KwaZulu-Natal agriculture sector will contribute more to GDP
DURBAN - The KwaZulu-Natal agriculture sector was poised for growth and possessed a potential to contribute more to South Africa’s gross domestic produc(GDP).
Head of Information and Marketing at FNB Agriculture Dawie Maree said this growth was possible despite the prevailing “temporary headwinds”.
“The agricultural sector in KwaZulu-Natal, South Africa’s second largest province by population, is growing at around 12% per annum, compared to single digit growth in other provinces. It contributes around 4% to KwaZulu-Natal’s gross domestic product,” said Maree.
“The province is recovering from a severe drought, and indicators point to a normal rainfall for SA’s summer rainfall areas which bodes well for production.It is well diversified with sugar production in the north and south coasts, dairy and irrigation maize in the Midlands region and mainly cattle and commercial poultry production inland. The province has seen a dramatic increase in the production of macadamia nuts and avo’s, mainly for export markets.”
FNB Agriculture said had a substantial market share in the province’s agricultural sector and considers it as a very important province in its agricultural strategy. Maree said that however, agriculture in KZN was currently facing specific risks which are land reform as expropriation without compensation was one of the key risks, climate change which saw farmers suffer greatly from the 2016/2017 drought and cheaper imports.
The price of sugar has however seen a significant drop over over and above the lingering effect of the drought. The drop is attributed to the new sugar tax on beverages having caused a marked decline in the demand for sugar from this industry. There has also been an increased risk of “cheap sugar” entering the country from South America and increased competition from commercial sugar expansions in Zambia and Mozambique.
Maree said that dairy was KZN’s second most important commodity. “Prices are currently too low. Long life milk (UHT) is imported into SA tariff free, while milk powder and cheese carry tariffs of roughly R4.50 per kg. Prices, especially in coastal regions are supressed mainly because of UHT milk imports from South America and countries like Poland and Slovenia are landed at cheaper prices in Durban, the Western Cape, and Port Elizabeth.”
The province’s inland areas better known for its livestock have seen prices take a knock because of the outbreak of foot-and-mouth disease in January this year.
FNB Agriculture said that increased collaboration particularly between small holder farmers would enhance sustainability and profitability as it could include buying inputs together and having the power to negotiate discounts on bulk sales.
“There is something to be said for collaborating on the use of expensive harvesting and planting equipment, although this remained a difficult concept for SA farmers to accept. There is also the option of contractors –if a group of farmers have a sizeable piece of land they can use a contractor for certain functions cutting out huge capital expenses to buy tractors, harvesters, planters and trucks. We have seen a move towards this collaborative way of farming – especially in terms of buying input – some are formal and some are informal structures.”
Maree said that the use of technology has been expanding “exponentially” in agriculture. “Precision farming is not something new. Each industry has specific technologies to improve productivity and efficiency. Investment in technology is crucial to mitigate risks. It may be an expensive investment, but it is crucial to stay ahead.” said Maree.
University of KwaZulu-Natal’s development agriculture expert Professor Maryann Green said that she concurred with Maree on KZN possessing significant growth potential that could go a long way as the province also had water despite the past drought. “While technology will increase production, we need more jobs in South Africa that can be created in this sector.”
Green said that while one could be successful in agriculture with low-skills, to increase production, higher skills were essential.