Large-scale “white” agriculture this week voiced disbelief and confusion over government moves to reintroduce controls over agricultural markets.
However, the planned policy switch — which would reverse a 10-year trend — was welcomed by the National African Farming Union (Nafu), which speaks for small black farmers.
Last week the Mail & Guardian revealed the contents of a government discussion document outlining the planned policy changes. Agriculture Director General Bongiwe Njobe said the document has been approved by the Department of Agriculture and Land Affairs’s executive committee and is being used as a basis for policy revision.
South Africa currently has the world’s freest agricultural markets, with no subsidies or government intervention. The reregulation of farming is intended to favour black farmers and open the way for state controls over food prices.
The departmental document envisages the creation of an “independent national statutory institution representative of all major commodity groupings in the sector, to carry out the functions that the market would not be able or willing to do on its own”.
Penned by assistant director general Gerry Tube, it was first publicly aired at a National Agricultural Marketing Council (NAMC) workshop in January, where it was coolly received by representatives of commercial agriculture. They branded it outmoded and outlandish, and assumed it would be consigned to oblivion.
However, at the World Food Summit in Rome this week Njobe confirmed that the document was alive and well, and that a new agricultural marketing Bill was being drafted, based on the paper.
The document would be sent to the provinces, other government departments and various interest groups before going to the Cabinet and being published for comment, she said. A Bill was expected to be tabled in Parliament early next year.
Major commodity organisation Grain SA was scathing about the Tube document after its January debut. Following its revival, general manager Steve Shone conceded that now-dismantled marketing boards had brought some price stability, while tariff barriers had protected producers.
However, state control had serious downsides.
“Floor prices based on production costs encouraged production in marginal areas, with negative environmental results. The current free market system has stabilised the production areas and the market is in a degree of equilibrium,” he said.
Shone said there might be merit in revising the role of the NAMC to ensure its contribution to agricultural sustainability and emerging-farmer development. However, it remained unclear how the overhaul would take place.
There have been many financial casualties in South African agriculture in the 10 years since deregulation, but the sector has emerged leaner and more competitive. The competitiveness index for agriculture drawn up by the Agricultural Business Chamber has shown steady improvement from -0,16 in 1992 to 0,46 in 2000.
Processed agricultural products for export rose 16,79% in value in 1999/2000.
The chamber’s CEO, Johan van Rooyen, said the devaluation of the rand had played an important role in making prices more competitive. However, sharper business skills, higher-quality products and higher productivity had also contributed
In sharp contrast Nafu’s Mocks Mothabela welcomed the government proposals, saying government intervention would “level the playing field for South African agriculture”.
Mothabela said the dominance of white commercial agriculture was “a consequence of 70 years of exceptional government support, including marketing control”.
“When the system was deregulated during the democratic transition, small-scale, mainly black, farmers confronted an unregulated market and did not have the guarantees and financial incentives of the past. Market forces could not bring the changes expected.”
Mothabela said state intervention was needed to enable black farmers to participate in established markets.
“Black economic empowerment in agriculture is not simply a matter of land redistribution or even new forms of lending. Market access is critical,” he said.
Jack Raath, executive director of Agri SA, said the document was not clear enough to test its feasibility, and said a return to the old Marketing Act schemes and control boards was unlikely. South Africa had commitments under the World Trade Organisation and trade agreements in Africa, with the European Union and other countries, he said
“But Agri SA has always said there is justification for certain statutory measures to protect the interests of producers and consumers,” said Raath. “When the policy was being revised in the late 1980s, we said that the baby should not be thrown out with the bath water.
“When the total freeing of agricultural markets was under way, we warned that newcomers would find it difficult to enter the market. But that was the choice the country made and we have had to take the pain that went with it.”
Raath said the old marketing boards “did a lot for agriculture”. However, towards the end some interfered unduly in the market. In view of globalisation, they had outlived their usefulness and relevance.