Government’s big agriculture plan
South Africa’s agricultural sector is critical to both the country’s economic health and food security, but to drive inclusive and sustainable growth in the industry, effective public-private partnerships (PPPs) are critical.
This was the overarching theme presented at the Agriculture Sector Stakeholder Dialogue hosted by the Agricultural Development Agency (AGDA) and Absa on 14 October.
The sector contributes an average of 2.8% to the national economy, measured in Gross Domestic Product (GDP) and ~896,000 formal sector jobs in Q2 2024.
When food manufacturing is included, the two can collectively contribute up to 7% to the GDP.
However, it has been facing issues on multiple fronts, which seen in the sector’s GDP 2.1% decrease in Q2.
Speaking at the dialogue, former Mpumalanga premier and Chairperson of AGDA, Dr Mathews Phosa, outlined that major challenges include climate change-related issues such as dry-spells in key production areas, as well as biosecurity, logistics and infrastructure issues.
“Neither the government or private sector can solve these challenges alone – public private partnerships are the way forward to sustainable and effective growth,” said Phosa.
He cited promising initiatives such as the Lima agricultural initiative that De Beers implemented in Blouberg municipality, close to its Venetia Mine.
Through a working relationship with De Beers Diamonds, Lima (a non-profit, non-governmental organisation that carries out various rural development initiatives across South Africa) helps farmers with loans, holistic support and more.
According to its website, 800 farmers in Musina and Blouberg in Northern Limpopo have been helped through support services, which have resulted in considerable increases in farm production, local job creation and skills development.
Harnessing growth in the sector through PPPs like this was echoed by various stakeholders, including Agriculture Minister John Steenhuisen who said that this sits at the heart of the Agriculture and Agro-processing Master Plan (AAMP) drafted several years ago.
Steenhuisen said that industrialisation, tourism, agriculture and agri processing are the the catalysts for economic growth and job creation.
“Partnerships (with the private sector) is what is going to move this forward,” said Steenhuisen.
To achieve this, the Minister highlighted that the Department of Agriculture must be responsive to the needs of all stakeholders through:
- Collaborate with commodity bodies to understand their needs.
- Engage with representatives from all agricultural sectors.
- Enhance departmental communication.
- Create a modern legislative environment and reduce unnecessary red tape.
- Improve collaboration on biosecurity to reignite exports.
- Work with the DTIC to leverage trade partnerships and reduce trade deficits.
“The aim of our support is to get farmers, both large and small scale, on their feet as quickly as possible to guarantee their viability, sustainability, and profitability,” said the minister.
Legislation plays a crucial role in defining how the agricultural sector operates, however Steenhusien said that they must not inhibit farmers’ ability to grow crops and bring them to market.
He added that the South African regulatory environment is not keeping pace with global advancements, and as the sector rapidly evolves, it is essential to adapt accordingly to support farmers; particularly when it comes to skills development and climate-disaster response.
Kallie Schoeman, a founder and board member of AGDA, said that although effective implementation of the goals AAMP has thus far left much to be desired.
However, he remained optimistic, asserting that “never before has there been so much positive energy and leadership waiting to be unleashed.”
Schoeman emphasised the importance of the alliance among the farming community, society and the government.
He suggested that stakeholders should be “surveyed and identify the critical areas in [the AAMP], consolidate all these inputs, and have a clear action plan by December 2024.”
Government’s PPPs push
The push for PPPs are part of President Cyril Ramaphosa’s reform agenda.
At the beginning of October, Ramaphosa, ministers and some of South Africa’s top CEOs met to launch of Phase 2 of the Government Business Partnership.
Broadly, it is government and the private sector looking for a sort of ‘all hands on deck’ approach to growing the economy.
In 2023, organised business, comprising about 150 CEOs, pledged support to the government in three key areas: electricity, transport and logistics, and crime and corruption, known as Phase 1.
They contributed around R250 million in funding, deployed 350 experts into key areas, and engaged 57 companies in power station interventions, significantly reducing load shedding.
Building on this success, Phase 2 aims to scale efforts with increased resources and actionable plans for the three key areas.
This is exactly what they want to materialise in the agricultural sector.
Speaking to BusinessTech on the sidelines of this event, Steenhuisen said that they “rely a lot on the private sector in my portfolio [as] a lot of the industry knowledge exists in the sectors.”
This includes the likes of AgriSA, GrainSA, the Black Farmers Association, etc.
“That’s where the real expertise lies, so there’s a high degree in my department of public private partnerships,” said Steenhuisen
“In fact, the entire AAMP is predicated on value chains that bring in the private sector and industry players to make them successful and linking particularly new emerging farmers with value, so it’s a very strong collaboration,” that he has vowed to double down on.
Funding
The speakers highlighted that funding remains a significant challenge in the South African agricultural sector.
Johan Kotze, CEO of AgriSA, stressed the importance of having a well-functioning development bank with specific objectives, rather than replicating the structure of a commercial bank.
“It is not just about giving people access to finance; finance is one key to opening development. We need [an all encompassing approach]” said Kotze.
Abrie Rautenbach, head of Absa Agribusiness, and Leona Archary, CEO of AGDA, emphasised the importance of discussing the intricacies of financial support and defaults, supporting sustainable farming practices, and empowering young farmers.
They noted that a comprehensive access to support, including expertise and development finance, is crucial for farmers, whether they are large commercial operations or ’emerging’ farmers.
Overall, all stakeholders at the dialogue remained optimistic about the country’s agricultural future.
They said that through effective collaboration, South Africa’s full agricultural potential can be realised and the issues which have hampered its growth can be addressed.