and so on, and discover how to get access to their markets so that they can give preferential treatment to our markets. If we know that Bangladesh is the next silent giant after India and China, a proactive bilateral agreement with them could be to our advantage – but we have to get in there before our competitors.
We need our people to live in the new market communities and understand them. If I had R10 million I would take 20 of our brightest kids and send them to the 20 fastest- growing cities in the world. Their task would simply be to make deals for South African companies and learn those markets. That’s how you generate market intelligence. What about collaboration with southern hemisphere competitors to access northern hemisphere markets successfully? How important is the development of domestic markets?
There should be a lot more south-south collaboration. A lot of world production has shifted from the north to the south for cost reasons, and countries in the southern hemisphere are increasingly competing with each other for northern hemisphere markets. We should sit down with our southern hemisphere competitors and discuss how we can collaborate in the markets we share, in terms of marketing strategies, research, promotion and so on.
Another point is that it does not help us to just export. If we focus too much on export we could end up neglecting our domestic markets. We need to diversify our domestic markets and adopt a diversified approach generally. Some of our industries suffer because they haven’t developed our domestic markets sufficiently. Is current agricultural leadership up to the market challenges of the future? We have good people in the leadership of agriculture but they are a little old and many have retired from the public arena. They were good leaders, but we need the same leadership calibre for the next 10 years with long-term plans. I say this because I have been teaching at university for 10 years and I have not seen students moving into good leadership positions in the agriculture industry.
Something that the Japanese have really taught us well is that the future always belongs to the youth. Part of the reason for their economic success is that they took highly talented youngsters and made them CEOs of companies in their early 30s. Let the young, talented guys come through and start taking leadership positions. They also have less baggage; in South Africa we have a deep-rooted mistrust that is just not addressed.
How can the NAM C and the NWGA cooperate to enhance the competitiveness of South African wool internationally? The NWGA and the NAMC can collaborate and formulate plans to grow and share [the wool] industry. Much of the growth will come from enhancing our exports to target markets. We can combine our efforts in research and the formulation of appropriate plans to present to the minister [of agriculture]. This will help the minister and the department of agriculture in the task of directing programmes and resources.
