New dawn for agriculture, if we get it right
The South African agricultural sector has seen a number of important developments over the last few months that are set to change the landscape. On the 21st of September this year, President Cyril Ramaphosa appointed a Panel of Experts made up of a cross section of experienced agricultural sector players. This Panel will provide technical support to the Inter-Ministerial Committee (IMC) on Land Reform chaired by Deputy President David Mabuza.
On the same day, the President also unveiled a stimulus package and economic recovery plan for the country, with a major focus on reprioritising spending to drive job creation, transformation and growth in the agricultural sector. At its core, the stimulus package includes specific interventions to increase access to established value chains for black commercial farmers, lengthening lease periods to 30 years to better enable farmers to mobilise funding for agricultural development, and beefing up funding to export-oriented crops that are highly labour intensive to drive both growth and jobs here.
These developments, coupled with the recently concluded Jobs Summit and this week’s Investment summit will no doubt impact on the agricultural sector, though the extent of which sector analysts are still trying to understand.
A good starting point in understanding how all these developments come together may be in the delivery of Thursday’s Medium Term Budget Policy Statement (MTBPS) by our new Minister of Finance, Mr Tito Mboweni. On the macro side, Mboweni may be in somewhat of a tight corner in addressing declining growth and rising prices, but developments on the agricultural front should leave a bit more room for some tactical and strategic manoeuvring.
We already know that an Infrastructure Fund is set to be established as one of the core pillars of the stimulus package and the economic recovery plan. However, in response to all the developments in the agricultural sector, it is perhaps an opportune time to establish a standalone land and agricultural fund.
With money already pledged to agricultural development via the President’s ongoing international investment drive, greater clarity on how this investment is apportioned and aligned to agricultural sector job creation, growth and transformation imperatives such as the NDP, must now be a priority.
With accelerated land reform on the horizon, we need Treasury, the IMC and line functions (including DAFF and DRDLR) to be on the same page in translating this economic stimulus into an operational plan that will address the sector’s pressing demands. Government should ensure that a certain portion coming in from the investment pledges is set aside for agricultural reforms that will result from land expropriation without compensation, the administration of which could come via this separate land and agricultural fund.
These investment pledges will be unlocked based on projects submitted to investors through government. For Mboweni, ensuring that these projects truly speak to the country’s pressing land and agricultural needs is going to be critical. Aquaculture, as an example, has been identified as an area with huge potential to benefit communities residing in the coastal areas of the country. As the backbone of the Blue Ocean economy and with targeted investments into growing its reach, aquaculture could play a key role in boosting agricultural GDP figures and creating access for new entrants into the sector.
Accordingly, funding for a comprehensive farmer support programme aimed at creating value from expropriation of land without compensation should form part of this submission process.
Additionally, the alignment of resource flows from institutions with a similar mandate to support agricultural sector growth and development must be prioritised. This is especially necessary to widen access to the sector in anticipation of accelerated land reform. Blended finance and other innovative financial instruments that work to overcome the traditional barriers to entry such as a lack of equity or security are long overdue. This type of collaboration could also contribute towards allaying some of the concerns around the operationalisation of accelerated land reform that continue to come from certain sectors of society.
Lastly, both Mboweni and Ramaphosa should continue to galvanise the entire investment community around land and agriculture development, starting at this week’s Investment Summit. A dedicated number of investment pledges must be secured through the bilateral agreements signed both this week and throughout to strengthen the current pot.
While developments over the last 18 months could be interpreted as somewhat of a new dawn for the agricultural sector, the real test will be whether the institutional capacity and will exists for us to get it right.
Zamikhaya Maseti is a Senior Specialist for Public and Sector Policy at Land Bank. He writes in his personal capacity and the views expressed in this article are his own and do not necessarily represent policy positions of Land Bank.