Our abun­dant agri­cul­tural land and pro­duc­tion abil­ity should mo­ti­vate us for agro­pro­cess­ing

CityPress - - Business - PETER LUHANGA busi­ness@city­

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.

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