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Agri sector heading for recovery

Drought conditions in the Western Cape are still of great concern, says Hamlet Hlomendlini, chief economist at AgriSA.

NASTASSIA ARENDSE:  I’m joined in the studio by Hamlet Hlomendlini, who is chief economist at AgriSA. We are going to be looking at the state of agriculture in South Africa. Hamlet, I see your colleague tends to tweet a lot about it. Wandile is all over the place when it comes to agriculture.

Thanks so much for your time

HAMLET HLOMENDLINI:  Thank you for having me. I appreciate it.

NASTASSIA ARENDSE:  The one thing about agriculture – and we were talking about it with our market watcher a little earlier – is that it was one of the drivers in the GDP figures that were released a couple of says ago. What is the state of agriculture right now from your perspective?

HAMLET HLOMENDLINI:  Well, I really do concur with your previous guest. We’ve seen agriculture kind of revitalising itself. At the moment we think that it is going towards recovery, especially from the drought that we experienced in the past two years. So the state of agriculture is looking good at the moment, and we are kind of expecting that it will continue on that trajectory of positive contribution to the GDP because we want to see very strong agriculture in South Africa. And we need it to lift up the economy.

You would remember that agriculture directly and indirectly influences other sectors of the economy, like for instance manufacturing. Agriculture is a big buyer of inputs from the manufacturing sector. And of course the manufacturing sector is also a big buyer of primary products coming from the agriculture sector.

So, going forward, I think things are going to turn out to be positive for the agriculture sector in South Africa.

NASTASSIA ARENDSE:  There is news about the Western Cape and I suppose particularly in Cape Town, where it is bit dry right now. They don’t have enough water. Is that still an issue that could affect the Western Cape region when it comes to agriculture?

HAMLET HLOMENDLINI:  Of course. It is still a very, very big concern for the sector, and we think that if it wasn’t for the state of drought in the Western Cape and parts of the Eastern Cape, by the way, the contribution to GDP by the sector would have been much more than we saw recently. So it’s still a big concern, what is happening in the Western Cape. And we also anticipate or kind of predict that for the next quarter, because of that, we might experience a bit of slow growth within the agriculture sector, although it will still be a positive contribution. But it will not be as robust as it was in the second quarter, because of what is happening in the Western Cape and parts of the Eastern Cape.

NASTASSIA ARENDSE:  In terms of the regions that are the biggest contributors to the agriculture sector, be it the Western Cape or the Northern Province or whatever the case, which are the biggest contributors in the region when it comes to agricultural produce?

HAMLET HLOMENDLINI:  Sometimes we are not looking per region that thoroughly. Ja, you can look at it that way. But we would look at it in terms of an enterprise or subsectors within the agricultural sector. If you were to go for the regional route, you would see that the Western Cape, Free State and Limpopo are actually big contributors. And if you were to dig down and look into specific subsectors, you would notice that it’s mainly the horticultural subsector and the grains that are doing well.

NASTASSIA ARENDSE:  The Brics summit took place in Xiamen in China. When we look at the export side of South Africa’s agriculture, is there a market for exporting to the Brics nations?

HAMLET HLOMENDLINI:  Yes, of course there is a market in the Brics nations, especially the likes of Russia and perhaps China when we look at, for instance, the horticultural products and maybe livestock products as well. There is some kind of leverage for us when we look at those markets, and we think relations within the Brics countries would actually strengthen the trade relations between South Africa and those countries.

NASTASSIA ARENDSE:  I always see these reports from the AfDB where they talk about agriculture, especially on the continent, and the advantage that we should be taking in terms of what we do, and the demand for food, and what we export. Then I start wondering, when I look at young people, is the agricultural sector slowly becoming attractive, do I suddenly see a sector that I could go into, or is it still not as fascinating?

HAMLET HLOMENDLINI:  I think if you are looking at it from an African point of view a lot of young people have this image about agriculture – that it’s really not attractive to them compared to other sectors. Of course, it’s associated with debt and all of those things.

But if you look specifically in South Africa you would notice – and this is a conversation that I had even this morning with the deputy minister of agriculture, who has been very, very practically involved in getting young people in the agriculture sector – that in South Africa we’ve seen that there is a change. Of course, we are still worried about the average age of the farmer in South Africa, which is something like 65, compared to other regions in the world. But we are seeing young people seeing more opportunities in agriculture, and they are starting to make some money.

I was sitting with one of the people I respect very much, a semi-farmer involved in piggery, and she was talking about the opportunities that are there that need to be explored by young people. It’s just that young people do not have much information. In fact, they do not dig deep to find it. But there are a lot of opportunities for young people and we need young people to come to the agricultural sector for its sustainability.

NASTASSIA ARENDSE:  One of the questions that has just come in is land, talking about agriculture and land. I suppose they sort of come together. There is no way we can talk about South Africa’s agriculture without people talking about land reform, which I can imagine is going to be one of those big conversations as we near the December conference, especially when we have to now decide what’s going to happen. What are your thoughts on land and agriculture together?

HAMLET HLOMENDLINI:  Perhaps what I can say is maybe just go back a bit. Look specifically into the African agriculture that is in South Africa. It’s called black agriculture, how it was before the Land Acts of 1913 and 1936. It was a thriving sector and black people were very much involved in the agricultural sector and they were using opportunities that were there, and they were exporting to other regions as well. That’s how good they were.

But when the Land Acts came into place, and they dismantled the agricultural sector in the black communities and people started losing their land, that actually tells you from there that land is very important. You cannot be embarking on agricultural activities without land. You need land. And the biggest problem that we have, if I were to look at smallholder farmers at the moment, agriculture is very reliant on the financial institutions. You need money from the financial institutions.

The people that are big within the sector right now are big because they are getting money from the financial institutions, and they use their land as collateral. But if you are looking at smallholder farmers, they do not have ownership of the land. Whatever piece of land they have, they do not have ownership of it. Therefore they cannot go to financial institutions and use the land they occupy as collateral to gaining loans, which puts them on the back foot already.

So the issue of land is big in South Africa and it needs to be addressed. The ANC in its policy conference put it on the table that there should in South Africa be land expropriation without compensation. Of course, that is something that is against the Constitution. The Constitution will need to be amended for that to happen. But we are actually looking at that option, and we feel like it would have some kind of negative effect similar to what you have seen in Zimbabwe if we were to go that route. So we are pushing for government to come up with a better solution to land expropriation without compensation which will address the issue of land in South Africa.

NASTASSIA ARENDSE:  And land acquisition by government – is the budget enough to be able to get sufficient land in order for black farmers to get access to that land?

HAMLET HLOMENDLINI:  From an AgriSA perspective and other agricultural associations, we’ve been pushing for a land audit in South Africa because we want to see what is in the government’s hands, what is in the so-called white commercial farmers’ and black commercial farmers’ hands – and smallholder farmers’ hands, if there are any that own land. And what is there that does not belong to anybody.

So at the moment the government has acquired a lot of farms from the land reform programmes, but those farms right now, some of them are not in the state they were in before they acquired them, and some where they put people that are actually doing the work and doing what they are supposed to be doing.

At this point in time we cannot really say government has acquired this much land. But there is something like 240 000 hectares of land that is sitting in the government’s hands that was acquired through the land reform programme that is lying in wait, and which needs to be utilised.

NASTASSIA ARENDSE:  The other question was: What is government doing to transform the commercial farmers?

HAMLET HLOMENDLINI:  I don’t know what that means – “transform commercial farmers” – but I think to transform or maybe to take the emerging black farmers into commercial space, that’s the question. I fear to speak for government, but I know that there are initiatives in place. I said earlier I was talking to the deputy minister of agriculture and she did say that there are initiatives from the department of agriculture’s side that they are involved in to help emerging farmers to stop emerging forever, and actually transit to commercial farmers.

And also other agricultural associations are collaborating with the government to help it to come up with ways to help the smallholder farmers and get into the commercial sector.

NASTASSIA ARENDSE:  I do want to invite you again so we can talk about the role of women in South Africa, especially in the agricultural space. I think that’s a very important topic to have.

But thank you so much for your time.

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