87% small growers in SA haven’t recovered from hard lockdown
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DESPITE overall favourable agricultural and weather conditions, which included good rainfall, 87 percent of small growers in South Africa have not managed to recover from last year’s hard lockdown.
This was highlighted during BeyondCOVID’s first online Making Emerging Farmers Bankable Summit on Tuesday.
BeyondCOVID co-founder Etienne van Wyk said this concerning situation was rooted in emerging farmers’ already being in a vulnerable position.
“Small growers largely rely on sidewalk food stalls and fresh produce markets, as well as direct trade with corner shops, spaza stores, other SMMEs, schools, crèches and NGOs. When we went into hard lockdown, with all the restrictions, they lost access to those markets. Because they don’t have the financial buffers large companies have, they were hit severely and are still struggling,” said Van Wyk.
According to the virtual summit, agricultural companies, particularly small ventures, have also been severely affected.
The latest edition of the BeyondCOVID Business Survey, conducted by specialist management consultancy Redflank, released in March, shows that 63 percent of commercial agricultural companies and a mere 13 percent of emerging farmers were back to their pre-pandemic operational levels.
Van Wyk said it did not help that many SMME off-takers of emerging farmers had been affected by the pandemic.
“The above-mentioned BeyondCOVID Business Survey has revealed that 54 percent of all small businesses surveyed were still operating below capacity. This impacts severely on emerging farmers, considering that SMMEs account for half their demand,” said Van Wyk.
The non-profit company, which is working to develop and enable a supportive framework for the creation of SMME opportunities for scale and employment, said that what made the above-mentioned situation bitter-sweet was that last year could have been an excellent farming year because of favourable weather conditions, sufficient rainfall, and the fact farming was an essential service.
The NPO’s chairperson, Fay Mukaddam, said the situation was a major problem, as it affected everyone.
“Emerging farmers, like other SMMEs, are important job creators, especially in rural and peri-urban areas where jobs are already scarce. When these ventures struggle, people struggle and with that the government’s social security network.”
Makaddam said the status quo also had consequences for the country’s food security levels, particularly in townships and other vulnerable areas.
“The bulk of the South African population relies on fruit, vegetables and other products produced and sold by emerging farmers, such as sidewalk stalls and fresh produce markets. If small farmers suffer, then their customers suffer, too,” Van Wyk said.
Among the proposed solutions that were discussed involved organising emerging farmers and established agriculture corporations in so-called SMME collectives. These structures were based on similar tried-and-tested enterprise development models funded by organisations such as the National Treasury’s Jobs Fund and the World Bank.
Jaques Hugo from Agriqua GWK said another major advantage for emerging farmers was that being aligned with large export corporations helped them become export-ready, allowing them to sell their products overseas.
“There is an enormous demand for quality agricultural products internationally ... At the moment, emerging farmers can’t tap into this lucrative market, because they do not have the practical and financial resources to scale, grow and improve their production and quality,” said Hugo.
Mukaddam hoped that the summit would mean a new start for South Africa’s smaller farmers and the entire agricultural sector and attract the interest of providers of development grants and affordable commercial credit, as well as local and international development funding institutions, corporate social responsibility sponsors, commercial financiers and national governments. All these institutions have a crucial contribution to make in growing the emerging-farmer community.
Meanwhile, a 2020 PwC survey found that 22 percent of business owners ranked access to funding as their biggest challenge.
Steven Heilbron, the chief executive of the Connect Group, said in a separate press release that the growth-funding landscape had changed in South Africa over the past few years, as new financial technology players had entered the market to address the financing gap.
He said many retailers were not aware that these platforms made it quick and easy for them to access opportunity capital via the internet or a mobile app.
BUSINESS REPORT ONLINE