WHAT’S NEEDED TO KICK-START AGRICULTURAL ECONOMY – JOHN PURCHASE

THE agricultural sector provided a significant boost to the economy last year, helping to prevent a protracted technical recession.

This followed exceptional early rainfall that resulted in record maize (17.4 million metric tons) and soybean (1.3m metric tons) crops, among others, and despite severe drought in the Western Cape.

But agricultural output is highly volatile over seasons and largely dependent on favourable conditions.

This year the now-disastrous drought in the Western Cape will have a negative impact on the sector’s growth rate as the province contributes about 20% to the country’s agricultural economy.

Severe drought has returned over large areas of the summer rainfall region, especially over the important crop areas of the Free State and

North West.

This does not augur well for the growth of the sector and could put pressure on the country’s growth rate.

The second major factor that will determine investment and growth in the sector is the current lack of policy certainty.

Late last year a high-level panel, chaired by former president Kgalema Motlanthe, released a report on the assessment of key legislation and acceleration of fundamental change.

This 600-page report clearly outlines many of the policy problem areas in the agricultural sector and provides recommendations as to how these should be addressed.

These recommendations should, by and large, be implemented as a matter of urgency. This would drastically improve confidence in the sector and stimulate investment, growth and development. Unfortunately, land reform remains an issue of great discontent and uncertainty, and this needs to be addressed.

The recent ANC policy adoption of “expropriation without compensation”, albeit subject to certain caveats and a sustainability test, has just worsened the policy uncertainty situation.

Purchase is chief executive officer of Agbiz.