WANDILE SIHLOBO: Act now to avoid crisis management

I spent most of July on the road, engaging with agribusiness and people in the sector in various regions of SA. The feedback about the near-term outlook was reasonably positive in all our engagements, with many attributing their optimism to the favourable 2022/23 summer crop and 2023/24 winter crop seasons.

The feedback from the horticulture and wine industries also remained encouraging, as various stakeholders forecast growth and expansion prospects in the coming years. However, the outlook was less optimistic when talking to the livestock and poultry industries, which have struggled with higher feed costs and persistent outbreaks of disease.

Beyond that, everyone agreed that persistent load-shedding, rising protectionism in key export markets, high interest rates, intensified geopolitical tensions, continued dysfunction in municipalities and network industries (water, rail and ports) and the deterioration of rural roads remain a significant threat to the sustainability of their businesses.

While these are not new issues, the extent of weakness this year has reached worrying levels in some areas. Many, but not all, of these issues are within the government's control and in such instances it should urgently assist. Here are a few such cases.   

First, the summer rainfall, while supporting agricultural production, has also worsened the damage on neglected rural roads. This is a challenge facing all farmers, not just large commercial entities that serve a broader clientele.

Emerging or new black farmers, with limited financial resources, face this challenge more acutely. Roads between the rural towns of the Eastern Cape, the Free State, the North West, Limpopo and KwaZulu-Natal are poorly maintained and in some instances are unserviceable.

Compounding the issue is the reality that SA now transports more than two-thirds of its agricultural produce by road, as a result of well-documented rail constraints. Higher agricultural output without functional roads doesn’t yield the full financial benefit to farmers and agribusinesses; some of them even fund construction out of their own pockets to maintain roads. Meanwhile, municipalities often have the allocated financial budget to cover their infrastructure needs but mismanage the funds, as so often reported by the auditor-general. 

Secondly, the rising protectionism in crucial export markets remains a major challenge. Here, the government must take the lead and help engage with our trading partners to resolve the issue. Moreover, the need for expanding export opportunities has become even more urgent as agricultural output consistently improves and the country has limited capacity to absorb new produce.

Japan, China, India, Saudi Arabia, Bangladesh, the Philippines and South Korea are key markets where SA agriculture and agribusinesses are interested in expanding. While working on new markets we must maintain access to existing markets such as the EU, Africa, the US and various other Asian markets. 

Thirdly, biosecurity remains a challenge, as we have seen with various outbreaks of foot-and-mouth disease, African swine fever and avian influenza. All of these worsen the operating conditions in industries that have also felt higher input costs.

Exports of livestock products have also been affected as a result of the outbreaks. The government and organised agriculture and industry bodies need to work together to address the country’s biosecurity challenges.

Animal diseases are likely to be more prevalent as climate change intensifies. As such, the department of agriculture, land reform & rural development should consider earmarking a share of its annual budget for such emergencies.

The issues discussed here aren’t exhaustive, but I believe they highlight the key intervention areas that translate the ideas on paper in various plans into tangible projects.

• Sihlobo is chief economist at the Agricultural Business Chamber of SA and a senior fellow in Stellenbosch University’s department of agricultural economics.