South Africa currently imports more than 80 percent of its annual fertilizer usage and over 90 percent of its agrochemicals. File photo.
South Africa currently imports more than 80 percent of its annual fertilizer usage and over 90 percent of its agrochemicals. File photo.

Agbiz’s Wandile Sihlobo dismisses perceptions of a decline in the number of farmers in South Africa

By Given Majola Time of article published Sep 14, 2021

Share this article:

THE Agricultural Business Chamber(Agbiz) says that rising input costs means that economies of scale will continue being a dominant feature in the South African farming sector.

The country’s local agribusinesses association’s chief economist, Wandile Sihlobo, said South Africa currently imported more than 80 percent of its annual fertilizer usage, and over 90 percent of its agrochemicals.

“These input costs are a challenge for all farmers, but more so for smaller farming units. Still, to remain competitive, the farmers have to adjust their production and marketing strategies to cope in this environment,” said Sihlobo.

It was for this reason that the sector saw consolidation into larger farming units after the deregulation of agricultural products marketing in 1997/98.

“It is, however, so that these farming units largely expanded ‘vertically’ through investments in the value chain, and through productivity growth and intensification (production under cover, irrigation, etc.). The extent of horizontal consolidation of small farms into larger units is limited to a small number of farming units with the majority growing through internal growth and investments,” he said.

The consolidation had come as a way of farmers attempting to thrive on the economies of scale as they compete with global players in the agricultural and food markets.

“It is for this reason that there is often a misleading statement that says ‘the number of South African farmers is declining’. However, the fact is that farmers are not necessarily “declining” but instead, farming units have consolidated to take advantage of the efficiencies provided by scale. Even then, there are still many small family farms that sustain the food system in rural South Africa,” said Sihlobo.

Stats SA Census of Commercial Agriculture 2017 Report released in March last year, showed that a total of 40 122 farms/ farming units were involved in the commercial agriculture industry in 2017. The largest proportion were in livestock farming followed by mixed farming and field crops.

The province with the highest number of farms in 2017 was the Free State followed by the Western Cape, the North West and the Northern Cape. The provinces with the lowest number of farms in 2017 were Gauteng, Mpumalanga and Limpopo. This was down from the more than 57 000 in the agricultural census of 1993.

Agbiz said that the agricultural census of 2017 presented an incomplete picture as it only reported on farming units that were registered for VAT. Sihlobo said the 1993 census was a more comprehensive survey and included all bona fide commercial farms but excluded farming enterprises in the former homelands.

However, most of these farming units were considered small enterprises, with most earning a gross farm income of below half a million rands. Sihlobo said this created the further confusion where it was argued that all commercial farms were large agribusiness firms.

“The reality, however, is that almost 90 percent of all VAT registered commercial farming businesses are classified as micro or small-scale enterprises and with the rest not eligible for VAT registration. This implies that most farms in South Africa are small-scale.”

Sihlobo said the notion of smallholders, in reality all survivalist firms, was also entering the debate on the reform of food systems. He said the relatively large number of small family farms were crucial for sustaining the informal food value chains in rural South Africa and supplementing incomes, but would have to be connected to commercial supply chains where aggregation, packaging and other systems would be critical.

[email protected]

BUSINESS REPORT ONLINE

Share this article: