BREAKING: AGDA to channel R25 billion investment into SA agriculture

Collaboration between government and private sector promises sustainable, corruption-free support for small and large-scale farmers

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The Agriculture Development Agency (AGDA), which was officially launched moments ago, is set to change the face of South African agriculture through investments worth R25 billion over the next decade.

Malcolm Ferguson, a former ambassador and AGDA board member, said the agency believes that, based on their research, it is able to provide sustainable finance to very large numbers of farmers, including smallholder and newly commercialising farmers. He said, “We believe this is possible working in conjunction with development funding institutions, such as the International Finance Corporation (which is the World Bank’s private sector arm) and the European Investment Bank.”

The agency’s primary focus will be on what it describes as smallholder and micro-farmers as well as “newly commercialising farmers”. It will also support existing commercial farmers and “super commercial farmers”.

AGDA was spearheaded by, amongst others, Dr Johan van Zyl, the CEO and president of Toyota in Europe, and local businessman Roelf Meyer, who was chief negotiator for the National Party government when the country transitioned to democracy.

Didiza welcomes collaboration with private sector

Thoko Didiza, the minister of agriculture, land reform and rural development, addressed the attendees at Africa Agri Tech, via a pre-recorded message. The conference, where the AGDA launch was the first item on the programme, is currently underway at the Sun Arena at Times Square, Pretoria.

Didiza praised AGDA as “yet another initiative where the private sector is engaged in the agricultural development in our country”. This follows a call by President Cyril Ramaphosa to the industry and communities in general to work with government in solving the challenges we are facing today with regards to our economy. It was in 2018, following the call by the president, that a number of private sector members, including agri-business and farmers, came together strategise about a joint plan with government to resolve agricultural and land reform issues.

The minister said, “We, as government, would like to welcome this initiative, appreciating, of course, that it is an addition to a variety of structures that are there in the form of organised agriculture in South Africa in the many facets at national level. Organised agricultural organisations, like AFASA, AgriSA, TLU and many others which are in the provinces and regions.
“These instruments are important for the betterment of the sector. AGDA has also brought in a some of these organisations as well as individuals in the financial sector in the agri-business to actually work together to find a way in which they individually and collectively can partner with government on the issues of agriculture and land reform.”
The agency is supported by many leader farmers, including the chairperson of the Sernick Group, Nick Serfontein, and cattle farmer Aggrey Mahanjana, group managing director of the National Emergent Red Meat Producers’ Organisation (Nerpo).

Malcolm Ferguson, a former ambassador and AGDA board member.

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Speaking to Food For Mzansi, Ferguson said: “It is ambitious to say that AGDA is South Africa’s last hope, but this is probably true. I don’t think there is a full sense of realisation – especially among white folks – about the seriousness of the land question for the future of South Africa.”

Ferguson worked in the Middle East for 17 years – as former ambassador to Israel and South Africa’s first representative to Palestine, and also as chief director for the department of international relations and cooperation.

‘Land symbolic of great divide between black and white’

Ferguson believes South Africa now faces “two gigantic routes, both impacting severely on confidence in the country”. The first is the state of parastatals, such as Eskom, “which messed up the country’s financial status”, and the other is the land question.

He said, “The severely racially skewed character of land ownership in South Africa – which is probably the most living, abiding symbol of an apartheid past – also symbolises the great divide between black and white. We have got to change the state of land ownership, which is a noble promise from the Constitution. If we don’t, we are awaiting a future we don’t want.”

Agda believes it can positively impact job creation at farm level and throughout the agricultural value chain.

Through a combined effort, Ferguson said great emphasis will also be placed on sustainable food security and skills transfer to new farmers.

“The focus of the agency’s activity is to ensure that farmers, first of all, have access to the right kind of skills. Many black people, especially, might already be farming successfully, but because of our country’s past they do not necessarily have the kind of skills that can help them produce at a higher value and with greater productivity,” Ferguson said.

AGDA ‘will take pressure off the state’

Leona Archary, the former director-general: land reform and rural development and current business manager: agriculture for the Biden Group, believes AGDA will also take pressure off the state. She said, “One of the biggest challenges government is facing, specifically with land reform programmes, is support to farmers who have acquired land – not just financial support, but with technical and business skills, and assistance in getting access to markets.”

Leona Archary, business manager: agriculture at the Biden Group.

The agency will also help to root out corruption in the sector, Archary believes. “Obviously the sector is massive. We are not going to play in every space of the sector, but we will definitely take care with how the entity is governed. Money will go directly to the projects supported, so it’s not like AGDA will be housing all the money.”

Governance of AGDA will be led by a board constituted of an equal number of representatives from government and the private sector, working together to achieve the common goal of sustainable and accelerated land reform to the benefit of South Africa and all its people.

In an effort to support wealth creation for new farmers, the agency will also accelerate business management training. Ferguson said, “Government doesn’t have the ability to create successful small businesses, which is what small farmers are. Government also doesn’t have the capacity to do that. If you know what is wrong with a patient, you know what treatment is required to help them. What AGDA is going to do, is to try and drive small farmers to get things right. We will create the circumstances where these farmers are able to sell into the value-chain to build a better future for themselves and leave a legacy for their families and future.”

Ferguson believes that the same approach was followed during apartheid to create wealth for white people. “The things which have been done for whites in apartheid can be duplicated in many ways for black farmers. It is hard to make new entrants into agriculture successful, but if you can duplicate this for black farmers with a strong private sector and partnerships, we can certainly achieve it.”

Meyer, who heads up the In Transformation Initiative, said: “It is only through the pursuit of partnerships with government, focusing on a more vigorous pursuit of the noble objectives of the national land reform programme, that the market failures and imperfections in building an inclusive, dynamic and competitive agricultural sector can be overcome.”

Gloria Serobe, CEO of WipCapital

Gloria Serobe, CEO of WipCapital and also one of the leading contributors to the creation of AGDA, said: “The agency must have a well-developed social conscience and it must be institutionalised in a manner that will ensure it is always dedicated to such imperatives.”

Urgent need to address historical injustices

While Ferguson does not believe that South Africa will necessarily follow a similar path, he is mindful of the fact that many other countries have fought bitter wars about land. “When I was an ambassador, El Salvador (in Central America) fought a bloody war about the inequitable distribution of land. I don’t think South Africa will go the route of civil war, but if we don’t address injustices, you will increasingly see people who have radical and populist solutions (come to the fore), just like you’ve seen in Zimbabwe or Venezuela. We can’t afford to do that. We have got to be responsible.”

Ferguson’s warning follows the ANC’s recent proposal of a Constitutional amendment allowing expropriation of land without compensation in a move that could effectively cut out the courts and give government unlimited powers. Public submissions for comment on the amendment closed at the end of January 2020.

“Agda Is the private sector’s response to the failure of land reform in South Africa.” – MALCOLM FERGUSON

“We do, however, need to give government credit for spending a lot of money on acquiring land and the redistribution of land; to ensure that people will have land in living memory, and to restore that land to them,” he said.

According to Ferguson, AGDA is currently in conversation with, amongst others, the European Investment Bank about ways to empower small-scale and other farmers in South Africa. While this might mean greater access to funding, it will also lead to crucial partnerships to grow new farmers. “This goes far beyond simply being a bank. Essentially, we become a partner with the farmer to ensure that they achieve success.”

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