Farmer's Weekly (South Africa)
Agribusiness perspective: L ooking back at 2018 and ahead to 2019
As 2018 draws to a close, I think it fitting to reflect on the year and start thinking about the next one. From a very uncertain policy environment (underpinned by many issues including expropriation without compensation), a one percentage point VAT increase, depressing economic growth, low business confidence levels, fuel hikes, a weak currency exchange rate, rising unemployment levels (especially among the youth), as well as interest rate hikes, 2018 has proved to be a very difficult year for the farming community. This is also true for many other South Africans whose resilience was tested to the core.
The previous year ended on a high note from a political perspective with the election of Cyril Ramaphosa as president of the ANC in December, which resulted in his ultimately taking over as the country’s president earlier this year.
However, his election as president came with a mixed bag of political stability and great policy uncertainty and unpredictability, especially with regard to the issue of land.
As a result, South Africa witnessed confidence levels in the economy declining somewhat in recent months, which negatively effected investment sentiment, particularly in the agriculture sector.
Farmers increasingly uneasy
Throughout the year, the debate about land did little to settle the unease among farming communities as emotions became the key driving force in most of those debates. As a result, some farmers became very despondent as it became increasingly difficult to predict what will happen next.
However, one has to commend government for giving all interested South Africans, including corporates, organised agricultural and civil rights organisations, tribal groupings and individuals, the platform to voice their opinions on the subject.
The latest developments with regard to the amendment of Section 25 of the Constitution to allow for expropriation of land without compensation created further uncertainty for farmers.
Despite this, it remains crucial for farmers to continue doing what they do best, which is to produce food, and position South Africa as the breadbasket of sub-Saharan Africa.
Indeed, the Constitutional Review Committee may have agreed to amend the Constitution, but it is worth noting that in its 54th Conference Resolution Report, the ANC stated that the approach to land reform must be based on three principles, namely increased security of tenure, land restitution, and land redistribution.
It is also worth noting that both the 2018 Economic Stimulus Package and MediumTerm Budget Policy Statement made mention of the importance of the agriculture sector to ignite economic recovery.
Despite the initiatives to address the land question, restore confidence and attract investment to the sector and the economy as a whole, it is important that more be done in this regard now and going into 2019.
Land debate
Much more needs to be done to manage the debate about the land question. Politicians’ recklessness on the matter has had serious implications for how the international community views the situation. The main reason for this is that very few who speak out about the matter use reliable evidence to inform their comments, and most rely on only emotive language, which leads to the issue being misrepresented. It is thus important that the situation be better managed.
There are three key factors that will lead to the restoration of investor confidence in 2019. Firstly, South Africa must combat corruption and deal decisively with corrupt individuals in the public and private sectors. Secondly, it must provide clarity on land and property rights. Thirdly, it must facilitate the ease with which business is done.
Ramaphosa’s investment drive to attract US$100 billion (about R1,4 trillion) to the economy from foreign investment has already secured almost half of this amount in commitments. However, the three key factors mentioned will determine whether such investments will eventually flow into the economy. Ratings agencies will also be looking very closely at how the country addresses these factors.