Government cannot rely on outsourcing the transformation and development of the agricultural sector to farmer associations and allow public institutions to deteriorate further, says Sifiso Ntombela.
The period between 1995 and 1996 is considered a defining moment that shaped and rebranded the South Africa’s agricultural economy as we know it today.
It was during this period that the then newly elected democratic government took a decision to remove state subsidies for farmers and also stopped the regulation of food prices. Essentially, the government repositioned agriculture to become an integral part of the global farming community.
These decisions were meant to force all farmers to adopt principles of market competitiveness and sustainability with a minimum support or interference from the state. One unintended consequence of these early reforms was the perpetual exclusion of black farmers in formal agricultural economy.
Till today approximately 9% of total agricultural output is produced by black farmers despite the existence of land reform, the Land Bank and a comprehensive agricultural support programme designed to bridge the developmental gap between black and white farmers in the country.
Because of market deregulation, South African farmers gained access to new export markets in Europe, Asia and Americas creating a demand-led investment drive.
Capital invested in agriculture grew by 21% between 1995 and 1996 and continued at an annual growth rate of 17% between year 2000 to 2008. Most of this capital was channelled to fixed farm improvements and purchasing of farm tractors and machinery.
Interestingly, despite large investments in farm machinery and technologies, farm employment was kept relatively high, dropping slightly from the 1 million agricultural jobs recorded in 1993 to an average of 865 000 jobs we still witness to date. This can be attributed to a shift into high-value and labour-intensive commodities like fruits, nuts, wine, vegetables, wool and others.
One factor worth crediting for the success of agriculture over the past two decades is the reorganisation of farmers (mainly white) into private commodity associations. After the fall of marketing control boards in 1997, farmers grouped themselves into commodity associations, and resumed some of the functions that were performed by then market control boards during the apartheid era.
Specifically, the new farmer associations started collecting industry data, conducting technical research, driving market development and determining the rate of, and collecting statutory levies. Parallel to the rise of farmer associations is the downfall of state institutions that supposed to service the sector.
For example, institutional challenges at the Land Bank encouraged farmer associations to develop their own funding tools such as the HortFin in the fruit and wine industries. The concerns of operational inefficiencies and low budget allocation to the Agricultural Research Council (ARC) and Onderstepoort Biological Products (OBP) have inspired farmer associations to establish their own research houses to produce new varieties, animal vaccines and private product standards.
Effectively, these developments imply that black farmers are facing new barriers to entry in agriculture.
The privatisation of generic agricultural services such building soil and plant testing facilities, collecting market data and producing crop varieties all increases the cost of farming, which most black farmers cannot afford. Without government support and intervention, the exclusion in agriculture is fast shifting from racial discrimination of the apartheid times to class exclusion we are witnessing today.
Noticing a need to achieve an inclusive growth, the private farmer associations have initiated a variety of programmes some in partnership with government to drive transformation. Unfortunately, these efforts have yielded limited success because the output from black farmers remain negligible at the sector level.
Ironically, the government continues to heavily rely on partnerships with farmer associations to transform the sector and less focus or vigor is given to restoring technical capacity, operational efficiency and funding constrains to State Owned Institutions such as the ARC, OBP, Land Bank, National Agricultural Marketing Council (NAMC) and state departments.
While partnerships with private farmer associations are necessary and must be upscaled to sustain growth and competitiveness in the sector, equally, the transformation and development of the sector must be accelerated.
With the ruling government party preparing for its policy conference that will likely shape and affect the state policies in the next administration, it is crucial that the existing modalities and partnerships meant to drive inclusive growth in the sector are reviewed to bring in fresh and progressive ideas.
Some of the question to attended during the review process include: Are private farmer associations the ideal model to drive meaningful transformation, given the potential competition and conflicting interests in the market? Is the transformation progress achieved to date through partnerships with private farmer associations justifies the amount government has spent?
Does government still see the ARC, OBP, NAMC and Land Bank as central institutions to drive transformation and development of the sector? Should these state’s institutions be recapacitated or government should rather pursue deeper partnerships with private farmer associations and agribusinesses?
These are essential questions that government must answer to boost confidence, inclusivity and suitability in the sector.
Clarity on some of these questions will also neutralise some of radical calls or proposals that risk destabilising the agricultural economy.
Sifiso Ntombela (PhD) is the chief economist at the National Agricultural Marketing Council (NAMC) and the Research Fellow at WITS School of Governance. Contact him via email at: email@example.com and follow him Twitter: @Ntombela_SM. Views are his own.