AGRI SA’S OMRI VAN ZYL ON THE STATE OF FARM­ING

With re­gard to sus­tained eco­nomic per­for­mance, so­cial de­vel­op­ment and job cre­ation, the agri­cul­tural sec­tor is one of SA’s big­gest as­sets. The new CEO of Agri SA, Omri van Zyl, dis­cusses the po­si­tion the sec­tor finds it­self in.

Finweek English Edition - - FRONT PAGE - By Jac­ques Claassen

since Omri van Zyl took over the reins at Agri SA in De­cem­ber l ast year, the or­gan­i­sa­tion’s com­mu­ni­ca­tions strat­egy i s vir­tu­ally on steroids. In ad­di­tion to a new web­site and the use of so­cial me­dia across the whole avail­able spec­trum, a brand­ing and value-propo­si­tion strat­egy has been de­vel­oped to re­de­fine the agri­cul­tural sec­tor lo­cally and in­ter­na­tion­ally. Ac­cord­ing to Van Zyl, a le­gal ea­gle who worked at Deloitte for 15 years, a South African farmer is far more than a guy on a trac­tor; South Africa’s ap­prox­i­mately 35 000 com­mer­cial farm­ers, 250 000 small-scale farm­ers and 2.5m sub­sis­tence farm­ers make an ex­tremely im­por­tant con­tri­bu­tion to the wealth of the country.

In fact, the sec­tor’s con­tri­bu­tion to the GDP is ap­prox­i­mately 20% if agri­cul­ture’s to­tal value chain is taken into ac­count. In pri­mary pro­duc­tion alone, the sec­tor em­ploys about 850 000 work­ers. I n ad­di­tion, the sec­tor ex­ports about 40% of its pro­duc­tion to other African coun­tries and sat­is­fies 61% of the South­ern African re­gion’s food re­quire­ments. In this re­gard, agri­cul­ture ex­ploits the op­por­tu­ni­ties be­ing cre­ated by the ever- i ncreas­ing foot­print of l ocal su­per­mar­ket groups in the rest of Africa and the grow­ing de­mand for food.

SA agri­cul­ture is the re­gion’s bread bas­ket

In the three years prior to Van Zyl be­ing ap­pointed at Agri SA, he was the head of Deloitte’s Africa Agribusi­ness Unit. Some of the most im­por­tant top­ics that he worked on, dealt with, among oth­ers, key fac­tors in or­der to de­velop agri­cul­tural op­por­tu­ni­ties in Africa; the man­age­ment of agribusi­nesses’ risk ac­counts; and food se­cu­rity.

Ac­cord­ing t o Van Zyl, t he l ocal agri­cul­tural sec­tor is cur­rently de­vel­op­ing at t he s ame t ech­no­log­i­cal r ate as in­ter­na­tion­ally and the busi­ness dy­nam­ics of South Africa’s com­mer­cial farm­ing units are con­stantly im­prov­ing.

The world is in­creas­ingly look­ing to Africa given the fact that the pro­vi­sion of food, wa­ter and en­ergy is be­com­ing in­creas­ingly im­por­tant in the global econ­omy, in­clud­ing Africa. As in the case of South Amer­ica, Africa has more land than could cur­rently be used for food pro­duc­tion, and in ad­di­tion it’s closer to the ma­jor world mar­kets than South Amer­ica.

“And South Africa is by far still the eas­i­est spring­board for in­ter­na­tional in­vestors who want to en­ter the agri­cul­tural sec­tor in Africa, and SA also has the most de­vel­oped

agri­cul­tural sec­tor on the con­ti­nent,” says Van Zyl. When asked how healthy lo­cal agri­cul­ture is, Van Zyl points out that:

The num­ber of com­mer­cial farm­ers dropped sharply from 61 000 in 1996 to the cur­rent 35 000;

Agri­cul­tural pro­duc­tion has nev­er­the­less in­creased thanks to con­tin­ued mod­erni­sa­tion; South Africa’s net farm­ing in­come has in fact in­creased ex­po­nen­tially since the dereg­u­la­tion of agri­cul­tural mar­ket­ing about 20 years ago to R75.188bn at the end of 2014. He ex­pects that con­sol­i­da­tion in agri­cul­ture will con­tinue and that SA will prob­a­bly have only about 20 000 farm­ers in 10 years’ time. The tremen­dous neg­a­tive eco­nomic im­pact of the drought in vast ar­eas across the country could even speed up this con­sol­i­da­tion.

“Given the pop­u­la­tion growth, and cur­rent weak eco­nomic growth, th­ese two fac­tors’ in­fla­tion­ary ef­fect on one an­other and the need to bal­ance sup­ply and de­mand, we must again get food pro­duc­tion on the same level as be­fore the drought. We must in fact even try to in­crease agri­cul­tural pro­duc­tion. Over the medium to longer term, this will be cru­cially im­por­tant,” says Van Zyl.

Farm­ers look to the fu­ture

“South Africa’s farm­ers are nowa­days far more so­phis­ti­cated. De­spite our di­verse mem­ber­ship, which ranges from aqua­cul­ture to game pro­duc­ers, there are many com­mon­al­i­ties,” says Van Zyl. “Nev­er­the­less, ev­ery farmer ex­pects i nfor­ma­tion that i s ap­pli­ca­ble to his spe­cific busi­ness and they all want to have some­thing to say as well. Our mem­bers are highly fo­cused on the country’s fu­ture and on an in­clu­sive sec­tor. They are or­gan­ised in more than a thou­sand farm­ers’ as­so­ci­a­tions of which a num­ber are vir­tual.”

Van Zyl re­gards agri­cul­ture as one of the ma­jor i nvest­ment bases for the econ­omy that of­fers many op­por­tu­ni­ties for bl a c k e mpower ment . “S o me o f govern­ment’s pro­posed land re­form plans are, how­ever, un­fea­si­ble.”

He reck­ons that agri­cul­ture re­quires pol­icy cer­tainty so that farm­ers can con­tinue in­vest­ing in their farms, and the sec­tor [also] re­quires ex­ter­nal cap­i­tal in­vest­ments.

“It has be­come nec­es­sary to be­gin to sub­sti­tute the po­lit­i­cally charged land de­bate with job cre­ation and eco­nomic growth. Agri SA is cur­rently in talks with govern­ment re­gard­ing a joint ven­ture part­ner­ship plan. If govern­ment were able to de­clare agri­cul­ture a strate­gic in­dus­try and treat it as such, as it did with Eskom, the sec­tor could mean so much more for South Africa.”

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