The policy agenda for growing South Africa’s agricultural sector, has been clear as far back as 2012 when the National Development Plan (NDP) was released. The NDP sketched out a number of sectors in the economy with high potential for labour-absorbing growth.
One such subsector was horticulture which, among others, had the capacity to grow and create employment along the value chain, including off-farm activity and in agro-processing.
An increase in global demand for horticulture
Seven years after the NDP was crafted, nothing has fundamentally changed with respect to the growth opportunities that horticulture presents. In fact, global demand for horticulture and protein-rich food products has increased notably over this period. With this, South Africa’s agricultural exports have also increased, amounting to US$10,6 billion in 2018, representing a 17% increase from 2012, the year of the release of the NDP.
The gains have largely been underpinned by the subsectors that were identified as potential drivers of South Africa’s agricultural economy – namely horticulture as already discussed, as well as wine, grains and wool, amongst others. But the growth in exports has not been evenly distributed from a geographic and spatial point of view. In fact, growth has been concentrated in traditionally agriculture active areas, while the former homelands have seen sporadic improvement over time.
In our field visits in the Eastern Cape last week, where we interacted mainly with new generation farmers with an objective of understanding the developments at farm level in the province. The constraints that came out repeatedly were not different from those expressed by agribusiness firms and farmers in other provinces. These included the lack of access to finance, challenges regarding land governance in the communal areas, access to water, need for farming advice (effective extension services) and poor infrastructure.
This means that if South Africa is to attain its rural economic growth and job creation ambitions, the country does not need to re-invent a new vision of creating vibrant rural economies. Rather, the focus needs to be on crafting specific strategies which seek to resolve the prevailing constraints that hinder progress, such as the aforementioned ones from Eastern Cape’s farmers.
Targeting specific bottlenecks entails more effective coordination between the established agribusinesses, farming enterprises, communities, finance institutions and government (national and local).
This approach is premised on the assumption that there is universal buy-in on the vision articulated in the NDP. However, often times, the message and vision at the national government level are not always received with the same level of enthusiasm at local government levels. Policy coordination across the different levels of government is an area which requires improvement.
Agribusinesses and farmers have in various forums expressed a willingness to collaborate with the government in growing South Africa’s agricultural sector. This willingness should be welcomed as it promises to address some of the challenges that currently exist at the farm level, such as skills transfer, access to finance and also links to market, amongst others.
There are areas where this approach has started to bear fruits. Within the Eastern Cape, the blended finance approach of the provincial government has sparked agricultural development in lands that were under-utilised for decades, and thus increasing value and creating extra jobs.
In the Free State, livestock farmers have also started collaborating with emerging black farmers with the aim to bring them into the formal market and growing the industry. The government has also supported some of the initiatives through the Jobs Fund.
A joint-venture approach
Encouragingly, this public-private partnership approach appears to be receiving more attention recently, with the National Treasury’s recent economic policy discussion paper highlighting the need for a joint-venture approach to drive development in South Africa’s agricultural sector.
This should receive increased focus in the coming months as its success would ensure that the bigger ambitions articulated in policy papers actually translate to development at farm level and communities.
The importance of broader policy questions
There are, of course, broader policy questions such as land reform policy and water rights which will need to be attended to concurrently with the other development strategies. Even these specific areas require the realisation that, in order to attract investment into agriculture, property rights are key.
Overall, the path for growth and job creation in agriculture has been clear for some time. What is needed is an increased effort in coordinating and implementing strategies and programs that address specific constraints and bottlenecks in order to unlock the sector’s growth potential. – Wandile Sihlobo, Agbiz
Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets. Click here for the full report on agri markets for the major commodities.
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