The food and farm reforms needed to counter COVID-19 disruptions

Due to agriculture being declared an essential service during the COVID-19 outbreak, it should not suffer the same level of trade disruptions as other sectors. However, according to Dr Sifiso Ntombela, chief economist at the National Agricultural Marketin

For every South African, surviving the coronavirus disease (COVID-19) pandemic is the only agenda item in the short term. COVID-19 is affecting every part of our society, including the country’s health, education, social and economic systems, thus threatening all livelihoods.

Within the agricultural fraternity, there is growing uncertainty about how the COVID-19 crisis will affect the structure of the sector and whether distribution of food will remain normal. Despite South Africa being a net exporter of agricultural products, about 14,8 million of its citizens go to bed hungry every day, which weakens the capacity of their immune systems to cope with COVID-19.

The disease has placed the importance of saving human lives at the centre of toplevel decision-making in the country.

Farmers and farmworkers, who produce food, have received essential recognition status similar to that of health practitioners, indicating a renewed interest in the sustainability and inclusivity of food production, processing and distribution in South Africa.

THE TIPPING POINT?

It is worth noting that South Africa’s agriculture sector was already constrained prior to the outbreak of the disease due to a series of droughts, low inclusivity caused by high barriers to entry, biosecurity problems, rising input costs as a result of the weakening local currency, and a deteriorating market, processing and research infrastructure, amongst other aspects. Due to these factors, agriculture’s long-term (the past 13 years) growth rate has averaged 1,7% per annum, compared with 2,3% in the overall economy. Of even more concern, over the medium term (the past five years), the sector’s growth rate has averaged -1,3% per annum, which is lower than the 0,8% per annum achieved by the overall economy. This suggests that agriculture was almost at the tipping point even before the COVID-19 crisis happened.

Moreover, the level of imports for poultry, sugar and other products was increasing, constraining the ability of local producers to expand and supply local demand.

THE IMPACT ON AGRICULTURE

The agriculture sector is unlikely to be as hard hit by the COVID-19 shutdown as other sectors of South Africa’s economy. This is mainly because food production has been allowed to continue (the production of wool, mohair and cotton has not continued). In the short term, it is safe to say that the domestic food supply is secure, at least for the next 12 months. However, because essential imported products, such as wheat, rice, palm oil and poultry have relatively large global stock availability, they may be affected if the global lockdown continues for long. The lockdown could affect logistics and result in key trading partners instituting export bans on the aforementioned products. South Africa is 100% dependent on imported rice and palm oil; 50% dependent on imported wheat; and to a lesser extent dependent on poultry and oilcake.

INCLUSIVE AGRI PARTNERSHIPS WILL BE NEEDED AFTER THE COVID-19 CRISIS

A NEW EQUILIBRIUM

To re-imagine a new agricultural equilibrium, one needs to understand how the agricultural labour market, trade flows, technology and innovation will be affected after the COVID-19 crisis. The South African lockdown has effectively choked off the mobility of the informal labour force, leading to widespread losses of jobs and incomes for the poor. The fruit industry, the greatest job creating industry within the sector, relies on the availability of seasonal workers for harvesting, pruning and canopy management of orchards and vineyards.

The availability of labour could be a challenge in the coming months, as it will depend to a large extent on how rapidly medical researchers manage to find a vaccine for COVID-19. The long-term impact would be a shift towards the adoption by farmers of labour-saving technology. Fifteen years ago, for example, it was inconceivable to replace humans with machines to pick fruit because of the sensitivity of the produce

and its susceptibility to mechanical damage. Humans were the only option. Today, thanks to advances in technology and artificial intelligence, machines can ‘learn’ on their own how to pick, grade and pack fruit.

Players in the sector have become accustomed to free trade and relatively protected information over the past two decades. With the COVID-19 outbreak, the priority of saving human lives over making profits has come to the fore, and is likely to inspire the rationale of fair trade over free trade. Regulations may increasingly force traders to first satisfy domestic demand before generating foreign earnings through exports.

Moreover, after the COVID-19 lockdown, consumers are likely to minimise their travelling and physical interaction, which could affect the traditional purchasing of food. Virtual markets and factory-tohousehold distribution of food could significantly increase in the medium term.

Lastly, funding could favour farmers and agribusinesses that produce food items deemed critical for food security.

This includes grain, oilseeds, vegetables and animal products that form part of the typical food basket.

REQUIRED REFORMS

In the short term, reforms are needed to save farmers, agribusinesses and jobs, thus ensuring ready access to affordable food for all South Africans. In the medium to long terms, inclusive partnerships need to be forged to develop underutilised land for production growth, revitalise irrigation schemes, assist farmers with affordable capital, and invest in research and technology development.

After taking all the relevant facts into account, the writers of the 1995 White Paper on Agriculture envisioned a sector that was highly efficient, economically viable and market-directed, characterised by a wide range of farm sizes and types. To date, most reforms proposed by the White Paper have not been implemented and they remain critical to achieve a new equilibrium in the agriculture sector post the COVID-19 crisis.