According to a recent study, South African agriculture's reputation as a competitive producer is threatened by state policies. This comes at the very time that global prices for food and commodities are on the rise, compounding worries for the farm industry.
At issue are the government's policies of land reform, which would have 30% of the country's commercial agricultural land owned by black farmers by 2014. According to a Johannesburg-based policy think tank, the Centre for Development and Enterprise (CDE), large areas of South Africa's productive farmland have been slated for redistribution, though this is hampered by the slow pace of processing claims and transferring titles. As of the end of 2007, state redistribution of white-owned land increased to just 4.7%, a marginal rise from the 4.3% in 2004, the CDE said in a report released on May 6. The actual level of black ownership of farmland was closer to 7% nationwide.
"The extent of unresolved restitution claims in some regions of the country and the long delays in resolving these claims are leading to large swathes of agricultural land being frozen," the CDE said in its report.
One of the hardest hit sub-sectors is the sugar production industry. According to a statement from the South African Cane Growers Association, cited in the report, half of all land normally cultivated for the crop had land claims hanging over it.
"This means that farmers cannot borrow against their land for the next harvest or to buy machinery or make improvements; it means that aspirant new black farmers cannot get bank loans to purchase this land," the association said in its submission.
Ann Bernstein, the executive director of CDE, said that many of the participants in land reform projects were not better off after receiving their new land and that the government's policy often ignored the realities of commercial agriculture.
The CDE report set out a proposed plan of action to boost land reform and to promote rural and agricultural development. This included identifying land needs and speeding up the redistribution process; a definitive study of current land usage and the potential for redistribution of state-owned land; as well as the involvement of the private sector, particularly agri-business, in the reform and agricultural development process.
Agriculture remains a vital sector. Although its contribution to gross domestic product has slipped over the years, from around 11% in the 1960s to some 3% last year, this fall is in part due to the rise of other industries, especially the manufacturing and services sectors, rather than a downturn in farming. While making an apparently modest contribution to GDP, analysts estimate the indirect input is closer to 15% when related industries dependent are taken into account. Around 30% of the country's workforce relies directly or indirectly on agriculture for their source of income.
Land reform and black empowerment are only two of the issues facing South Africa's agriculture sector. It is estimated that 30% of South Africa's workforce relies directly or indirectly on agriculture for their source of income, though according to the government's most recent labour force survey, some 455,000 agricultural jobs were lost in the past six years, in part due to rising costs following new minimum wage requirements introduced in 2000.
The sector is also being hit by cost increases above and beyond its wage bill. Over the past year, the prices of many essential materials, including grain for animal fodder and oil-based products such as fuel and chemical fertilisers, have doubled.
On May 6, the trade union Solidarity called on the government to cut fuel taxes after another round of price hikes were announced, warning that the agriculture sector, which uses 7.78% of all diesel consumed in South Africa, would suffer if forced to pay more for fuel.
"[The mining and agricultural] industries are by and large the mainstays of the South African economy and they will be very hard hit by the latest price increases," Solidarity spokesman Jaco Kleynhans said.
The increase in fuel costs would in turn be passed on to consumers as farmers and producers would be forced to raise prices, he said.
With many farmers having trouble making ends meet, consumers are already facing a new wave of price increases, and staples such as maize, milk, poultry and pork are all tipped to surge in the coming weeks. This will further serve to fuel inflation, with rising food costs being cited as one of the major factors pushing up the consumer price index, which hit a five-year high of 10.1% in March.
Rising food costs have prompted the government to consider issuing food vouchers or cash to poor households or to cap prices on some basic products. While this may help those having difficulty putting food on the table, it will do little to assist South Africa's embattled farmers.