Written by Wandile Sihlobo, Chief Economist of the Agricultural Business Chamber of South Africa (Agbiz)
Recent electoral polls continue to suggest that no single political party will win an outright majority in South Africa’s 2024 national elections due to take place on 29 May. This creates uncertainty regarding the national government, which will emerge from any possible coalition discussions.
Regardless of its composition, the seventh administration of democratic South Africa may have to refresh its economic policies when it assumes office. For some sectors of the economy, such a review may be necessary. The global environment in which we operate has changed significantly in recent months, partly because of the rising geopolitical tensions and their associated economic risks.
Agricultural policy
In our view, agricultural policy does not require a review. The sector needs a sharper focus on implementing the existing programmes. The focus should be primarily on the execution of responsibilities of the various directorates at the national and provincial levels of the Department of Agriculture, Land Reform and Rural Development.
The agricultural sector has an ambitious and unifying vision through the Agriculture and Agro-processing Master Plan (AAMP) launched in May 2022. Indeed, the AAMP is imperfect, and some aspects were contested during its drafting stages. This is expected given the breadth of social partners involved in crafting it. Still, most social partners, such as the business community, government, and labour, agreed that the AAMP offers a framework to grow the agriculture and agro-processing sector, build competitiveness, attract more investment, improve inclusion, and create jobs. These prospects would help to address South Africa’s socioeconomic challenges, particularly in rural areas and small towns.
Moreover, the Department of Agriculture, Land Reform and Rural Development (DALRRD) has signalled its intention to release the roughly 2,5 million hectares of land that is under the Proactive Land Acquisition Strategy (PLAS) to beneficiaries with title deeds. This land release will be through the yet-to-be-launched Land Reform and Agricultural Development Agency. The launch of this agency has taken longer than we anticipated. However, after informal discussions with the current leadership of the DALRRD, we believe that there is a commitment to the land release with title deeds to beneficiaries.
This land will help increase South Africa’s agricultural output across various commodities. Through the promise of this land release, the Bureau for Food and Agriculture Policy (BFAP) and ourselves continue to believe that South Africa’s agriculture could continue to grow and expand employment in the coming years.
Admittedly, amongst the industry and organized agriculture stakeholders, there has been growing anxiety about the slow pace of implementing the AAMP. The government and social partners finished the plan at a tricky time.
As the implementation process was set to start, various challenges took focus away from the AAMP. These include the persistent load-shedding in recent years, logistical constraints at ports, protectionism in export markets such as China (wool), EU (citrus), and Africa (vegetables), and the spread of animal disease (foot and mouth disease in cattle, African swine fever in pigs, and avian influenza in poultry). These events meant that the government and various industry stakeholders moved into “crisis” mode, and the attention shifted from the AAMP. Indeed, there has also been a lack of focus and interest in collaborating with businesses at a provincial level of the government, contributing to the slow implementation of the policies.
As is the case in South Africa with engagements between government and private sector engagements, political economy tensions often arise while resolving urgent and near-term issues, as we listed above. These tensions in political economy tend to strain trust and the collaborative vision, even temporarily. Such an environment is a rich breeding ground for slow action towards implementing the AAMP.
Moreover, we often hear from agribusiness leaders about the cold experience they receive from some provincial and local government offices that are instrumental to the success of the AAMP implementation. This is an area that the national government should focus on to ensure the alignment of vision and urgency with the adopted policies and programmes.
While we present the view that the appropriate policies and programmes for the next administration in South Africa’s agriculture need not change drastically, additional matters require nations’ focus that has weighed on sentiments in farming and agribusiness.
These include the ongoing El Niño induced drought that devastates the summer grains and oilseed regions, persistent port inefficiencies, poor rail and road infrastructure, and worsening municipal service delivery. Rising incidents of crime, lingering animal disease challenges, security of electricity supply and increased geopolitical uncertainty remain top-of-mind challenges for agribusinesses. In a survey we conducted in March 2024, covering businesses operating in all agricultural subsectors across South Africa, the respondents raised these are the most troubling issues they face.
Moreover, the one area that the South African government, working collaboratively with businesses, has seen success in opening the export markets for various products. The latest successes are the avocados in China, beef exports to Saudi Arabia, and grain exports to Egypt.
The effort of the government and industry to deal with the EU’s citrus export challenges through the WTO is another commendable step. From now on, widening the export markets should remain a priority for the South African government and organized agriculture. This is even more important in the current environment of the increasingly protectionist world, while South Africa is seeing an increase in production volumes of various products.
Exports would not be a success without an increased focus on logistics. The ongoing collaborative effort at the ports and rail should continue and extend to road infrastructure in the small towns where deteriorating roads have presented major costs and inefficiencies to agribusinesses.
Overall, we believe South Africa’s agricultural policy does not require a drastic change from now on, but it is better to focus on implementing current policies and programmes. The one aspect that should be an addition to the toolkit of the Department of Agriculture, Land Reform and Rural Development is continuous engagement and fruitful collaboration with industry stakeholders and organized agriculture.
This article originally appeared here.
Photo by Magda Ehlers: https://www.pexels.com/photo/rainbow-under-hills-1753207/
