‘Agriculture must brag about its quality produce’

Mpumelelo Mkhabela, a political analyst, says that it is crucial for the South African agriculture sector to highlight the quality of its produce on international markets.

‘Agriculture must brag about its quality produce’
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In 2018, I was privileged to receive an invitation to provide a political overview at the Agbiz annual general meeting. Part of my input focused on the need to keep South Africa’s agriculture sector competitive and for agricultural players to take the lead initiating transformation projects, instead of waiting for the state to do it for them.

However, ensuring that the entire agriculture sector remained competitive was not only the responsibility of agricultural entrepreneurs, but also that of policymakers, who need to create an enabling political environment.

Little did I know I shared interest in competitiveness with a member of the audience, Prof Johan van Rooyen of the Bureau for Food and Agricultural Policy at Stellenbosch University. He appreciated my interest and we exchanged notes. He suggested that there should more discussions about competitiveness among agricultural players, including policymakers.

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Van Rooyen had led a team of researchers, including masters and doctoral students to develop the agricultural competiveness analysis. They developed a paper that traced the concept of competitiveness to a number of economists, including Adam Smith, who emphasised natural endowments. David Ricardo focused on comparative advantage. Raymond Vernon focused on product-cycle theory.

But the most influential of all is Michael Porter who, signaling a fundamental departure from Smith, emphasised “strategic choices”, not “natural endowments” as a creator of wealth. The idea that it is “strategic choices” that result in wealth, not necessarily natural endowment, is indeed compelling.

One can think of wealthy countries with neither mineral resources nor agricultural land. South Africa, however, has both. With well-calculated strategic choice, we should be among the wealthiest countries in the world with higher levels of income per capita and low-income inequality.

However, we rank high in income inequality and are punching weigh below our weight when it comes to economic growth. Indeed, our natural endowments need to be supported by strategic choices.

Anyway, having adopted Porter’s thinking, Van Rooyen and his researchers developed quantitative analysis of agricultural competitiveness. In the grain sector, the research found South Africa has remained competitive in maize. We have been flat on barley, rye and oats and declined on wheat and rice. We have had a marginal improvement on soya beans.

Trade numbers back this up. South Africa imports soya bean and wheat, but exports maize in huge quantities. But maize being a staple, means South Africa’s competitiveness overall is such that we are self-sufficient. Overall, the competitiveness of South African agriculture, in terms of primary agriculture and agro-processing, has been going strong since 2008.

However, the researchers warned that it might be a bit nonsensical to talk about agricultural competitiveness in general. Focus on sector peculiarities and dynamics was more fruitful. This is because the agriculture sector is not a unitary system, but a sector with “complex diversity” with both collaborative and competitive relationships.

The research recommended long-term growth strategies as opposed to short-term and opportunistic behaviour among market players. It also found that competitive value chains will be the key factor in the future.

One of the most important aspects of competitiveness is the ability to create new markets and penetrate existing ones for products that are considered cost-competitive and quality competitive.

A policymaker recently told me that South Africa’s strength remains the quality of its products. If this is indeed the case, we must brag about it loudly in international trade shows and make the world realise they are purchasing quality products from us. The citrus sector seems to be doing a good job in this regard.

However, cost competitiveness will remain key in all sectors including grain. There is, therefore, a need to attract large-scale investors, scale-up research and development, secure policy certainty and enhance South Africa’s reputation on key markets.

These require concerted national unity among key players. South Africa cannot afford the kinds of divisions we have seen in the past where some lobby group badmouths the country in key markets while lobbying for their narrow interests.

Policymakers will also need to focus on the bigger picture and push for transformation in a more inclusive manner that enhances competitiveness of the various agricultural industries. When we speak of competitiveness, we should be speaking of the industry as a whole, from small-scale to large commercial enterprises. This means the parts making up the whole must be individually competitive.