By Sifiso Ntombela
AMONG the crucial reforms that the new democratic government undertook between 1994 and 1998 were the liberalisation of agricultural trade, the privatisation of rural finance, the removal of farm subsidies, and the deregulation of agricultural markets and inputs.
Following the reforms was the restructuring of state institutions, which led to the abolishment of Agricultural Marketing Boards and the emergence of Farmer Commodity Associations.
Farmer co-operatives were turned into agribusinesses while the Land Bank slowly lost its market share in the agricultural financing space, giving rise to commercial banks. The closure of the Agricultural Credit Board and the Land Bank’s weakened ability to provide credit to small-scale and subsistence farmers are perhaps the most important reforms that ensured South Africa remains with two agricultures, as articulated by Wandile Sihlobo in his latest book.
While it was a noble intervention, the government’s decision to provide pure grants instead of affordable credit has produced successful black farmers but created fertile grounds for some maladministration, dependency syndrome on farmers, and entitlement issues on black farmer leaders and communities.
South Africa is celebrating 30 years of democracy and there is no doubt the country’s agriculture is a better place for many farmers. All macroeconomic indicators, exports, employment, investments and consumption rates including government support are positive, at least at an aggregate agriculture level.
Within the agricultural sector, commercial white farmers and agribusinesses, have enjoyed the largest gains from the reforms and restructuring processes that took place in the early days of our democracy.
Looking forward to another 30 years of democracy, real tests or opportunities for agriculture are to expand and diversify its export footprint, especially in the Asian, Middle East and African markets. The country has enormous opportunities for livestock and field crops sub-sectors, which can also be grown in rural areas and on land reform farms thus benefiting black farmers and communities.
Upscaling agricultural exports must be underpinned by better biosecurity control, improved efficiency at the ports and rural infrastructure, and a continuation of the predictable and solid policy framework.
The agriculture and agro-processing master plan provides such certainty in terms of policy direction in the sector and the specific measures that must be priorities to keep agriculture in a positive growth trajectory.
Another important area is the need to make agriculture climate-smart and resilient. There is growing evidence suggesting that drier conditions and intensive (sometimes destructive) rainfalls will be more frequent in the future.
Parallel to changing climate is the outbreak of animal and plant diseases and pests because of open trade and the movement of persons in-and-out of our country. This means more resources, public and private, must be channelled to research and development (R&D) for better yielding, early maturing and drought and disease-resistant varieties and animal breeds. Resources and higher attention should also be given to crop and animal insurance that covers all farmers and areas in the country.
The sector has a well-functioning statutory levy system which has funded data gathering, market development and R&D research. It is important to explore how this levy system can help to build cost-effective insurance for the sector. The sustainability of the sector will be determined by the adaptation and mitigation strategies implemented both at the farm and sector levels, insurance should be one of the measures.
Reviewing the last three decades of agricultural performance, it is evident that transformation is slow despite the state making notable strides in providing land, training, and grant funding.
About 10% of agricultural output is from black farmers, even though the sector has more than doubled in output since 1994. It is now clear to all those who believed (pretended) that the market is functioning perfectly and it can help resolve the inequality and drive the development of small-scale and subsistence farmers, blacks in particular. The closure of the Agricultural Credit Board was probably the biggest oversight by the state, hence, the slow progress on the transformation front.
It is sensible that the government, especially the department, shouldn’t involve itself in providing credits, which was the Strauss Commission's recommendation in 1998. However, the need for a state-supported and controlled agricultural credit system is crucial for the transformation agenda.
Recently, Minister Thoko Didiza in the Department of Agriculture, Land Reform and Rural Development (Dalrrd) recognised the need for an affordable credit market and she launched the Blended Finance Scheme (BFS) with the Land Bank and the Industrial Development Corporation. The BFS has been successful especially in poultry and fruit industries to commercialise black farmers into large-scale operations and it should be expanded to commercial banks so commercialisation can gain momentum. However, BFS does not suit or solve the problem of financing small-scale and subsistence farmers, where 2.3 million black farmers reside.
During the Covid-19 pandemic, Minister Didiza made two crucial interventions targeting small-scale and subsistence farmers. She launched a special Covid-19 Fund and Presidential Employment Stimulus Initiative. Unfortunately funding for these programmes has ceased, however, in just three years they managed to revitalise 361000 hectares in rural areas and supported close to 200000 subsistence and small-scale farmers across the country.
During this period, maize and soybean exports increased by 93% and 1320%, respectively.
Good rains and higher global grain prices in the past three years also contributed to such success, however, the point to note is that there would have been no product to export if there was never such financial support to farmers. These programmes and private initiatives supported the sector and kept people on farms, hence, agricultural jobs reached 956000 in 2023.
In conclusion, agricultural success is one of the great stories deserving celebration as the country reflects on 30 years of democratic gains.
White farmers and agribusinesses must be given the highest accolades for quickly adopting and aligning with new policies and reforms that happened between 1994 and 1998. Equally, it is no longer an option to overlook the fact that the majority of black farmers have remained spectators of the agricultural economy. More importantly, there is no need to continue pretending that the market is perfect and cable on its own to correct this failure. Yes, it has a role but the government must take the lead.
At the centre of the transformation agenda should be a recreation of the functioning-alike, Agricultural Credit Board and a decisive and purposeful vehicle to elevate and advocate for the united small-scale and subsistence farmers in the country, blacks in particular.
Dr Sifiso Ntombela is an agricultural economist. He serves as the Special Adviser to Minister Thoko Didiza, in the Department of Agriculture, Land Reform and Rural Development. He is also an elected President of the Agricultural Economics Association of Southern Africa.
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