AGRIBUSI­NESS DOSSIER

…is what South Africa’s black farm­ers are striv­ing for af­ter decades of in­equal­ity in the agribusi­ness sec­tor. Land re­form is high on the po­lit­i­cal agenda, and un­equal ac­cess to fi­nanc­ing and in­puts must also be ad­dressed

The Africa Report - - EDITORIAL - By CRYS­TAL ORDERSON in Cape Town

A level play­ing field is what South Africa’s black farm­ers are striv­ing for af­ter decades of in­equal­ity

Is­mael Mo­tala de­scribes him­self as a po­lit­i­cal ac­tivist who thought he had left pol­i­tics be­hind for the tran­quil­lity of be­ing a farmer. A self-con­fessed cor­po­rate an­i­mal who lived and breathed busi­ness for years, he opted to leave the fast lane for the farm­ing world. Mo­tala traded the hus­tle of Jo­han­nes­burg for the serene beauty of the pic­turesque Wolse­ley in the Western Cape. Mo­tala ex­plains: “I farm a mix of pears, peaches and plums and have a 57ha farm. I still owe money to the Land Bank, but that is an­other story,” he tells The Africa Report. Mo­tala’s dream is to have a slice of the lu­cra­tive agribusi­ness sec­tor. But he says be­ing a black farmer in the Western Cape makes this a mere “pipe dream”.

“I thought I will give up ac­tivism and start farm­ing, but I am an ac­tivist again.” Mo­tala is the Western Cape chair of the African Farm­ers’ As­so­ci­a­tion of South Africa. He says that mem­bers com­plain of ex­clu­sion in the

agribusi­ness sec­tor on a daily ba­sis. He now won­ders if there will ever be a rad­i­cal trans­for­ma­tion of the sec­tor.

The left­ist Eco­nomic Free­dom Fight­ers have been push­ing land re­form – and the idea of land ex­pro­pri­a­tion with­out com­pen­sa­tion – high up the po­lit­i­cal agenda, forc­ing the African National Congress (ANC) gov­ern­ment to en­gage more with the idea of rad­i­cal change in terms of land own­er­ship and agri­cul­ture. The ANC won the 8 May national elec­tions with a slim­mer ma­jor­ity, and many vot­ers are calling for quick ac­tion to im­prove the econ­omy and to re­dress the his­tor­i­cal hang­overs from apartheid on the own­er­ship of land and control of the agribusi­ness sec­tor.

In the face of alarmist pre­dic­tions that land re­form will mean the col­lapse of the bank­ing and agribusi­ness sec­tors, the ANC and Pres­i­dent Cyril Ramaphosa have been at pains to say that land re­form will be done in an or­derly way: with no land grabs or dis­rup­tions to food security. But un­til the gov­ern­ment de­vel­ops de­tailed pro­pos­als, the long-term im­pact of re­dis­tri­bu­tion will not be clear.

The drag of un­cer­tainty

An­nel­ize Crosby, head of land af­fairs at in­dus­try lobby Agri SA, tells The Africa Report: “In­vest­ment re­quires pol­icy cer­tainty, and the de­bate around land re­form – and par­tic­u­larly threats of ex­pro­pri­a­tion with­out com­pen­sa­tion or at low lev­els of com­pen­sa­tion – cre­ates mas­sive un­cer­tainty in the agri­cul­tural sec­tor.” She says it’s hard to quan­tify to what ex­tent the cur­rent de­bate has hin­dered growth, but “we do be­lieve that it has def­i­nitely had a neg­a­tive im­pact.”

In ad­di­tion, while some crops like cit­rus and nuts are doing quite well, the agri­cul­tural sec­tor in South Africa is re­cov­er­ing from a chal­leng­ing two years. The most dev­as­tat­ing drought since the early 1990s took some farm­ers out of busi­ness and left others un­der enor­mous fi­nan­cial con­straints.

One thing that both sides of the heated cur­rent de­bate agree on is that dis­tribut­ing land more fairly on its own will not lead to an agri­cul­tural revo­lu­tion. South Africa needs bet­ter ex­ten­sion ser­vices to help small­hold­ers. Emerg­ing black farm­ers will never be able to ri­val the white-con­trolled agribusi­ness giants like ZZ2 (see box) with­out ac­cess to fi­nanc­ing, for ex­am­ple.

About 55% of South Africa’s fresh pro­duce ex­ports are from Western Cape. Mo­tala says the “value chain of agribusi­ness and the agri-econ­omy is zero trans­formed, and there is very lit­tle in­ten­tion to take a rad­i­cal stand to­wards trans­form­ing the sec­tor and open­ing up space for new and black farm­ers.”

Wandile Sihlobe, head of agribusi­ness re­search at the Agri­cul­tural Busi­ness Cham­ber (ABC), tells The Africa Report: “Agro-pro­cess­ing is grow­ing, and it can be in­creased if we boost agri­cul­ture on the pri­mary side. That is what Pres­i­dent Cyril Ramaphosa sees as a job cre­ator, and this is go­ing to be ex­cit­ing to ex­plore.”

Agri SA’S Pi­et­man Roos presents a bright pic­ture of in­no­va­tion amongst the top com­mer­cial farm­ing com­pa­nies: “South African farm­ers have been an early adopter of new tech­nol­ogy,” says Roos. The ABC’S Sihlobo adds that the South African mar­kets are highly so­phis­ti­cated and practices are com­pa­ra­ble to what farm­ers are doing in Aus­tralia, the US and Europe. “A farm in Iowa in the US is us­ing the same technologi­es as a farmer in SA – the amount of in­vest­ment in the sec­tor is high and farm­ers are open to new knowl­edge and grow and be com­pet­i­tive.”

But for black farm­ers like Mo­tala, there are some se­ri­ous pol­icy is­sues that have to be dealt with to en­sure black farm­ers are part of the dis­cus­sion and the fu­ture of agribusi­ness.

His­tor­i­cal priv­i­lege

Mo­tala and Xo­lile Ngqa­meni of the Eastern Cape Farm­ers’ As­so­ci­a­tion (ECFA) say that farm­ers like them are be­ing ig­nored, and de­nied ac­cess to fi­nanc­ing and mar­kets that their big­ger com­peti­tors have.

Ngqa­meni has been a farmer for the past 20 years and farms on the banks of the Keiskamma River in the Eastern Cape. “The means of production are still in­clined to be for those who are his­tor­i­cally priv­i­leged. The de­vel­op­ing farmer – like us black and African farm­ers – is not com­ing into the sys­tem be­cause they need to be sup­ported to be an active player in the sec­tor.”

Agri­cul­tural econ­o­mist Sihlobo says there are other com­plex prob­lems: “The is­sue is not that they were ex­cluded. It boils down to the is­sue of land. The re­al­ity is that you get black farm­ers that are farm­ing on com­mu­nal land and they are not go­ing to have in­vest­ment and can­not pro­duce volume.” He says South Africa needs to ad­dress the is­sue of com­mu­nal land rights “so that farm­ers have trad­able value of their land.”

Ngqa­meni says that for many of the EFCA’S mem­bers, un­cer­tainty over com­mu­nal lands makes them “shiver” and they are calling on the new gov­ern­ment to deal with the is­sue of land ten­ure.

Crit­ics of the gov­ern­ment say it has un­der­funded agri­cul­tural

pro­grammes and failed to come up with ways to de­velop the sec­tor be­yond huge com­mer­cial farms.

Ben Cousins, a pro­fes­sor at the Univer­sity of Western Cape and a prom­i­nent voice in the land re­form de­bate, wrote last year: ‘The South African en­vi­ron­ment re­mains largely un­favourable to small-scale farm­ers who face con­strained ac­cess to in­puts, fi­nance, ir­ri­ga­tion and wa­ter in­fra­struc­ture, rel­e­vant re­search, ex­ten­sion ad­vice, trans­port and mar­kets. The dom­i­nant think­ing on agri­cul­ture is one-sided and bi­ased to­wards the large-scale com­mer­cial model.’

Ngqa­meni echoes this: “There’s still much to be done to sup­port black farm­ers to be active play­ers in the agribusi­ness sec­tor […]. We want to see the lev­el­ling of the play­ing fields to have ac­cess to mar­kets. It is the big play­ers that have ac­cess to the mar­ket.”

Fi­nance is key for emerg­ing black farm­ers to flour­ish and get a foothold in the sec­tor, but banks are “nowhere to be seen” ac­cord­ing to Mo­tala. He is par­tic­u­larly an­gry at the state-owned Land and Agri­cul­tural Devel­op­ment Bank of South Africa, which was set up in 1912. “The Land Bank must be shut down. It is not there for us, it doesn’t help any of our people. One can ex­pect other com­mer­cial banks to run and shy away from us but when the Land Bank ig­nores you – well it’s a se­ri­ous prob­lem for us as African farm­ers,” he says.

The Land Bank’s Syd­ney Soundy re­futes Mo­tala’s anal­y­sis. He says the Land Bank is al­ways look­ing for op­por­tu­ni­ties to bring new play­ers into the sec­tor, es­pe­cially black emerg­ing farm­ers. “We are bring­ing new entrants into the mar­ket, es­pe­cially black com­mer­cial farm­ers, and also as­sist­ing ex­ist­ing com­mer­cial farm­ers in their busi­ness.”

Ac­knowl­edg­ing that cur­rent fund­ing mod­els are not chang­ing the sit­u­a­tion on the ground, the gov­ern­ment launched a new blended fi­nance ini­tia­tive with the Land Bank and the depart­ment of agri­cul­ture, forestry and fish­eries (DAFF). It in­cludes loans and grants to strengthen the Black Pro­ducer Com­mer­cial­i­sa­tion Pro­gramme.

Soundy says the “grant fa­cil­ity en­ables the bank to com­ple­ment its loan fa­cil­i­ties with grant fund­ing from DAFF which, amongst others, pro­vides the black pro­duc­ers with ac­cess to eq­uity […] in or­der to sus­tain­ably en­ter the agri­cul­ture, forestry and fish­eries sec­tors.”

It is still in its pi­lot pe­riod, and the depart­ment of ru­ral devel­op­ment and land re­form has made an ini­tial com­mit­ment of R800m ($55.5m).

Soundy ar­gues that if land re­dis­tri­bu­tion is prop­erly ex­e­cuted,

“it can af­ford more op­por­tu­ni­ties in the agribusi­ness sec­tor. You can­not look at it in a neg­a­tive way.”

But for farm­ers like Mo­tala the ques­tion is: will Ramaphosa go far enough? “Our pres­i­dent’s heart is in the right place, but does he have the po­lit­i­cal will to shake the econ­omy? I am not con­vinced. We are told the agri­cul­tural sec­tor will be desta­bilised if you have land ex­pro­pri­a­tion, but I say it has to hap­pen.”

DUBES SONEGO/SHUT­TER­STOCK

Small-scale black farm­ers can­not com­pete with huge mar­ket­gar­den­ing out­fits like this one in Dur­ban

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