Get more Mail & Guardian
Subscribe or Login

This is how South Africa could unlock its agriculture growth potential

I believe South Africa’s agricultural sector will grow by more than 6% this year after an already solid growth of 13,4% year-on-year in 2020. Still, this expansion will probably slow to a long-term average of about 3% in 2022. The favourable weather conditions, strong export activity and relatively higher commodity prices will remain critical catalysts for growth in this sector in the near term. 

Although uncertainty remains about the commodity price trajectory, the expected La Niña and associated dryness it typically brings to South America could prove to be a significant global price supporting factor and, in turn, boost the South African agricultural commodities market. 

In the case of trade, South Africa has experienced numerous difficulties at the ports because of delays, theft of Transnet infrastructure, cyber attacks and general inefficiency, which calls for a need to improve and modernise ports. 

Still, agricultural exports have held on positively for the first half of this year. I suspect that the full-year exports will surpass the 2020 levels of$10,2-billion. In the first half of 2021, South Africa’s agricultural exports amounted to $6,1-billion, which is a 30%  year-on-year increase. Compared with last year, the growth is partly because of base effects; the first half of 2020 was heavily affected by the Covid-19 related disruptions to global supply chains. Still, the growth reflects rising export performance for various products.

The vibrancy could be seen across the major subsectors of the agricultural economy — field crops, animal production, and horticulture. As such, I am confident that employment in the primary agriculture sector could also remain elevated in the average long term of 852 000 people. Already, in the second quarter of this year, direct agricultural jobs recovered from the slump of the first quarter by 9% quarter-on-quarter and 8% year-on-year to 862 000.

Although these near-term growth prospects support the sector, unlocking the full growth potential over the long run will require policy interventions in agriculture and cross-cutting government departments. This area has remained a challenge for South Africa for a while because of the poor implementation of government policies and programmes. 

As far back as in 2012, the government published its National Development Plan, which promised prospects of accelerated growth and job creation at the sector’s primary and value chain level. But, as with some policies before it, South Africa never fully implemented the ideas of chapter six of the National Development Plan. The prerequisites for unlocking growth in the sector included a need for investment and expansion of irrigation infrastructure. If done properly, it would have unlocked about 500 000 hectares for the horticulture sector — a labour-intensive subsector. 

In addition, the government had to convert some under-used land in communal areas and land reform projects into commercial production. This intervention would have involved a transfer of land rights to beneficiaries so that they could mobilise funding opportunities. Also, the government had to support the commercialisation of the new entrant farmers instead of locking them into small farming enterprises. Unfortunately, none of these suggestions were implemented fully. 

The expansion that we have observed in agriculture since 2012 has been led by private sector firms rather than the government. As a result, the discussion about the low levels of transformation in agriculture continues to linger. The National Agricultural Marketing Council estimates that black farmers still constitute less than 10% of the commercial production.  

To address low transformation and potentially slower growth in agriculture in the coming years, the government has revived the high-level views of chapter six of the National Development Plan through its Agriculture and Agro-processing Master Plan. The plan involves social compacting between business, labour, and government, among other stakeholders. Its major contribution is that it has managed to map commodity corridors through which expansion could take off and clearly outlines the type of investment and infrastructure needs in each area. Still, this will need a full buy-in of all agricultural role players. 

The two major areas I feel need increased attention are (1) messaging and participation of the provincial and local governments and (2) the financing instruments beyond the blended finance model that the government has launched on its first leg. 

On the first point, some of the most critical implementation for the agricultural sector happens at the local government level, even if the policies are crafted at a national level. Therefore, the government should ensure that the provinces’ agricultural strategies are aligned with the overall national policy approach of the master plan. This will need proactive communication and discussions from the national government. 

Second, the blended finance instrument is a welcome development but will not be sufficient to fund the new entrant farmers and initiatives entailed in the master plan. Social partners should work on the financial strategy to implement the plan, and the government will have to be proactive in this regard. 

The first step from the government side would be through ensuring that all provincial spending is aligned with this new plan for agricultural development. The provinces should not continue with their old spending patterns in various projects, but instead align with this new national vision. This is a discussion that could be facilitated in the government, so that appropriate policies and procedures are followed.

Another essential point that the government will have to reassess is its land reform policy. The development and expansion that the master plan calls for require private investment into the new land and partnerships. Such interventions will probably continue to be a challenge when there is no clarity on the land reform policies. Although already advanced in the National Assembly, the debate about expropriation without compensation will not serve the sector and economy well

In principle, the focus should be on securing property rights, releasing the land already in the government’s books to carefully identified beneficiaries, and continuing to pursue various instruments of accelerating land reform. Some were highlighted in the President’s Advisory Panel report on Land Reform and Agriculture.  

In sum, South Africa’s agricultural economy growth prospects are positive in the near term. Still, the long-term growth prospects depend on the pace and commitment to implementing reforms such as the Agriculture and Agro-processing Master Plan, along with various land reform suggestions in the President’s Advisory Panel report, among others. Another important area that needs the attention of all social partners is agricultural finance.

Vote for an informed choice

We’re dropping the paywall this week so that everyone can access all our stories for free, and access the information they need in the run up to the local government elections. To follow the news, sign up to our daily elections newsletter for the latest updates and analysis.

If our coverage helps inform your decision, cast your vote for an informed public and join our subscriber community. Right now, you can a full year’s access for just R510. Subscribers get access to all our best journalism, subscriber-only newsletters, events and a weekly cryptic crossword.

Wandile Sihlobo
Wandile Sihlobo is chief economist of the Agricultural Business Chamber of South Africa (Agbiz), author of Finding Common Ground: Land, Equity, and Agriculture and visiting research fellow at the University of the Witwatersrand’s School of Governance.

Related stories

WELCOME TO YOUR M&G

Already a subscriber? Sign in here

Advertising

Latest stories

Mission implausible for the DA’s man in Nkandla

Malibongwe Dubazane is contesting all 14 of the IFP-run Nkandla local municipality’s wards

Andries Tatane’s spirit will drive fight against ANC in Ficksburg

The nascent Setsoto Service Delivery Forum is confident it can remove the ‘failing ANC’ in the chronically mismanaged Free State municipality

Paddy Harper: On gleeful politicians and headless chickens

Paddy Harper doesn’t know who to vote for yet, since the Dagga Party isn’t contesting his ward, but right now what to order for lunch is a more pressing concern

Malema: ANC will use load-shedding to steal votes

While on the campaign trail in the Eastern Cape, EFF leader Julius Malema, without evidence, claimed the ANC was planning to use rolling blackouts to ‘steal votes’
Advertising

press releases

Loading latest Press Releases…
×