Fix critical issues to ensure agricultural growth – BFAP

If the agricultural sector wants to stay in its growth trajectory, it will have to address a number of critical issues, warned BFAP. Also, there are many lessons to be learned from the Covid-19 pandemic

Not to be Missed

- Advertisement -

Addressing poor infrastructure, inefficient service delivery and ineffective biosecurity management are key to sustained growth in South Africa’s agricultural sector.

This is the view of Dr Tracy Davids, commodity markets and foresight manager at the Bureau for Food and Agricultural Policy (BFAP).

Davids highlighted these shortcomings at a recent webinar hosted by Nedbank. She believes addressing these issues would prove crucial in keeping the country’s agricultural sector on its current growth trajectory.

Last year, agriculture was the standout performer.

Primary agriculture’s contribution to the gross domestic product (GDP) is 2%, while agro-processing adds another 3% to GDP.

Combined, the two sectors employ 10% of the working population, while producing a whopping US$4,4 billion in international trade surplus for 2020.

Agricultural growth: Dr Tracy Davids, BFAP’s commodity markets and foresight manager. Photo: Supplied/Food For Mzansi
Dr Tracy Davids, BFAP’s commodity markets and foresight manager. Photo: Supplied/Food For Mzansi

Reflecting on highlights of 2020, Davids said that horticultural crops had the strongest growth due to robust production volumes, high global prices and a weak rand.

- Advertisement -

“Citrus, particularly, has shown solid growth, with soft citrus export volumes growing by 257% from 2011 to 2020, and lemons and limes up by 180% over the same period,” Davids pointed out.

Dominating South Africa’s agricultural exports, she pointed to horticulture to highlight that exports were the primary driver of expansion in the sector.

“We are expecting more than 100% growth in macadamias (197%), avocados (123%) and oranges (106%) by 2030,” said Davids.

ALSO READ: Lack of inclusivity curbing agricultural growth – Sihlobo

Consumer spending power

Meanwhile, with the South African consumer spending power constrained and real income per capita only reaching 2019 levels by 2025, Davids explained this had a significant impact on consumption levels in 2020, especially on beef and mutton.

These are the most expensive and therefore most sensitive to weaker spending power.

According to her, the ability of farming businesses to generate earnings declined in 2021 due to high feed prices, and livestock is a major driver of demand for field crops.

She highlighted that the country’s livestock and field crop sectors, in contrast, remain predominantly reliant on domestic markets, although beef exports grew in recent years.

“Rapid growth certainly won’t be handed to us, but there are many actions that can be taken to accelerate it.”

Davids cautioned that although current high prices were being driven by import demand from China, smaller crop yields than expected in the US and dry weather in the Black Sea region, input costs continue to rise over time.

This is largely due to South Africa being a net importer of key inputs like fuel and fertiliser, which are affected by higher oil prices, a weaker exchange rate and global supply dynamics.

Looking forward, Davids said that while agriculture had a bumper year last year, it is a volatile sector due to its biological nature of production and susceptibility to external environments.

“There is a strong upward trend, but baseline growth is generally quite muted in this time of economic recovery and a generally weak consumer environment.

“The question we should be asking is how we boost the sector: rapid growth certainly won’t be handed to us, but there are many actions that can be taken to accelerate it,” Davids said.

ALSO READ: Livestock decline: Why you’re paying more for meat

New export markets

On this note, she stressed that the agricultural and food value chain is highly complex and Mzansi needs to be globally competitive while introducing new entrants successfully in a capital-intensive production system.

Davids said, “Inclusivity is critical, but so are growth and competitiveness, and we need to continue building globally competitive value chains to supply affordable food products to an increasingly urbanised consumer base.”

Key to this is accelerating access to new export markets, improving protocols and securing preferential trade agreements. However, unfavourable trade agreements, lack market access or tough protocols are blocking South Africa’s export growth.

 “Some 45% of South Africa’s agricultural export foreign revenue is derived from the mature markets of Europe and the UK, so there is limited opportunity for additional volumes in these markets.”

There is significant opportunity in markets in the East, but due to these issues, little can be done at this point.

Concerns around biosecurity

In addition to this, there is a need for massive infrastructure development and improved efficiency to optimise logistics and manage growing volumes.

“[This] while weather changes and climate change make it vital to expand and maintain our water infrastructure and ensure sustainability of our natural resources and land.

“And with increasing concerns around biosecurity, South Africa needs more effective management of animal and plant health.”

She added that efficient service delivery in terms of water, electricity, municipal services and safety is essential to improve competitiveness across the entire value chain.

This, while comprehensive and customised farmer support and financing from both the public and private sector, will result in productivity gains.

Davids believes that the Covid-19 lockdown illustrated how underestimated the role of the informal sector in primary agricultural production is.

This, she believes solidifies how important the agriculture and agroprocessing master plan (AAMP) is for the sector. Also, it paves the way for future agricultural growth.

During a recent study by BFAP, the calculated the impact the AAMP could have on poultry production by 2030.

“We found that gross value product (GVP) could be R4,2 billion above baseline projections for primary production, with 5 660 jobs created and 22 665 livelihoods improved, while black farmer output share could increase from 4% in 2019 to 15% in 2030,” Davids concluded.

ALSO: Didiza lauds strides made in agriculture master plan

- Advertisement -
- Advertisement -

Latest Articles

Some Flava

More Stories Like This

- Advertisement -