South African agriculture again finds itself at a particularly challenging crossroads. While certain sectors and value chains may be in distress and declining (the wheat sector springs to mind), South African agriculture, from an economic perspective, has performed relatively well since the previous major crossroads of deregulation and liberalisation in the mid-1990s.
This is despite increased biosecurity threats and failures, a skewed global agricultural trade environment (subsidies, dumping and non-tariff barriers), safety and security concerns, and substantial increases in administered prices, especially of electricity. South Africa remains a net exporter of agricultural produce (primary and processed agricultural produce), earning valuable foreign exchange, while the sector has generally ensured national food security since the turn of the previous century.
Local and foreign markets have expanded, and the offering of fair-priced food on supermarket shelves has grown dramatically, emphasising the competitive drivers in the open South African agro-food value chains. (See The Economist’s 2012 Big Mac Index as an indicator of real food prices – South Africa has the third-cheapest Big Mac.)
Clearly, role players in the South African agri-food markets can be proud of the progress made in developing competitive and efficient supply chains, especially during the past few years. South Africa’s agri-food system is a major asset to the country, and should be valued as such.
However, challenges and threats that have been lurking for some time, confront the industry more fully now, and will require cool heads and dedicated attention in 2013. These issues primarily relate to land reform, labour and broad-based black economic empowerment implementation – in short the transformation of the sector. Most responsible South Africans would agree that transformation is necessary to achieve sustainability through greater inclusivity, to narrow the inequality gap, to improve household food security, to bolster employment, and to bridge the massive skills gap due to a largely dysfunctional education system.
The question of what exactly this transformation in the agri-food industry entails, and how it should be achieved within the ambit of the Constitution of South Africa while maintaining investor confidence and growth, remains largely unclear from a government policy perspective. Transformation of our rural and agri-food environment means different things to different people in our complex and changing society. This divergent expectation ultimately poses the biggest threat to the agri-food system.
Land and labour reform
A case in point is the so-called consultation process followed by the National Reference Group (Nareg) on land reform, established by the minister of rural development and land reform last year. Final policy documents from the six different working groups have not all been finalised and inferences drawn could be premature, but indications are that pragmatic and constructive inputs from the private sector have been largely ignored in favour of questionable economic and political dogma proposed by the so-called experts group.
Instead of broadening property rights and extending land ownership to more citizens, government is acquiring and holding more land for leasing purposes. If implemented in its current form, it is foreseen that constitutional challenges on certain key proposals would appear inevitable.
There is a way to take agriculture and agri-business forward, and that is primarily through the National Development Plan (Vision 2030), recently adopted by Cabinet as the overarching plan for South Africa. Vision 2030 articulates a rural development strategy based on agricultural growth and development. It recognises the importance of both commercial and smallholder agriculture in achieving national and household food security, while emphasising its employment potential through forward and backward linkages and multiplier effects.
It proposes a land reform strategy that will see significant transfer of commercial farm land (20%) to black farmers through fair remuneration/compensation schemes operated by district land committees. These committees would comprise stakeholders from government and the private sector and would identify land already in the market, as well as land where the farmer needed to stop farming. It is acknowledged that various technical details need to be ironed out, but the proposed framework provides a basis for a more pragmatic, sensible and economically feasible approach.
Given the recent labour unrest and protest action in the agricultural sector, it is the responsibility of the sector to engage constructively with labour and government to develop a more sustainable dispensation for farm workers, especially for temporary farm labour. This will need a review of the current sectoral determination in agriculture, as well as a review of the basic conditions of employment for these workers.
While political opportunism and meddling played a part in the labour unrest at De Doorns and elsewhere in the Western Cape, the sector should acknowledge that the current situation is not sustainable and requires innovative solutions. Government has a major responsibility and role to play in this regard, especially in terms of service delivery to settlements.
Thought should be given to a Rural Foundation-type initiative. South African farmers can rise to the demands of the occasion. This has become evident in the Agri-Sector Unity Forum’s Declaration of Intent, signed by all the major organised agricultural unions, representing black and white groups, to work together and seek consensus on strategic matters impacting on the industry, before engaging with government.
To develop agriculture and our agri-food system, such an approach has now become essential. South African farmers and agribusinesses have a bright future if an agreed road map between private sector, government and labour can be implemented. The basis for it now exists through the National Development Plan. Food production, right down the value chain, is a competitive business where entrepreneurs risk investment capital to eke out a livelihood.
Politicians would do well to heed the advice of the United Nations’ Food and Agriculture Organisation’s latest publication, entitled The State of Food and Agriculture, in which the following is stated: ‘This report calls for a new investment strategy that puts agricultural producers at its centre and focuses public resources at all levels on the provision of public goods and the creation of an enabling environment for investment by farmers. It calls upon governments at all levels and their development partners to channel public and private investment towards activities that yield higher returns for society.
All agricultural investors and rural businesses need good governance, macro-economic stability, rural infrastructure, secure property rights and effective market institutions in order to mobilise the resources and assume the
significant risks that investing in agriculture entails.’
The views expressed in our weekly opinion piece do not necessarily reflect those of Farmer’s Weekly. Email John Purchase at [email protected]