PLANT THE CROPS
Our abundant agricultural land and production ability should motivate us for agroprocessing
Agriculture, Fisheries and Forestry Minister Senzeni Zokwana has urged farmers and investors in the agricultural sector to use and plant crops on all available arable land to prevent the call by the Economic Freedom Fighters (EFF) for illegal land invasions. Addressing more than 600 industry specialists attending the recent two-day African Agri Investment Indaba in Cape Town, Zokwana said: “Let’s not fear what the EFF is saying. Any piece of land that is meant for agriculture, let’s use it. Let’s plant on all available arable land to prevent them [the EFF] from invading.”
He said about 65% of South Africa’s population was urban, which is projected to reach 71.3% by 2030 and nearly 80% by 2050. Feeding this burgeoning population is a challenge.
“We hope our potential investors will see this as a perfect opportunity to invest in agriculture, and associated upstream and downstream industries,” he said, adding that it was sad to note that Africa spent about R340 billion annually on food imports alone, and most African countries continued to be exporters of raw materials and net importers of value-added products.
“Our natural resource base in the form of abundant agricultural land, combined with our tested ability to produce primary products, should be a leading motive for us to initiate an industrialisation programme through the promotion of downstream agroprocessing industries,” Zokwana said.
In his keynote address, former finance minister Nhlanhla Nene, who is now a resident adviser at Thebe Investment Corporation and a nonexecutive board member at Allan Gray, referred to the World Bank review of South Africa’s agricultural sector published just before the 1994 democratic election.
The review had found that large-scale producers had been able to generate substantial volumes of output, achieving national food self-sufficiency for most commodities. It also found that the agricultural sector was, and to some extent continued to be, characterised by significant policy distortions that have resulted in less than optimal levels of efficiency in many parts of the sector, average farm sizes were too large, and ownership of rural assets, most notably land, was highly skewed.
“This performance, combined with the active suppression of black farming, meant that the agricultural sector had underperformed in terms of its contribution to national income, exports and employment creation,” Nene said.
He also said the National Development Plan identified agroprocessing as a potential driver of economic growth, job creation and increased exports, and an opportunity for the creation and growth of small and medium-sized businesses.
It also identified obstacles; historically high levels of concentration in agricultural value chains; high and increasing levels of vertical integration between agriculture and agroprocessing; access to infrastructure – specifically irrigation and farming equipment; and lack of access to consumer markets.
Among other insights Nene pointed out were that finance remained a critical challenge for new and blackowned businesses, while alternative sources of funding that have emerged from settlements by the Competition Commission, for example, have facilitated entry into agricultural value chains.
“These funds had less stringent requirements, allowing greater flexibility to take a risk on new entrants. Increased competition means some new entrants will fail. The volatility in commodity prices and key variables such as the exchange rate also require support to ride out shocks,” he said.
Asked about US president-elect Donald Trump and what his victory and policies meant for Africa and particularly the African Growth and Opportunity Act (Agoa), he said the agreements are signed and sealed, and were supposed to be honoured, while Zokwana said some of Trump’s policies might not work in real politics.
Western Cape Minister of Economic Opportunities Alan Winde said what was worrying was Trump’s view of Africa. However, “Agoa is a concern because of his views, but it’s a signed deal”.
Asked whether the Western Cape farm workers’ strike in 2011 and talk of farmers embarking on mechanisation had led to job losses, he said mechanisation led to the loss of about 65 000 jobs in the sector. This compares with the total South Africa agricultural jobs today of 196 000.
In his keynote, Winde said foreign direct investment flows into Africa’s agricultural, forestry and fisheries sector reached more than $200 million in 2014 and projections showed the upward trend is set to continue.
On the EFF call for illegal land invasion, he said the party was specifically “a flashing light to us”.
“We haven’t found a solution to land reform in the province. We need to up our game. We have to find a solution within the market space.”
Wesgro chief executive Tim Harris said that the fundamentals of agriculture remained strong in the Western Cape.
Harris said that the Western Cape agricultural industry could create 100 000 jobs in a few years and the EFF call for illegal land grabs had not had any impact on investors flocking to the province.
“The best way to deal with populist policies is to make them less popular,” said Harris.