Let’s add value – and jobs

If government is serious about creating jobs in the agricultural sector, it has to do more to encourage value adding.

“In the last decade or so, South Africa has changed from being a net exporter to a net importer of food.“ I cannot tell the number of times I’ve heard this mentioned. Certainly, it seems to pop up in every politician’s speech whenever agriculture or any related issue is being discussed. But a recent survey by the SA Institute of Race Relations states that South Africa has remained a net food exporter. In 2010, we sold about 30% more agricultural products abroad than we imported. Moreover, the country’s agricultural exports grew by 10% between 2008 and 2010.

In fact, according to the Agricultural Business Chamber (ABC), all the talk about South Africa becoming a net importer of food is false: the country has never been a net importer of primary agricultural products. Unfortunately, the word ‘primary’ is the qualifier. According to Lindie Stroebel, manager of economic intelligence and finance at ABC, South Africa has been a net importer of secondary, or processed, agricultural products since 2005.

This is due to a lack of industrialisation in the sector. And the result, quite simply, is that South Africa has been unable to unlock opportunities in value adding, wealth and income generation – and, criticially, employment. The ABC report states that, in 2010, South Africa imported primary agricultural products valued at R7,3 billion, while it exported R22,7 billion of these products. By contrast, in the same year, the country imported secondary agricultural products worth R28,5 billion, but exported only R24,6 billion worth.

Investing
A short while ago, while visiting one of South Africa’s largest abattoirs – where 1 800 animals are slaughtered a day – I learnt that every single hide was exported. What lost potential! Instead of adding value to the hides, we’re shipping them out and buying them back as expensive leather articles. Here’s another example. South Africa isn’t able to supply its own demand for chicken meat, yet exports tons of maize, much of which ends up back here as chicken meat. Worse, we’ve become a dumping area for other countries.

South African chicken producers have accused Brazil in particular of selling whole chicken cheaper in South Africa than in its home market. So much has been said about agro-processing. Yet so little has been done about it. The figures speak for themselves. We export three times more primary agricultural products – in value – than we import. Just imagine if the export/import ratio of our secondary agricultural products were similar!  If South Africa is really serious about beating unemployment and growing the economy, we have to look closely at sustainable ways to introduce more value adding.