HILARY JOFFE: Improved state focus needed to exploit agri-export potential
Revelations of extensive fraud and corruption add to the tragic story of the failure of the land reform programme, on which the government has spent an estimated R85bn since 1994 - without creating a new class of sustainable black farmers or adding in any meaningful way to SA's agricultural output or export potential. But if there has been an upside to the expropriation without compensation controversy, it is that agriculture is now firmly on the agenda as a potential driver of economic growth and job creation - and that commercial farmers and those in the government who are serious about growth are talking to each other about how to transform and expand the sector.
Agriculture accounts for less than 2.5% of GDP. But it has significant potential to grow its contribution to employment and exports in ways that integrate new black farmers into the industry. SA has a sophisticated commercial farming industry led by some very large privately owned enterprises that tend to fly below the radar. SA is the world's second-largest producer of citrus (behind Spain), the largest macadamia producer and one of the largest pecan producers, and that's not to mention our avocados. It's in these "superfoods" that much of the potential lies. Some established players have already partnered with local black communities or individual farmers to exploit that potential.
Tommie van Zyl, CE of the family-owned tomato giant ZZ2, points to the great logistical advantages SA has in export markets relative to competitors - it takes 17-19 days to ship produce from Shenzhen to Durban but 34 days from Lima in Peru. SA has the opportunity to ramp up its exports of superfoods - avocados, dates, cherries, blueberries, almonds, pecans and macadamias. Existing turnover is about R24bn but it's estimated this could triple with the right enabling environment.
ZZ2 in Limpopo grows half of SA's tomatoes and is one of the world's lowest-cost producers of the fruit. It has helped to set up a partnership with the Makgoba community in superfood production, focusing on avocados, and Van Zyl, who participated in the recent economic colloquiums convened by finance minister Tito Mboweni, is a big advocate of a "social compact" in agriculture.
An agri-summit convened last year by AgriSA was a first attempt at that. But this is not a sector in which the private sector can go it alone, and the public sector's woefully inadequate capacity is one of the biggest constraints to ramping up exports. Unlike Peru, SA doesn't have the bilateral trade agreements with China, Southeast Asia and India that it needs to access key markets. Those agreements are government-to-government matters. The government is responsible too for the certificates and infrastructure exporters need to comply with phyto-sanitary rules, and if the capacity is not there to tackle outbreaks of disease, exporters can't access those markets.
As AgriSA CEO Omri van Zyl sees it, transforming agriculture is the biggest opportunity in SA today, but market access and climatological challenges remain major constraints. The private sector is trying to work with the government to provide the capacity to address that. The other issue, he argues, is the need for cheap finance, which could be provided by an agricultural development fund.
From the president down, every statement on economic policy these days refers to agriculture in all its guises as a key driver of labour-absorbing growth. Making this happen will require the know-how of SA's sophisticated commercial farming sector, and a partnership approach to expand in domestic and export markets. It will require too that the government, whose land and agriculture efforts have focused almost entirely on a flawed redistribution strategy, turns its attention to helping to develop markets and creating an environment in which commercial farmers, black and white, can thrive.