by Nicola Jenvey

Conversations that count

Agriculture House is committed to practical, inclusive solutions for emerging farmers

Agriculture_House_directors_Vusi_Madonsela,_Rhonnie_Manana_and_Sifiso_Myeni_1.png

The land reform and redistribution conversations happening in South Africa are critical to establishing a workable solution to an emotive issue. The current noise resonates around those defending their right to land; those equally arguing for its expropriation without compensation and redistribution, and those wanting the cohesion that evolves from working together.

“Destructive statements that South Africa is the next Zimbabwe emanate from people not listening to president Cyril Ramaphosa’s comments on the issue. He has consistently stated land expropriation will be done mindfully of the economy, jobs, food security and within legal ambit,” Agriculture House CEO Sifiso Myeni says.

The solution to land reform lies in stakeholders thrashing out the issues until they discover the way forward, because South Africa cannot have pockets of highly prosperous land ownerships amid dire poverty.

There are case studies that we can all learn from, where commercial farmers are working with local communities and everybody benefits from the proceeds of the business.

Currently, primary agriculture contributes an estimated 3% to South Africa’s gross domestic product (GDP), with the figure slightly higher when agro-processing industries are included in the data. However, despite attempts to encourage new entrants, the gap between commercial and emerging farmers is widening as the latter struggle to gain a significant toehold.

Myeni says emerging farmers face challenges relating to agrologistics and production infrastructure e.g. the lack of silos means no grain storage and a limited time to handle produce after harvest, access to capital with weak balance sheets, and access to markets where small farmers cultivating a few hectares must adhere to costly global compliances.

“This is where the government should assist emerging farmers in breaking the cycle of poverty,” he says.

Equally critical within the land debate is ownership, specifically the right to title deeds, as when black farmers do not own the land they are farming, they cannot offer financial institutions the security required to develop and enhance their commercial prosperity.

In KwaZulu-Natal this issue speaks directly to the Ingonyama Trust Act—legislation adopted ahead of the 1994 general election that has placed all the land holdings previously administered by the KwaZulu government into a trust “for the benefit, material welfare and social well-being of the members of the tribes and communities living on the land”.

“The main issue with land should be about how it benefits the people living on it. This means if the situation is not currently favouring development for those people, then the conversations about how Ingonyama land is used need to take place,” says Agriculture House senior project implementation specialist, Vusi Madonsela.

Agriculture House senior risk and credit analyst Rhonnie Manana says resolving the land issue means unlocking the opportunities for economic activities and development. Lack of ownership and clarity becomes a barrier to economic growth, as has happened with a silo project in Umzimkhulu. Despite grant funding having been secured from the Department of Trade and Industry to construct the silos and thus boost agribusiness in the region, debate around the land ownership has caused delays.

“Land has the ability to address some of government’s problems and provide meaningful economic participation.

Looking ahead, Madonsela says South Africa’s agricultural landscape should reflect the optimal use of available productive land to the benefit of the country and all its citizens. The KZN provincial government is currently driving programmes such as Raset which is aimed at contributing towards economic transformation – and if those initiatives are effectively implemented, they can become the solid foundation for a different agribusiness scenario in the country.

A diverse portfolio

Established in 2007 as a specialist agribusiness development company, the wholly black-owned Agriculture House has nine experienced managing specialists in various agricultural specialisations. Essentially, it is among a handful of specialist agribusiness organisations working on closing the gap between commercial farming and the emerging agriculture sector.

Aiming to become the trusted centre for knowledge in the agribusiness value chain development, the company has seven business units—the holding company, farms, agro-logistics, food distribution, trading services, information and communications technology (ICT) and consulting services – and provides clients with quality products and reliable, practical solutions.

The holding company invests and provides support to the group, while the farm division produces on company-owned and leased farms. The agro-logistics unit collects and distributes raw and processed agricultural products on behalf of the group and customers. Food distribution processes and packages agricultural commodities, and trading services sources various agricultural commodities from producers and supplies into various markets.

Technological support for the group as a whole is provided by the ICT unit, which also develops tailored software solutions for clients, such as Agri Smart Pro. Consulting services provides technical expertise in various agribusiness development fields and in the value chains such as grain and oil seeds handling, fresh produce, livestock, poultry and sugarcane.

Among the company’s clients are the Old Mutual Masisizane Fund, the National Health Education and Allied Workers Union (Nehawu) Investment Holdings, Sheepcor South Africa and Sheepcor KwaZulu-Natal, Twelve Apostle Church in Christ, Durban International Convention Centre, King Fresh Wholesalers, Pick n Pay, Spar Group, Enterprise Ilembe Economic Development Agency and eThekwini Municipality.

Leadership on the path forward

Madonsela says in a diverse society like South Africa, a leadership vacuum opens opportunities for problems to fester, but solid leadership in government dispels political rhetoric to detail the path forward.

This prevents self-enrichment opportunities. Agriculture House facilitates emerging farmers, believing investment into an initiative cannot be a once-off approach. Myeni explains that this scenario carries the opportunity for meaningful public-private partnerships driven by deliberate attempts to shift the agricultural landscape.

The company considers three methodologies when assisting clients, taking into account the existing business and managerial skills. The first is an operator model where Agriculture House runs the farm and transfers skills before exiting the venture; the second is a senior understudy model where the company does not deploy the full structure but places an experienced manager on-site to transfer skills to an understudy before exiting the venture; and the third recognises a high competency on the farm, but the requirement for on-the-job training for additional skills development. Some projects demand a combination of the three models.

The Stanger-based Essienna Farm project is an Agriculture House initiative where the 18.5 hectare farm is currently being converted from sugarcane into a fully irrigated vegetable farm. Plans include growing and packaging spinach, tomatoes, cabbage and various peppers and will create 43 jobs.

Madonsela says that emerging farmers are struggling as a result of a lack of product diversification and the need to access technical information and skills development.

Furthermore, their participation is restricted to primary agriculture where margins are narrow.

The higher the farmer’s position in the value chain, the higher the profits—supplying milk in bulk is less profitable than bottling the milk, which in turn is less profitable than making cheese.

“Agriculture is a numbers game, but emerging farmers do not have access to the land and capital required to produce in scale. Coupled with those restrictions is a lack of business acumen,” Myeni says.

Manana says there are sound government programmes aimed at assisting small-scale farmers to boost their projects, but implementation is problematic and changes in political administration merely reshuffle and repackage existing programmes in different configurations without following through on the outcomes.

“The government must devote time to establishing where the difficulties lie in implementing programmes—essentially speaking to the people on the ground rather than those sitting remotely in offices—and then contribute meaningfully to assisting those programmes to take hold. Partnerships, including mentorships from industrial bodies that can train new entrants to the market, are critical to success,” he says, reflecting that merely throwing money at the capital-intensive elements without transferring skills does not solve the problem.

Added to that scenario is the dedication to follow through with the monitoring and evaluation of various programmes. “The government cannot have a five-year programme and only send through evaluators in year six and still expect faultless accountability,” he concludes.

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