Markets, logistics, finance, trust. These are South African farmers’ biggest worries, according to leading agricultural economist Wandile Sihlobo. There are solutions – or at least starting points – for all of them, but it will take commitment and effort from both the government and private sector to move the needle in the right direction.
“One theme that comes up time and again … is the need for the diversification of the export markets to non-traditional regions while retaining the sector’s foothold in key markets such as the European Union,” Sihlobo writes on his personal blog this week.
He says this is even more urgent considering that farmers consistently produce more while the local market cannot absorb all of it – the country already exports half of its produce, in value terms.
Where can South Africa send its food? Japan, China, India, Saudi Arabia, Bangladesh, the Philippines and South Korea, says Sihlobo. “Recent [non-tariff barriers] from the EU and China, two of the largest export destinations currently, highlight the importance of diversifying destination markets,” Sihlobo says, and adds that it is not a job for the private sector or organised agriculture alone.
“The government should work hand in hand with industry stakeholders in creating a ‘South Africa Inc.’ plan for widening exports.
“The building blocks for such a plan are already in the agriculture and agro-processing master plan. Still, given the urgency of this matter, South Africa needs a dedicated working group that will champion the expansion of the country’s agriculture exports and work towards servicing the existing markets to avoid challenges such as the constraints faced by the citrus industry in the EU or wool in China.”
What is being done on infrastructure?
Not much is improving in terms of South Africa’s infrastructure woes, says Sihlobo, specifically on the state of the roads network.
He finds it heartening that agri role players regularly talk to Transnet about the efficiency of South Africa’s ports. And Transnet has been open to engagements on – and has been effective in resolving – challenges such as rebuilding the port of Durban following the destructive floods of April this year.
“Going forward, private sector role players want to explore possibilities of better partnerships in the various nodes of the ports, which could help improve efficiencies, not only for agriculture but a range of industries such as mining and automobile, amongst others.”
Do farmers have access to money?
Top of many farmers’ mind is agricultural finance, specifically the department of agriculture, land reform and rural development’s blended finance programme and the Land Bank, which could support both new and commercial farmers.
“This area will require increased focus during phase two of implementing the agriculture and agro-processing master plan,” Sihlobo says. “The blended finance instrument should include all agribusinesses and financial institutions in the sector.
At the same time, government should support the reform of … the Land Bank. The goal should be to build agricultural finance instruments that help grow the agriculture and agribusiness sectors of ‘South Africa Inc.’.”
Trust has eroded
Sihlobo further writes that trust, accountability, monitoring, and evaluation are all key to building credibility.
“This is trust amongst the sector role players and with government. The first step in building trust will be to deliver on promises.”
He believes officials can take the lead by implementing the reforms of the master plan, particularly those that don’t require capital spending but legislative amendments.
“These could be aspects of the Agricultural Product Standards Act 119 of 1990 (around the thorny issue of assignees that the industry does not desire or view as adding value to the sector) and … the modernisation of the Fertilisers, Farm Feeds, Seeds and Remedies Act 36 of 1947 (there is already work underway, which could be accelerated).”
Some key suggestions
He reiterates some points he had made in 2021 that could put South Africa on the path to finding solutions:
What government could do:
- Implement regulatory interventions that require less capital and provide consistent updates to social partners.
- Reprioritise the budget in line with the master plan, to signal government’s commitment to the plan’s success.
- Support state entities such as Transnet.
- Work closely with Treasury to resolve the Land Bank’s financial challenges.
- Intensify efforts to open more export markets for South African agriculture.
- Release land in the government’s hands to new beneficiaries with long-term tradable land rights or title deeds.
- Root out corruption at various levels within the department.
What should the private sector do?
- Build trust and a unanimous voice amongst farmer organisations and agribusiness.
- Boost collaborative efforts to rebuild South Africa and expand the farming and agribusiness sector, possibly through partnerships with new farmers in development programmes of commodity groups.
- Showcase and expand successful partnership programmes.
“These are not exhaustive,” says Sihlobo, but adds that he believes these interventions could start to turn ideas on paper into tangible projects that could contribute to the growth and job creation in South African agriculture.
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