Wandile Sihlobo: Dagga belt could bring high returns for horticulture

Wandile Sihlobo
Wandile Sihlobo

This morning I will participate in a roundtable discussion in East London, organised by the Provincial Department of Rural Development and Agrarian Reform. My focus area will be to provide a brief update on South Africa’s agricultural economy, with a key focus on the role that the Eastern Cape can potentially play going forward, particularly from a job creation perspective.

For context, South Africa has about 842 000 people working in the agricultural sector (the Eastern Cape accounts for an 11% share). About two-thirds of South Africa’s agricultural jobs are in the field crop and horticultural industries. Employment in these subsectors has slightly increased over the recent past, particularly horticulture.

Prioritise horticulture

Meanwhile, other subsectors saw a marginal decline. This tells us that if we are to see an increase in agricultural employment, horticulture will have to be a priority (the rise of technology is not an immediate threat to jobs in this subsector due to its nature of production and harvesting – it's labour-intensive).

Given the presence of underutilised land and water, there is a need to focus on communal land. The Eastern Cape will be one of the focus areas for agricultural expansion and growth in the South African agricultural sector over the coming years.

Invest in underutilised land

A few things that are needed to achieve this are to bring underutilised land in communal areas and land reform farms into commercial production, expand irrigation systems, identify and support agricultural expansion in areas that have a high potential for growth and employment.

This will require investment and strong and efficient institutions.

Take a long, hard look at cannabis

Among many things that I will present on, I will throw to the discussion ‘cannabis’ to get a sense of the province’s senior government leaders’ thinking about the prospects of doing a formal study on this crop and its potential economic benefits in the province.

You will remember that about two months back the Constitutional Court ruled that the private use of marijuana is now legal.

Notwithstanding the potential unintended consequences, and the fact that legislation is still required to outline the conditions under which it could be commercially produced, I think there should be some research on the possibilities of legalising marijuana for international trade purposes.

Eastern Cape ideal?

I saw this long list of cannabis companies that are specialising in all range of issues, and it struck me that the Eastern Cape, specifically the former Transkei area, has the right terrain and climate for cannabis production.

This is according to the research paper presented by Stellenbosch University’s agricultural economist Heinrich Gerwel at the 2018 Agricultural Economics Association of South Africa’s Annual Conference in Somerset West in September 2018.

Key markets for cannabis

Gerwel points out that about four States in the United States - Alaska, Colorado, Oregon and Washington - have legalised cannabis for personal use, followed by California legalising recreational use as of 1 January 2018.

These could be key markets for South Africa, in addition to other destinations where it has been legalised for medicinal purposes.

The Eastern Cape’s 'dagga-belt' has a high level of unemployment, and an abundance of underutilised land.

In the quest to explore high-value crops (no pun intended), I think we shouldn’t leave dagga behind.

In fact, there should be discussions with the medicinal companies about prospects of breeding the right varieties of dagga that are needed in the market, and systems to train farmers to produce such products.

Legalisation will allow the development and use of specific controls to ensure produce safety, whereas no such guarantees exist in the black-market trade.

Instead of being associated with negative connotations – the dagga belt should be formalised for production to export markets!

Wandile Sihlobois an agricultural economist and head of agribusiness research at the Agricultural Business Chamber of South Africa (Agbiz). Follow him on Twitter: @WandileSihlobo

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
I'm not really directly affected
18% - 1636 votes
I am taking a hit, but should be able to recover in the next year
23% - 2145 votes
My finances have been devastated
34% - 3204 votes
It's still too early to know what the full effect will be
25% - 2326 votes