Where is the policy REVOLUTION?

Government does not understand agriculture. This is clear in its
obsession with implementing short-sighted policies that focus on
detail and unnecessarily complicate farming. Lindi van Rooyen
looks at examples of how small tweaks in agricultural policies in
countries abroad have helped those nations flourish.

The importance of food is never debated, yet agriculture’s place as a priority development in South Africa is constantly disputed. The agricultural sector is faced with an endless array of challenging legislation that complicates farming and creates more paperwork, instead of easing the way for farmers to grow food.

Take the example of wool farmers having to apply for work permits for sheep shearers from Lesotho, because there is not enough local labour to do the job. Not all the permits are granted and farmers are left shorthanded in peak shearing season.
Is our government able to see the bigger picture of agriculture and what it means to the country and its people? Or is it so fixated on “righting the wrongs of the past” that it can’t see farmers are working every angle to stay in the game?

A supportive environment
The subsidy debate has raged for years in SA as local agriculture is forced to compete in a global market against farmers who are financially incentivised to keep farming. Subsidising production is just one of many ways in which a government can support its farmers. Besides tractor subsidies introduced by the US government in such a way as to stimulate the economy, US farmers receive tax cuts. Kelvin Leibold, farm management specialist at Iowa State University points out that American farmers benefit immensely from the way in which agricultural tax laws are structured.

Thailand is another example of a country where government has shown vision and acted to benefit agriculture by changing policy. Once a net importer of rice, Thailand made the decision to give landownership back to the people and consequently became the world’s second largest exporter of rice, according to the Bureau for Food and Agricultural Policy (BFAP). Ownership made all the difference in motivating farmers to produce more than adequate tonnage.

Looking at our own sector and the amounts of food produced on owned land, versus that grown on land leased from the state, should be enough to prompt government to push for private land ownership. While the Thai government provides no direct subsidies, agricultural loans are interest free. Farmers can pay back loans without being dependent on the government.

At a recent conference on agricultural benchmarking, Jannie de Villiers, Grain SA CEO, asked how long the South African government would continue to deny emerging farmers landownership which would give them access to proper finance instead of relying on the state for funding. There are no lessons in this exercise about business or money.

What, indeed, will happen to these farmers when the, obviously unsustainable, system of financial support falls away?

The only way to survive in agriculture is through economies of scale – a laughable concept to an emerging farmer battling to survive on state assistance. Our policies are not geared towards a robust and thriving agricultural industry. US and European farmers are free to farm to their maximum capacity without fear of failure because their governments have put safety nets in place. Many of the risks associated with farming are eliminated and food surpluses build up.

Africa should look to these countries and see the difference better farmer support makes. The US ethanol industry creates a market for the maize surplus and keeps the maize price high. Unfortunately for SA farmers, our ethanol industry is barely out of the starting blocks and farmers have nowhere near the same advantages as those in the US. As Ferdi Meyer, director of BFAP, puts it, “All indications are that the ethanol industry could slow down going forward.” This, before it ever really took off.

Greener grass
A robust economy requires multiple links for efficient functioning. One of the most important of these is an adequate transport system. US farmers pay less for fertiliser than SA farmers simply because of reduced transport fees. According to Leibold, the competitive structure offers the user choices and plays a role in bringing input costs down and ensuring greater profitability when moving produce. These farmers have definite advantages over their counterparts who don’t have the infrastructural benefits.

SA’s aging infrastructure has been a point of contention among farmers who have to rely solely on increasingly expensive road transport (up to 28% more than rail transport, according to De Villiers). Transnet says that 3 350km of lines are not functional, including Hutchinson to Calvinia, the Port Elizabeth narrow gauge, Maclear, Koffiefontein, Warden, Marble Hall, Vaalwater and Zebediela lines.

Transport minister S’bu Ndebele said last year that the department was engaging in a “comprehensive rail upgrade that looks at placing rail at the centre of our freight movement.” So far, more talk about rail improvements has followed, but no action.
Staying with the US example, Leibold states that the re-sale value of farming equipment is high. Generally used by skilled operators, second-hand machinery is in good condition when it is sold, helping with cash flow and investment in new machines.

SA farmers, facing a shortage of skilled labour, generally do not have this resource. Damaged equipment is not worth much and may even have to be scrapped. Between the lure of the city lights and government grants, it is difficult for farmers to find labour that can be trained and will then stick with the job.

The fact that farming is viewed so negatively by the country’s youth doesn’t help, and every farmer who perpetuates the idea of farming being tantamount to punishment adds to the problem. South Africa needs more agriculture-friendly policies.  The ANC’s flirtation with socialism would have to be the first victim.

Ernst Janovsky, head of Absa AgriBusiness, says that capitalism is the most important ingredient needed for SA’s growth. “Capitalism is about making money and if you can’t make money, you won’t survive.” Janovsky succinctly sums up the issue: “Competitiveness is policy driven and that’s why some countries are there and some not.”

The views expressed in our weekly opinion piece do not necessarily reflect those of Farmer’s Weekly.