A government-led, single-market system to procure exclusively from black farmers could promote local food systems, argues agricultural economist Malapane Thamaga. He serves as one of minister Thoko Didiza’s representatives on the Maize Trust.
The idea of strengthening local food systems has taken centre stage since the Covid-19 outbreak in 2020 with some emphasising that it promotes food security and food sovereignty, as well as the consumption of less processed and healthier diets.
The Food and Agriculture Organisation (FAO) defines food security as a situation whereby “all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food which meets their dietary needs and food preferences for an active and healthy life”.
In contrast, food sovereignty speaks to a situation whereby communities have the power to democratically manage their productive food system resources such as land, water, and seeds, and to engage in trade on their own terms rather than being subjected to speculation through international commodity markets. Promotion of strengthened food systems aligns with the concept of food sovereignty and, by extension, sustainable production.
Deregulation in South Africa
When you engage academic writings in the agricultural economics field in South Africa, you often come across the emphasis that the deregulation of agricultural markets through the Marketing of Agricultural Produce Act of 1996 (MAP Act) has resulted in the dismantling of single-market channels to embrace the free-market system.
The assumption for the adoption of this policy was that it will help farmers drive for efficient ways to produce and be globally competitive. Indeed, this was achieved for commercial farmers, however, the same cannot be said about emerging farmers.
Similarly, the academic writings emphasise that the “South African agricultural sector remains dualistic, made up of successful white commercial farmers and struggling black smallholder farmers”.
Unfortunately, the policy reforms adopted by the new democratic government since 1994 have failed to develop black farmers and close this dualistic gap.
For far too long the focus has been on production support to empower black farmers through a number of tools, namely Recap, Casp, AgriBEE, Ilima Letsema, Mafisa, Sefa, IDC and the Land Bank to some extent. All of these tools have not yielded impactful results as was envisaged. To this end, the contribution of black farmers in the mainstream economy of the country remains minimal (if not negligible) with exceptions in cattle production.
There have also been some efforts to develop black industrialists by supporting participants in the agro-processing sector. However, the linkage between black-owned input suppliers, primary producers and agro-processors continues to be lacking as input suppliers struggle to enter an already concentrated market while agro-processors lack the needed throughput to even break even.
‘The invisible hand’
This has led to a closure of black-owned abattoirs, pack houses, feedlots, feed mixing facilities, millers, etc. The failure may be attributed to the free-market system as it assumes that the “invisible hand” will do the work. Unfortunately, it tends to favour big corporations more than local food producers due to economies of scale.
The free-market system is based on the classical economic theory which states that efficient and optimal conditions can be reached with markets and that consumers are sovereign. It further reaffirms that there are gains from trade by specialising in goods for which one is an efficient low-cost provider, having a comparative advantage. Therefore, there is no need for government intervention and hence the emphasis on the invisible hand.
All of these can only hold under a perfectly competitive market, among others. However, there is a high concentration of big firms or monopolies, hence the market failures. There thus is a case for government intervention to rectify these market failures.
It is safe to say that production-oriented support alone has not yielded adequate results in uplifting emerging farmers and strengthening local food systems. Accordingly, it is about time to explore other ways through which black farmers may be supported.
A market-first approach
One such method is by pulling the value chain rather than pushing it, through market-oriented support.
Government continues to be the biggest procurer of agricultural produce for school feeding, prisons, hospitals, SANDF, SASSA, etc. Yet black farmers are not benefiting from these markets. Government alone procures food and food-oriented services to the value of R10 billion annually.
Perhaps an introduction of a government-driven, single-market channel exclusively to empower black farmers, whereby farmers are given quotas to produce specific quantities for this market at a subsidised price, may be a way to go.
After all, the Marketing of Agricultural Produce Act of 1996 provides for this instrument in the form of a pooling system. In addition, the Preferential Procurement Policy (2005) provides a basis for the enforcement of such a policy.
Similarly, the department of social development, through the South African Social Security Service, may issue a portion of its grant as vouchers exclusively to purchase from local black farmers. Technology advancement must be exploited to link the beneficiary’s physical address with the registered producers in their area. In this way, government will be promoting food sovereignty and food security, and strengthening local food systems.
Malapane Thamaga is an agricultural economist and ministerial representative on the Maize Trust.
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