Balancing The Books

Commercial agriculture deserves appreciation

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From a commercial agriculture point of view, 1994 introduced changes which still affect the sustainability and profitability of primary food production in South Africa.

Whilst some of those changes resulted in the abolishment of marketing boards affecting stabilised product prices, the cutting of subsidies also had far-reaching financial consequences. Commercial farmers suddenly found themselves in a position within which they could at best be described as “price takers”. With the knock-on effect on income and profitability came several other consequences as well. Globally they had to compete with producers whose governments did not hesitate to subsidise food production and who did their utmost to protect and sustain the agricultural sector. The exact opposite was happening in South Africa irrespective of the fact that a growing population as well as neighbouring states increasingly became dependent on local commercially produced food.

In a sense, commercial famers experienced increased distance between themselves and government.

The resultant void created by a lack of governmental interest was, however, replaced by the introduction of several laws which directly had a bearing on sustainability and profitability. The Restitution of Land Rights Act aimed at repairing loss of land has unfortunately not ensured the retention of productivity of valuable agricultural land. The Extension of Security of Tenure Act (ESTA) is uniquely applicable only to farmers, having had a direct impact on the implications of the scope of private ownership. No other employer in the country is subject to similar legal obligations to provide pensioned employees with access to land. The subsequent introduction of a Sectoral Determination prescribed a minimum wage and currently discussions are under way to consider and introduce a National Minimum Wage. Furthermore, the efforts of government to appoint itself as the custodian of sub-surface minerals and water, as well as current efforts to do the same with “high potential agricultural land”, have created problems and distrust. To top it all, political competition and the side effects thereof, especially in the field of organised labour and the need to win elections, has also contributed to increased tensions.

Meanwhile, farm dwellers are subjected to sustained pressures as a result of continuing violent crimes and stock theft, which pose a direct threat to the country’s ability to feed itself as well as those citizens in neighbouring countries where growing populations are dependent on restricted commercial food production. Ironically, this situation has resulted in an influx of foreign nationals either seeking a better life or employment. The consequent emergence of xenophobia was not expected and contributed to increased pressure on a sector where industrial loss of production levels could not be balanced out by increased employment or overtime arrangements and increased pay. The agricultural production cycle is determined by seasonal factors beyond human influence.

It is within this scenario that commercial farmers are forced to revisit their options. Notwithstanding the need to continue doing what their calling dictates, i.e. to produce food, they have a major role to play by contributing to a stable and sound rural economy. This is itself an uphill battle as rural poverty has been identified as one of the major national challenges. Commercial agriculture is an important creator and provider of job opportunities in rural South Africa. Not only does the local populace depend on income provided by work on farms, but business enterprises in small towns, schools, medical facilities, religious structures and the ability to improve and extend rural infrastructure are equally part of that economic and social reality.

Just as in any other business, farmers need to manage the production process in such a manner that sustainability and profitability will ensure a viable future. It is this very real fact that distinguishes modern farming practices from the romantic and peaceful existence which in the past was so easily associated with farm life. Even more so, this applies to the need to be able to maintain financial reserves for the droughts, torrents and other natural disasters which may destroy carefully raised crops of livestock without warning. However, the ability to repair or recover losses differs greatly from what managers in other industries experience. The recent drought may well have been broken in most areas, but farmers who lost a season’s harvest or who had to drastically reduce a productive herd will need considerable time to recover.

The factors which make the agriculture process possible are restricted not only by the nature of crops or livestock to be raised, but also by access to capital, labour as well as seasonal and biological issues. In a global competitive world, further factors include the increased application of technology, the increasing cost of labour (and the local implications thereof), the need to protect the environment, access to potable water, being able to transport products on a well-maintained infrastructure to urban markets and affordable input costs to ensure sustainability and continued production.

South Africa needs to show and express its appreciation for the decreasing community of farmers and farm workers who are putting food on the table, providing employment and earning valuable foreign exchange to sustain life and the national economy whilst enduring a wide variety of imposed legislation, occupational challenges and serious threat to life and property. The vastly urbanised population with no proper grasp of the current challenges facing farmers owes it to them.

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