SA Graan December 2018

ISSN 1814-1676

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tydskrif gepubliseer word, word hiermee uitdruklik voorbe-

hou ingevolge die bepalings van Artikel 12(7) van die Wet

op Outeursreg Nr. 98 van 1978 en enige wysigings daarvan.

Chrismari van der Westhuizen van

Loeriesfontein was die 2017 Graan SA/

Sasol fotokompetisiewenner met dié foto

van haar van Mischa Batt met die hanslam

wat die tema “Plaasnostalgie” ten beste

uitgebeeld het. Kyk gerus op bladsy 44 na

die nuwe tema vir 2019: #LiefBoerdery.

Voorblad

Cover

Desember 2018

RELEVANT

MMATLOUKALABA,

lecturer inAgriculturalEconomics,

University ofPretoria

POLITICAL

analysis

South Africa’s struggling agricultural

sector:

What went wrong 20 years ago

outh Africa’s decision to play by the global rules of free

trade post-1994 put the country’s agricultural sector in a

difficult position.While itwas expected to compete against

the best in theworld, the support that could have helped it,

was taken away.

At the same time, the countries it was competing against were

extremely supportive of the sector – sometimes asmuch as three

timesmore. Thismeant that new black farmersmissed out on the

opportunity to catch up with farmers who had been supported

previously. Beyond that, there was the problem of land reform

whichneeded tobeaddressedwithoutputting the spiritof reconcili-

ation aswell asproductivity at risk.

South Africa has limited agricultural potential and produces at a

relatively high cost to attain the same unit of output asmost coun-

tries in the world. It is classified as a semi-arid area,meaning its

rainfall is low and erratic.The countryhas an average annual rainfall

of less than 500mm compared to the global average of 860mm.

Only 12% of its 1,2million square kilometres is suitable for agricul-

turaluse.

Political imperatives

Although the agricultural sectorhad toprovide food, thenewdemo-

cratic government also needed it to address political challenges re-

lated to rural development, social and political issues. The focus at

the time was on transforming the sector to achieve these political

goals rather than toprepare forglobal competition.

Looking at land ownership, this is understandable.More than 80%

ofagricultural landwasownedbywhite commercial farmers,yet the

white population constituted about 13% of the country.Addressing

theunequaland raciallyskewed landdistributionwouldalsocontrib-

ute toovercoming the socioeconomic challenges the country faced.

These included unemployment, income inequality, food insecurity,

poverty andmalnutrition.

Possibly the biggest of them all is unemployment, which has re-

mained atmore than 20% in this 20-yearperiod.Themajorityof the

unemployed is unskilled or have low skills and are affected by low

and poor levels of education. The agricultural andmining sectors

absorb themajority.

Employment in the sector has declined substantially over time.

In the 1970s agriculture used to employ over 2million people on

farmsalone,oraboutaquarterof theemployed.By2014, fewer than

700 000were employedon farms, less than 5%of the employed.

Tracing the problem

Within a year of the democratic government coming into power, it

had to accede to theWorld TradeOrganisation (WTO). Thismeant

that SouthAfrica entered into an agreement that exposed its econ-

omy to global competition and had to play by global rules, both at

home and internationally.

Other agreements were signed with the European Union (EU) and

southernAfrican countries.Some are stillbeingnegotiated.

The direction taken by the new government was contrary to the

stance adopted by the apartheid governmentwhich protected and

supported white South African businesses. The agricultural sec-

tor was a beneficiary through various forms of support. This in-

cluded direct subsidies or through institutions such as commodity

boards. The boardswere responsible for regulating and supporting

commodities through price setting, inputs, throughput and final

products.

But the supportwas aburden to thenational fiscus.To reduce costs

the new government got rid of the boards. The governmentwould

nothavemanaged to finance 60 000white commercial farmersonly

– therewere an estimated 3million smallholder farmerswhodidnot

receive support from the pre-democratic government. To balance

the scales, itwasmore convenient to removemost of the support

than to expand it.

The consequences

Two decisions – accession to theWTO and deregulation – put the

sector in a verydifficultposition. In termsof job creation, the sector

hasperformedpoorly. Inaddition, itscontribution togrossdomestic

product (GDP)has shrunk to less than3%ofGDP from4,6% in1994.

Land redistribution has also not succeeded. Only 7,5% of the land

targeted for black people has been transferred. The problem with

this failure is that it has led to radical proposals that could lead to

outcomes similar to those experienced in Zimbabwe. Government

December 2018

contribution to research and development and an intensive exten-

sion servicehas also increasinglydeclined.The research anddevel-

opment (R&D)gaphasbeenpartly filledby theprivate sector.

While international market access has improved and there is evi-

denceofglobalcompetitiveness,domesticcompetitionhasbecome

much tougher. Examples of this include the influx of poultry prod-

ucts, frozenpotato chips, and increasingwheat imports.

Hectares planted towheat are now one-third ofwhat theywere in

the late 1980s. This is because it is cheaper to importwheat than to

grow it. The same is true for cotton. In the early 1990s,more than

100000haused tobeplanted for cotton.Nowonlyone-tenthof that

isplanted,because cheaperproducts canbe imported.

Some positive outcomes

Despite the limited agricultural potential and resource scarcity,

South Africa has managed to make substantial improvements in

many areas. It remains one of the main exporters of agricultural

products to themost lucrativemarkets in the developed world. It

exports citrus,wool, avocados and nuts to theUS and horticultural

products,wine and tea to theEU.

South Africa has also found newmarkets. Its biggest trading part-

ners are now in Africa, overtaking the EUwhich used to dominate

most facetsof trade.

There has also beenmore diversification in terms of products such

as soybeans. These are in high demand globally and investment is

increasing to support production. Production has been increased

with the use of fewer hectares due to technology adoption and the

plantingofgeneticallymodifiedorganisms.

Government played an instrumental role by opening up markets,

creating the environment and adjusting policies to allow the private

sector to take advantage of opportunities. It also opened upmarket

accessbeyondwhatwas requiredby theWTO.

Policy concerns

Some of the contributors to the sector’s poor performance have

beenpolicy implementationand thepanic thesehavecausedamong

farmers.Land reform isonepolicyarea thatwillneed tobedesigned

and implementedbetter.

There are other government programmeswhichwere pursuedwith

the aim of transforming the sector, but the implementation, evalua-

tion andmonitoring have been very poor. Support of smallholders

andblack farmerswas inadequate andwaswithoutmentorship.

Technology transfer/adoption and extension services were either

poor or non-existent inmany areas.And some national policies are

nothelpful to farmers tocompete inglobal termsbecause thecusto-

dians are separategovernmentdepartments.

Even if these issueswereaddressed,SouthAfricawill remainahigh-

costproducer,whichpresents itsown setof challenges.

This article was first published on 27 July 2015 on

The Conversa-

tion

– an online publication.Visit:

http://theconversation.com/south

-africas-struggling-agricultural-sector-what-went-wrong-20-years-

ago-45171

Saadmaatskappy vier

60STE JAAR

in bedryf

annar, as oudste saadmaatskappy in die land, het onlangs

’n historiesemylpaalmet die viering van sy 60ste verjaars-

dag behaal. Híérdie trots Suid-Afrikaanse maatskappy kan

daarop roem dat hy oor ses dekades, sedert die stigting in

1958 op Greytown in KwaZulu-Natal, tot ’n hoogs gerespekteerde

internasionale landbou-ondernemingontwikkelhet.

As die grootste saadgroep in Afrika, besit Pannar vandag ’n

voetspoor in agt Afrika-lande en saad word regoor die kontinent

bemark. “Ditkanonderandere toegeskryfwordaandiekernwaardes

waarop diemaatskappy se besigheidsbeginsels rus,” hetmnr Nick

Goble (kommersiëlebestuurder,Pannar)gesê. “Metdieontwikkeling

van Pannar se wetenskaplike en volhoubare oplossings vir ons

kliënte is die veiligheid en gesondheid van al ons rolspelers nog

altyd voorop gestel. Dit loop hand aan handmet ons doelwitte vir

omgewingsbewaring en ons strewe om altyd professioneel en eties

op te tree.”

Corteva Agriscience™, die landbou-afdeling van DowDuPont en

Pannar Saad se moedermaatskappy, het in die afgelope twee

jaar R100 miljoen in ’n Afrika-streekstegnologiesentrum belê om

produkontwikkeling van verskeie gewasse vir produsente in Afrika

te versnel.

MARIËTTACRONJÉ,

SAGraan/Grain

medewerker

Pannarhethom tydens sy 60ste verjaarsdagvieringweer eens verbind

totdie lewering van saadwatdeur innoverende teeltegniekeontwik-

kel is enwatwyd virplaaslike suksesgetoets is.Bydiegeleentheid

was:Pierre FlyeSainteMarie (vise-president,Corteva [Europa,Afrika,

Midde-Ooste]),PrabdeepBajwa (kommersiële leier,Corteva [Afrika,

Midde-Ooste]),TonyEsmeraldo (kommersiële leier,Corteva [Suid-

Afrika]),NickGoble, JohnOdendaal (nasionalebemarkingsbestuurder,

Pannar) enDavid Lambie (uitvoerbestuurder,Pannar).

RELEVANT

AKTUEEL

RELEVANT

36 Political analysis:

South Africa’s struggling agricultural sector:

What went wrong 20 years ago

Saadmaatskappy vier 60ste jaar in bedryf

Persoonlike ontwikkeling kan help om die land te genees

Exporting of grains and oilseeds: The 101 of market access

Grondhervorming die spil van Agri SA Kongres

44 Grain SA/Sasol photo competition

: It’s time to capture those

#LoveFarming moments

Heffing om telers te vergoed

RUBRIEKE

FEATURES

Graan SA Standpunt:

Beeld van ’n beter toekoms

Grain SA Point of View:

Image of a better future

Uit die Woord

47 Wiele vir die plaas:

Luukse 4x4-bakkie

Padindrukke: Isuzu KB 300 LX D-Teq 4x4-dubbelkajuit

48 E-posse:

Ta’ Rose