BY WANDILE SIHLOBO, JOHANN KIRSTEN AND SIFISO NTOMBELA
From the reconstruction and development programme of president Nelson Mandela to the accelerated and shared growth initiative of president Thabo Mbeki, the national development plan of president Jacob Zuma and most recently the economic reconstruction and recovery plan of President Cyril Ramaphosa, agriculture has long been tipped as a key generator of jobs and economic activity in rural SA.
For agriculture to live up to these expectations requires a stable, predictable and conducive policy environment. It has not always been clear that SA agriculture is blessed with this. It is therefore remarkable that the value of the country’s agricultural output has more than doubled in real terms since 1994, though employment has trended downwards slightly.
This has been achieved amid decreasing support to commercial agriculture and inconsistencies in implementing policies and programmes. Government inefficiencies, delays and failures, particularly at the provincial and local levels, have made farmers’ lives challenging.
Nevertheless, farmers’ ingenuity and ability to adopt new technologies and find new markets have helped the sector survive and grow despite government-induced constraints (the depreciating exchange rate also helped export earnings). On the other hand, new entrant farmers are suffering due to the poor co-ordination and implementation of basic government functions at all three tiers of government
Production has soared since 1994 despite government inefficiencies, delays and failures
As a result, output growth, employment growth and transformation are not at the levels where they could have been. Market failures and cases of anticompetitive behaviour in value chains have also contributed to slow progress in transformation and agricultural development.
The start of every year presents an opportunity for business to review strategies, and some government departments to review policies. In 2020 the department of agriculture, land reform & rural development focused on four broad policy-guiding themes to drive agricultural expansion, inclusive growth, job creation, integrating rural areas and eradicating hunger, namely: transformation and redistribution, addressing inefficiencies, growth and expansion, and co-ordinating policies and investments for the integrated rural economy.
After limited action in 2019 the land reform programme showed some notable progress in 2020 with the release of 700,000ha of state-owned land to beneficiaries. While this was not all new land and some was already occupied, the decision was nevertheless a small step towards an accelerated release of the land acquired by the state for land reform purposes, which amounts to more than 2-million hectares. This should all be released in 2021 to bring about much more substantive progress in transformation and redistribution.
Our criticism of the recent release of land has been that it should have been with tradable leases or offered to beneficiaries with an option to buy after a minimum of five years working the land. On the tradable lease option the government could include a “first right of refusal” clause to guard against reversing gains already attained in the redistribution of land. Moreover, the land release should simultaneously go with a farmer support programme to ensure newly settled farmers have access to working capital.
Another development on the land reform front was the new Expropriation Bill, which was gazetted in 2020, outlining a uniform process for all expropriations to take place and a uniform means to calculate just and equitable compensation.
The national policy on comprehensive producer development support and blended finance was another programme that saw some progress in 2020 and should be completed and launched this year. The effectiveness of these programmes remains to be seen.
The development of the land donation policy, which encourages private landowners to participate in the redistribution of land voluntarily, is one of the policy changes that could accelerate the redistribution of agricultural land if all the incentives are properly aligned, as detailed in the report of the presidential advisory panel on land reform & agriculture.
This “transformation and redistribution” pillar is likely to gain momentum in 2021 as the majority of these land policies will be introduced to parliament for endorsement. We are likely to see progress on the release of the land, an essential area to watch as transparency was promised this time around, and that there will be bias towards the youth, women and other vulnerable groups, unlike the past when a disproportionate number of older men benefited from land reform.
Another critical area worth keeping an eye on is the broader discussion about the amendment of section 25 of the constitution to enable land expropriation without compensation. There was little discussion on this point in 2020 as the work of the committee that was tasked to “make explicit what is implicit” in the current wording of the constitution was interrupted by the pandemic. This discussion is likely to gain momentum this year, though the new Expropriation Bill would appear to already cover what is hoped to be achieved through the amendment of section 25.
The agricultural master plan is expected to be released in 2021 to address the inefficiencies that exist in government processes and systems, as well as with government infrastructure needed to support the sector. There is a need for stronger political will to work closely with the private sector and broader social partners.
Such relationships would entail leveraging private sector networks, capital, know-how and goodwill to bring about growth and transformation of the sector. Interventions to address the inefficiencies will differ from subsector to subsector. For example, some might require improvements in export-related and water efficiency matters, while others might need increased efficiencies on the registration of input products to increase productivity.
On infrastructural matters, we are less optimistic that there will be notable progress in the near term given the fiscal constraints and continued pressure to contain the spread of the pandemic and secure vaccines. Importantly, this is not a task carried out by the department of agriculture, but by other line departments.
Trade will continue to be part of the policy discussions as the SA agricultural sector seeks new markets. Moreover, an increase in production will need to be anchored in increased export potential and domestic agroprocessing capacity to replace food imports, where this is feasible.
Other essential points that did not dominate the policy discussion in 2020 but are likely to surface in 2021 are agricultural finance and commercialisation of black farmers. The former will have to deal with the crisis in the Land Bank and include the search for new and efficient financing methods. Perhaps the land reform fund raised in the presidential advisory panel for land reform & agriculture report will offer a solution to creating an affordable blended finance instrument.
Agriculture still has the potential to boost employment, transformation and economic activity in rural SA. But this hinges on a stable, predictable and conducive policy environment, along with dedicated and driven officials at all levels of the government.
• Sihlobo is chief economist of the Agricultural Business Chamber of SA. Kirsten is a professor in agricultural economics at Stellenbosch University and director of the Bureau of Economic Research. Ntombela is chief economist of the National Agricultural Marketing Council.