Systemic weeds need clearing if agriculture is to flourish
• Open the way for land reform and job creation plans by tackling existing farming issues
Arecent family holiday in northern KwaZuluNatal made it clear to me that if the government wants land redistribution and transformation in the agricultural sector to work, it is going to have to address systemic problems that have been undermining agricultural communities for years.
The decay I saw in the small farming communities of Darnall, Nyoni and Gingindlovu is not the result of who owns the land or even who farms the land, but of global trends and domestic policy that have over decades undermined a sector that should be the core of our economy.
The most obvious of these is a trend towards bigger farms, and with that a decrease in the number of farmers. With it comes a hollowing out of the small towns they used to support, and the lifestyle that was once appealing but is no longer.
According to data from Absa AgriBusiness, the number of commercial farmers in SA dropped from about 128,000 in 1980 to 58,000 in 1997. Since then the numbers have fallen further, with the most recent research suggesting there are only about 30,000 commercial farmers left in SA.
The rapid decline in the number of commercial farmers since 1994 is largely the result of trade liberalisation and deregulation of the agricultural sector.
Although well intentioned, the consequence was that farmers had to compete on a global stage with multinational farming conglomerates that operated on a scale few local farmers could match. In these conditions it is unsurprising that farmers who could take advantage of economies of scale have prospered, and that we have seen increased concentration within the sector.
Similarly, the deregulation and opening up of our markets meant there were opportunities for foreign-owned agricultural players to invest or buy into SA. This of itself is not a bad thing, but if the goal of agricultural policy is land redistribution and the transformation of the agricultural sector, it hasn’t had the desired effect.
Over the same time, commercial agriculture has made huge efficiency gains and overall outputs have increased. From a consumer perspective, this shift has been largely beneficial, but it has also contributed to increased concentration in the sector. The result is that a handful of farms are responsible for the lion’s share of production and receive the bulk of agricultural income.
This is by no means a phenomenon unique to SA. Around the world there has been a marked increase in market concentration across the agricultural value chain. For example, three companies control about half of the global agrochemical market: Bayer, Syngenta and BASF.
According to figures produced by the late agricultural economist Frikkie Liebenberg, about 1% of commercial farmers — about 300 — take home over a third of total agricultural GDP in SA. Again, this wouldn’t necessarily be a terrible thing, except large-scale commercial farms are generally more capital and less labour intensive, and fewer suppliers mean farmers become price takers for both inputs and outputs.
The effects of this were plain to see in the farming communities I visited: farm stores and repair shops had closed and worker accommodation that was serviceable two years ago was empty and vandalised. Farmhouses had been stripped, land lay fallow and nearby resort towns were more derelict than faded glory.
One farmer friend we visited had sold his farm to a large conglomerate. He stayed on to manage the farm and the new owners agreed to keep on his staff, but their pay was reduced to minimum wage, in line with the rest of the business.
With the new owner’s substantial capital behind him the farmer was able to do things on the farm he would not have been able to afford — build a new holding dam and buy new centre pivot irrigation systems, new diggers and tractors. All of this would increase the farm’s yield in the long run, but it was fairly clear that this was not a net positive for the community.
The brutal truth is that in SA agricultural input costs are high and farmers are price takers in a global commodity market.
To give you an idea, more than 80% of fertilisers and agrichemicals are imported — as is most large machinery — which means farmers are especially vulnerable to currency volatility, let alone the unpredictable weather. To make ends meet in this environment farmers have to achieve higher yields, and often the only way to do this is through economies of scale.
The result is that for many farmers, farming has become more of a commercial proposition than a lifestyle option. With fewer farmers the local towns have become hollowed out, amplifying another global trend — urbanisation. Sons and daughters who would previously have taken over a family farm and stayed in their communities would now rather sell the farms and move to the big city.
So where do we go to from here? If the ANC is serious about land redistribution and largescale job creation in agriculture it needs to address the existing problems before trying to introduce completely new policy.
It is clear that there is a shift away from small-scale commercial farming in SA, whatever the race of the farmer, so land redistribution as it is currently envisaged will not solve this.
Agriculture has the potential to play a key role in addressing the crisis of unemployment and inequality but it will require extensive policy work.
The government’s National Development Plan had bold plans to create 1-million jobs in agriculture and related industries over the next two decades, but no concrete policy changes to support this have been realised.
I sincerely hope those at the sharp end of policy making take the time to visit rural farming communities and ask the people who live in them what would make their lives better.
THE BRUTAL TRUTH IS AGRICULTURAL INPUT COSTS ARE HIGH AND FARMERS ARE PRICE TAKERS IN A GLOBAL COMMODITY MARKET