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State of the Nation - State of Agriculture

Written by  Jorisna Bonthuys
| in Landbou
| April 7, 2016

Was the state of agriculture and the natural resources that support livelihoods reflected in this year's State of the Nation Address? We asked a few thought leaders and role-players in this sector.

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The State of the Nation Address (Sona) - delivered by President Jacob Zuma in February - was actually more important than the budget delivered by Finance Minister Pravin Gordhan two weeks later, some analysts believe. Others disagree, saying that Gordhan's budget reflects more of government's priorities and policy direction.

What does this year's Sona mean for agriculture when it comes to policy and spending priorities amid our fragile economy? If it was properly synchronised with the overarching vision in the National Development Plan, South Africa Ltd should be on the right track, right?

Zuma's critics say he failed to announce detailed plans to deal with South Africa's weak currency, slow economic growth and failing commodity prices. Although he did reference the economy more than usual – clearly to appease investors - he did not address key structural issues in it. He also didn't do much to remove policy uncertainty in the agricultural sector.

"This plan, announced last year, includes an undertaking to revitalise agriculture, strengthen the ocean economy and ensure stable energy supplies"

The government's 9-point plan remains in place, Zuma indicated. This plan, announced last year, includes an undertaking to revitalise agriculture, strengthen the ocean economy and ensure stable energy supplies (something that remains critical to agricultural producers). However, Sona did not contain anything enlightening over and above what was announced about this plan last year. In this regard Sona offered more of the same, Moneyweb reported.

The current drought - the most devastating one in decades, fuelled by a super strong El Niño – also barely got a mention. This while South Africa last year received the lowest mean rainfall recorded between January and December since 1904. This response was “inadequate” given the long-term implications of the devastating drought, says Omri van Zyl, AgriSA's chief executive officer. “It is time that agriculture be declared as a strategic economic sector,” he believes.

The widespread rain in March over parts of the country has not yet broken the drought. Not only is the drought causing dwindling water supplies in many towns and regions, it also has a devastating effect on staple crops like maize. The knock-on effect of crop failures could result in people moving from rural areas, farm closures and potential job losses in the sector, warns Van Zyl.

Gordhan, who gave more attention to this issue in his budget speech, talked about a plan to protect South Africa against the effect of the current drought. Gordhan said government has reprioritised R1 billion for drought relief over the medium term. He also promised that more money could follow later in the year.

"AgriSA has made an urgent call on government to declare the countrywide drought a national disaster"

AgriSA has made an urgent call on government to declare the countrywide drought a national disaster. “Efforts to support producers in the aftermath of this drought are still inadequate to deal with the scale of the problem," van Zyl points out. "Government's plan on how to keep producers on farms, is also still mostly vague.”

With five out of nine provinces labelled disaster zones due to the drought, the country must acknowledge the national crisis to help farmers, Grain SA's Jannie de Villiers told Reuters. Should a national disaster be declared, emergency relief funds would be released from the National Treasury to eligible farmers. De Villiers reportedly also signalled trouble ahead for the next crop season, saying farmers would struggle to obtain finance after this year's disaster.

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“The extend of our problems will emerge during the next planting season and in the winter months when farmers experience credit problems and do not have enough financing support," Van Zyl warns. "We are also going to see massive losses in the red meat industry and this has a direct impact on the cash flow of many producers, whether commercial or emerging farmers.”

It is estimated that up to R20 billion might be needed over the next four years to recover from the drought. “Food production on long-term is already under pressure and if farmers do not get some kind of subsidy over the next few years we are going to see an immense effect on food inflation, to the detriment of not only the farmer but also of the consumer,” Van Zyl points out.

Although Sona might have appeased jittery investors, there was no new policy emphasis that would increase trust in the local economy, says Prof. Johan Willemse, agricultural economist at the University of the Free State. “We need to create trust that investment will be safe from random policy changes. That didn't happen. The emphasis was on accelerated land reform, without the necessary market related compensation.”

According to Prof. Willemse the Finance Minister's budget vote was also still vague about drought relief to commercial farmers, as well as Land Bank schemes, and the Industrial Development Corporation's role in providing relief. “We heard the minister on the need for fiscal consolidation in relation to keeping the budget deficit in tact, the efforts taken to identify new sources of revenue and the numerous demands the fiscus are facing," he says. "We did, however, expect more and firmer commitments from the minister with respect to dealing with impact of the current drought.”

The emphasis in Sona was mostly on small scale farming projects without an acknowledgment about what kind of support commercial agriculture will require to maintain food security in the country, says Prof. Willemse. “There was also open talk about the so-called agri-parks, which implies a duplication of existing market channels and processing plants in rural areas where there are actually too few products to make it viable to put up such plants. Rural towns are still going downhill; without water, and power processing plants are closing. The number of farmers is decreasing and less money is being spent in towns. This is how towns and job opportunities die,” he warns.

"The number of farmers is decreasing and less money is being spent in towns."

Sona also did not provide the kind of policy certainty that farmers need desperately. Says Prof Willemse: “They (producers) don’t have certainty and there are no measures taken to ensure commercial farmers survive this drought. New and emerging farmers also have no certainty, because the properties belong to the state and they are renting it. There are also cases where leases of emerging farmers have apparently been suspended because they have fallen out of political favour.

"The commercial agriculture sector has provided many examples of land reform that works and have submitted this on many occasions to the government, but this still gets ignored."

What this year's Sona did underline is that the role and potential contribution of the agriculture sector is still not properly recognised. “Commercial agriculture feeds 45 million people in our cities. We are starting to import grains, oilseeds, meat and other products on a huge scale (given the drought situation) and we don't have the necessary funds for this. The Rand is weakening and this continues to add to inflation by importing expensive food. The poorest fifth of the population is spending between 40-50% of their income on food – something that is getting more unaffordable by the day. This situation is creating poverty on a big scale," Prof. Willemse warns.

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Policy and spending priorities as outlined in Sona cannot be assessed without also considering the natural resources that will underpin it. The link between agriculture, rural livelihoods and the state of natural capital, still however, received little focus. With this in mind WWF-SA recently issued its own "assessment of the environment in our nation” on the eve of this year's Sona.

There is a web of interdependence between the biosphere, food, energy and water security, says WWF-SA in its statement. This food-energy-water ‘nexus’ refers to the interconnectedness of these systems (rather than just the resources themselves) and how they push and pull one another. Most pertinent for many communities is the deepening water crisis, exacerbated by the drought conditions. Says Christine Colvin, WWF-SA's senior manager of its freshwater programme: “We are not adequately prepared to deal with climate change and transition to a low-water economy. A drought resilient and sustainable future will rely on presidential-level attention to the keystone elements of our water sector: skills; infrastructure; new job opportunities.”

"We are not adequately prepared to deal with climate change and transition to a low-water economy"

Dr. Mao Amis, executive director of the African Centre for a Green Economy (AFRICEGE), considers as significant the overtures Zuma made towards the private sector (during Sona) in helping government fund its infrastructure programmes. “There is a massive shortfall of both energy and water infrastructure, and without significant private sector engagement, the government will not be able to deliver on its infrastructure programmes.”

From a water perspective, Zuma did not provide much insight into the future outlook, aside from acknowledging the persistent drought and the current interventions. “South Africa requires significant investment to expand and maintain its current water infrastructure," says Dr. Amis. "And with a growing demand, uncertainty around how the country’s water requirements will be met, still remains a key challenge. It would have been useful if the government clearly outlined a long-term vision on bolstering the country’s water infrastructure relative to energy. So for now, addressing water challenges - it would appear - will continue to be ad hoc in the near future.”

Like Amis, Colvin also emphasises the need to take the country's water infrastructure and ecological reserve seriously: “If South Africa is to attract the R700 billion thought to be necessary to upgrade water infrastructure, a clear cross-sector strategy for skills deployment from the tap to the catchment is needed, to have a system worth investing in. South Africa also needs to view its water infrastructure more inclusively, and this should start with the next phase of the National Development Plan.”

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Government policy urgently needs to provide far greater, coordinated planning and policy direction across departments focused on food production and food security. This is according to a statement by WWF-SA's Senior Manager: Sustainable Agriculture, Inge Kotze.

“This includes increasing the pace of the existing good efforts in supporting emerging farmers and small holders to improve rural livelihoods and increase levels of household food security,” says Kotze. To support this vision, there is “an urgent need” for stability and certainty with regard to the central issue of land.

With regard to food security issues Dr. Amis remains encouraged by the programmes for empowering smallholder farmers outlined in Sona. “This is very important, because if smallholder farmers become more productive, it will address multiple challenges of ensuring food security, land reform and implementation of sustainable agricultural practices. This is in line with climate smart agriculture practices that are being promoted on the continent.”

From an energy specific perspective, coal is clearly still an important component of the energy mix, although renewables have also bolstered the energy mix through the independent power producer (IPP) programme. “Considering that the government is keen to develop an IPP for coal, it would mean that South Africa’s long term energy requirements will still be intricately linked to unsustainable energy sources, which is quite worrying.

"The introduction of nuclear energy into the energy mix, could provide some relief from the dependence on coal, however nuclear energy is also not the most sustainable source of energy, in addition to safety concerns and the capital intensity nature of such programmes,” concludes Dr. Amis.