South Africa’s commercial farmers occupy a favourable position on the doorstep of a huge and growing market both locally and in the rest of Southern Africa. But they need government’s support to feed this population.
In South Africa, the population is unevenly distributed among the provinces. According to Statistics SA, 24% of the population of 54 million live in Gauteng. This represents 32% of the country’s working population and 22% of the households with access to electricity.
Income distribution is also skewed. Gauteng produces 34,5% of the total GDP, followed by KwaZulu-Natal with 15,7%, and the Western Cape with 14,2%.
The average monthly household income increased from R7 000 in 2009 to more than R10 000 in 2014. The increase was greater in the higher income groups. In 2009, a total of 56% of the population had a monthly income of less than R5 000. By 2014, this had dropped to 40% in 2014, with 60% of the population earning more than R5 000/month.
The SA Audience Research Foundation’s analysis of the socio-economic characteristics in 10 Living Standard Measurement (LSM) groups shows that the percentage of the population in the higher LSM groups (5-10) has increased, while the percentage in the lower LSM groups has decreased. This is a major driver of the growing demand for food in general and for protein and value-added food products in particular.
As in the rest of sub-Saharan Africa (SSA), the markets in informal settlements are being formalised through the opening of shops by the major retail chains in these areas.
The steadily growing Market to the north
In addition to the SA market, the demand for food in other countries in SSA is also growing. The International Monetary Fund has estimated that SSA economies grew 3,4% in 2015, and would grow at 3% in 2016 and 4% in 2017. This is higher than the expected global growth of 3,2% in 2016 and 3,5% in 2017.
As I noted in my previous column, the development of outlets by SA retail chains in the rest of SSA has resulted in formalising previously informal markets. The banking system has also improved, making it far easier and safer to transact across borders.
A recent study by the US Department of Agriculture shows SSA to be the most food-insecure region in the world, accounting for 45% of all food-insecure people. The food security situation in SSA will also improve but at a much slower rate than in other areas.
South Africa’s commercial farmers has the capacity to feed the growing SA and SSA markets. This is illustrated by the fact that, thanks to their skill and level of technology, local farmers were able to produce a relatively good summer-grain crop under what has been described as the worst drought in more than two decades. Despite these conditions, no consumer had to face empty shelves.
Food security is a prerequisite for political stability. The recent demonstrations and unrest caused by weak service delivery will seem like a Sunday-school picnic compared with what will happen if we experience severe food shortages.
While it is important to promote and aid the development of new entrants into agriculture, this is not the department of agriculture’s main task. It should spend most of its energy in ensuring an enabling environment for South Africa’s commercial producers. This also means the factors that prevent further investment in agriculture, such as continual threats about land repossession, should be stopped.
The farmers of South Africa are ready to take up the challenge to feed their own country and the rest of the region, but they need government’s active support to achieve this.
Dr Koos Coetzee is an agricultural economist at the MPO. All opinions expressed are his own and do not reflect MPO policy.