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The new director-general at the national department of agriculture (now known as the department of agriculture, land reform & rural development) has worked there for many years and is well-versed in the sector. Before his official appointment three weeks ago, Mooketsa Ramasodi had been serving as an acting director-general for more than two years.
Under his leadership the department championed a number of initiatives, including the development of the sector’s masterplans and a blended finance scheme. Both of these are joint efforts between the department and other agribusiness stakeholders, such as commercial banks and commodity organisations. They are reforms being designed to address the lack of transformation, inclusive growth and developmental finance in agriculture.
The envisaged key objective here is alleviating unemployment; enhancing food security; and substantially increasing growth, transformation and equitable access to the means of production to achieve inclusivity in the sector. While it is too early to assess the collaboration’s accomplishments, the progress made thus far is noteworthy.
In light of this, the appointment of the new director-general is timely and highly commendable. As a senior official at the department for many years, he has earned a great deal of respect from both the department’s officials and industry stakeholders. As such there is a widespread sentiment among industry stakeholders that his expertise and knowledge of the sector, as well as his understanding of what is required to address the numerous challenges the sector faces, will be critical in the implementation of the aforementioned initiatives.
SA is a formidable competitor in the global agricultural market and its agricultural products, notably fruits and wine, are among the most prominent in international markets, particularly in Europe and Africa. Furthermore, while the sector’s share of the SA economy has gradually declined to about 3%, owing primarily to faster growth rates and higher income elasticities of demand for non-agricultural goods and services, agriculture’s importance in SA’s economic and social fabric goes far beyond this indicator.
First, while agriculture’s proportional contribution to GDP has dropped, in terms of value added, the sector continues to expand significantly year on year and is essential for job creation in the country. As such, agriculture currently accounts for about 5% of SA’s labour force, with the potential to push that to more than 10%. In addition, as a strong competitor in the global agricultural market, SA’s agricultural exports in international markets are reaching new highs every year — making agriculture a significant source of foreign direct investment for the country.
An broad overview of this presents a good image of SA’s agriculture industry, but when viewed from within, the picture is not so good for all. Half of SA’s agriculture story is good — for the 38,000-plus large-scale commercial farmers. The other half of the story — the smallholder farming sector, which is often over-shadowed by big brother large-scale commercial farming sector — has remained the same due to the long-standing challenges that confront it. It is this part of the story that remains a major problem despite several government initiatives to change it.
One of the often-cited problems facing the smallholder farming sector is low productivity, which is caused by a number of interrelated factors such as lack of production land, lack of quality inputs (including relevant equipment and mechanisation, fertiliser, seeds, agrochemicals and irrigation water). Those who have been in the industry for several years will recall a number of government initiatives and programmes aimed at addressing these issues.
However, that we are still discussing them after many years suggests that such initiatives and programmes were neither effective nor adequately implemented. Instead of acknowledging this, state officials at all levels of government (national, provincial and local) defend the indefensible by claiming they have spent millions on this and that project, but with no returns on investment to show. Unfortunately, the department’s credibility has suffered as a result of this poor investment expenditure syndrome and negative returns. Hopefully with Ramasodi at the helm the department’s credibility can be restored.
That said, the objective here is not to criticise or blame previous government initiatives in the industry for their ineffectiveness, because doing so would not assist with anything. Instead, the objective is to caution the director-general and senior colleagues at the department about the critical importance of ensuring that the current initiatives being worked on by the department in collaboration with the private sector and other industry organisations, particularly the industry masterplans and blended finance scheme, are implemented as soon as possible.
Prioritising the implementation of these initiatives will not only improve agricultural productivity and competitiveness of the SA agricultural sector (particularly the smallholder farming sector), but also increase the level of trust, which is currently lacking between the government and the private sector. But equally important, it is the responsibility of all partners involved (the department, banks, industry organs and other stakeholders) in these partnership endeavours to deliver on the commitments they made.
Therefore, it rests on Ramasodi’s shoulders to ensure, among other things, that the department does not falter in the planning, progress and ultimately the implementation of the initiatives that are in the making for the betterment of the sector. Failure in this regard would signal yet another unsuccessful attempt by the state and social partners to fast track transformation and inclusivity in agriculture, which would mean the sector’s current challenges will still be a topic of debate in 2030.
Hlomendlini, an agricultural economist, is a senior agriculture specialist in Absa’s agribusiness unit.
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.