South Africa: Planning for agriculture growth

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South Africa is looking to step up investment in its agriculture sector, in a bid to not only address unemployment and rural poverty but also to improve food security.

While agriculture has traditionally been one of South Africa’s largest employers, the percentage of people working in the sector has fallen in the past several decades and now stands at about 7%. Agriculture’s share of GDP has also eased and currently contributes around 3% of the national total, though this is boosted to above 10% when the agro-industrial sector is taken into account.

While part of this is due to the rise of South Africa’s prominent tertiary sectors, the government is nonetheless working to improve agricultural productivity through a number of ways, included increased direct funding for government programmes.

The Ministry of Agriculture, Forestry and Fisheries saw a 17% increase in its budget allocation of $560m in the 2011-12 budget, handed down in late February. A further $28.5m is to be provided to the ministry, as per the government’s mid-term budget unveiled in late October 25, though even with this top-up, agriculture’s allocation is still only a fraction of the budget’s $105.8bn total.

The ministry already has plans to increase employment as part of its contribution to the New Growth Path programme, an initiative launched in October last year that focuses on creating jobs in six priority areas, including agriculture.

The initiative targets the creation of 130,000 jobs in agriculture, forestry and fisheries by 2014 and supports the establishment of 50,000 commercially oriented smallholder farmers. The ministry’s goal is to see 300,000 households operating in agricultural smallholder schemes, plus an additional 145,000 jobs in agro-processing, by 2016.

The sector is also set to benefit through programmes to be developed for the National Development Plan (NDP), the government’s blueprint for economic and social growth through 2030. Launched by Trevor Manuel, the minister in the presidency in charge of the National Planning Commission, on November 11, the plan aims to tackle the poor state of the country’s rural economy.

According to Manuel, agriculture has the potential to create close to 1m new jobs by 2030, but substantial reforms, as well as sizeable capital injections from both the state and the private sector, are needed.

The commission’s recommendations include expanding irrigated agriculture by substantially investing in water resource and irrigation infrastructure; putting in place security of tenure for communal farmers and establishing flexible systems of land use for different kinds of farming on communal lands; and giving greater support to public-private partnerships to develop under-exploited opportunities.

There are sizeable obstacles that must be overcome, however, if the country is to reap the hoped-for harvest, including a limited amount of arable land, some of which is subject to severe recurring drought.

However, if these goals are met, by 2030 South Africa’s rural communities should have greater opportunities to participate fully in the economic, social and political life of the country, according to the NDP.

“Successful land reform, job creation and rising agricultural production will all contribute to the development of an inclusive rural economy,” the plan states.

Talking up the NDP through South African media and addresses to leading organisations, Manuel said it was crucial to create jobs in order to stimulate growth and reduce social inequality. Along with mining and manufacturing, he identified agriculture as one of the prime sectors to achieve this.

“We must...grow agricultural output and focus on agro-processing,” Manuel told a meeting of the Federation of Unions of South Africa in late November.

The need to improve performance in agriculture, mining and manufacturing was made all the more clear following the release of figures by Statistics South Africa in late November that showed that the economy was slowing, with the three sectors identified by Manuel all contracting. Agriculture’s lower performance – the sector contracted by 4.3% compared to the third quarter of last year – was in part attributed to the weakening global economy, with the slowdown in some of South Africa’s main export markets eating into produce sales.

Though committed to bolstering the agriculture sector, the government also has many other calls on its limited funds. As such, it will have to work hard to convince the private sector to come to the party, possibly through enhanced incentives. A failure to attract private investment could see the agricultural component of the NDP and the New Growth Path wither on the vine.

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