Panel agrees agriculture can only grow through impactful collaboration

Marleny Arnoldi | Creamer Media

With the South African agriculture sector not enjoying the same level of State support as many of the countries it is expected to compete with globally, it is vital that agribusinesses at least be enabled to operate and support one another, a panel of speakers have agreed.

The speakers participated in chemicals group Omnia’s first-ever industry dialogue at the Gordan Institute of Business Science (GIBS), in Gauteng, earlier this week. The dialogue unpacked many of the current challenges faced by the agriculture industry.

At a global level, Omnia CEO Seelan Gobalsamy said, the agriculture sector was plagued by climate change and its impact on rain patterns and extreme weather events; persistent supply chain disruption, which was in large part owing to the ongoing conflict in Ukraine and climate change to a certain extent, particularly when extreme weather events impact on logistics; and the need to use resources more efficiently through technology.

At a continental level, Bloomberg reporter and panel moderator Janice Kew stated that 18 sub-Saharan African countries were engaged in armed conflict in 2021, which impacted greatly on food security and ability to trade, while the continent also experienced a 24% spike in food prices over 2020 to 2022.

Between 42% and 60% of household spend on the continent was on food, compared with 8% in the UK and 6% in the US, she cited. This was largely owing to the high cost of food and reliance on imports.

Additionally, many countries within Africa were net importers of produce or food products, all this while the population in Africa was set to account for 50% of the global ten-billion population by 2050, who all need to be fed, added economist and GIBS research associate Francois Fouche.

He said food demand would only be met by investing in technology and that Africa’s young population could be harnessed for skills development. Fouche believes African countries can solve many of their challenges through collaboration with each other.

Omnia agriculture MD Mandla Mpofu agreed, elaborating that much of the global impacts on agriculture could be mitigated at local level by investing in technology and local production capacity, with fertiliser as an example.

He believes the equaliser for competitiveness globally is innovation. “Tools to make farms more resource efficient and productive are available, but access is an issue. The key is making these solutions accessible to all.”

Fouche continued that African countries needed to work together to develop markets and increase intra-regional trade, since, for example, South Africa still had limited market access in China and India owing to non-tariff barriers, despite being counterparts in the Brazil, Russia, India, China and South Africa (Brics) bloc.

Fouche questioned what benefits South Africa was really getting out of Brics, since market access challenges remained prevalent, and why South Africa would continue affiliating with Russia despite it being responsible for a major hike in fertiliser prices, among other atrocities.

During the Brics Summit, which was held in Johannesburg this week, it was announced that China would become more lenient with its import bans and practices relating to certain commodities from South Africa, including beef and avocados.

The problems with regional collaboration in Africa, however, Fouche pointed out, related to non-tariff barriers that were not addressed by the African Continental Free Trade Agreement, including the ability to get goods to port, the cost to cross the border and the fact that it was often physically easier and cheaper to trade internationally.

Farmer and CEO of agribusiness Green Terrace Mbali Nwoko agreed with Fouche’s point about collaboration, emphasising the importance of partnerships in the agriculture industry, especially in the midst of high input prices, such as fertiliser, fuel and electricity costs.

Her organisation, through partnerships and collaboration, had helped to mentor and equip more than 2 000 farmers in the Eastern Cape with the necessary means to farm maize on a small, but profitable scale, which she said was what the industry needed more of, if small-scale farmers were to reach commercial levels of operation and be more competitive.

Industry body Agri SA executive director Christo van der Rheede shared the same sentiment, saying that farmers had taken transformation efforts into their own hands to a large extent, in lieu of inadequate support and guidance from government.

He mentioned that the National Treasury’s budget was not aligned with the expected growth agenda for the agriculture sector. Owing to social development taking the lion’s share of the R2.3-trillion national budget, less than R1-billion ended up in the pockets of small-scale farmers every year, which is “certainly not sufficient to spur meaningful economic development”.

Van der Rheede believes South Africa has a financing problem that needs a shift in focus towards the future, to become an ecologically advanced economy with more beneficiation and processing. He mentioned that South Africa’s economic complexity – relating to the level of processed products – had been declining owing to lack of skills and mounting industry pressures.

For example, he cited South Korea having grown its gross domestic product by an average of 4.9% a year over the period 1988 to 2022 and lifting many of its people out of poverty, by having aggressively financed innovation and technology development alongside the World Bank.

Similarly, Van der Rheede also noted that Thailand had a plethora of small businesses, indicating the country’s success in mobilising people economically.

Van der Rheede and Nwoko said agriculture had long been organising itself while national policy still splattered in all directions, and not in favour of the farmer, or agribusiness.

Fouche agreed, adding that the agricultural sector, like many others, was overregulated, with most policies not achieving their intended outcomes.

Nwoko highlighted that alliances in the agriculture industry were enabling more efficient businesses, while organisations such as Green Terrace were taking it upon themselves to assist in growing rural farmers.

She mentioned that South Africa could only ever be competitive against a country such as Japan through alliances with other countries or with various businesses. Nwoko explained that Japanese farmers receive State subsidies to the effect that they can farm on government-owned land, with full solar operations, quick permitting processes and at very low interest rates.

Despite industry’s best efforts to organise itself and take public infrastructure development into their own hands in many cases, Nwoko said powerful people with vested interests often jeopardised or sabotaged the private sector’s efforts to this effect, which she argued must be dealt with more decisively by government officials.

Van Der Rheede concluded that businesses must continue to blaze a path for themselves and focus on economic mobilisation of people. He urged stakeholders to “not wait for government” and assist in getting more people to work for themselves.

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