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SA loses standing as most food-secure country in Africa – index

The sharp decline in agricultural employment and seasonal labour, as well as rising food and petrol prices, may have been major contributors to lowering SA’s ranking in the index: Agbiz economist Wandile Sihlobo.

NOMPU SIZIBA: The Global Food Security Index, which is a collaborative effort between The Economist magazine and Corteva, indicates that South Africa has regressed in this regard. South Africa is now said to rank 69th out of 111 countries surveyed. In 2019 its ranking was 44 out of 113. So why has it experienced this massive tumble, especially given that the agricultural sector was largely left to continue operating from the start of the lockdown in late March 2020 until now, precisely to ensure food security for the nation?

Well, to dissect what this all means for us I’m joined on the line by Wandile Sihlobo, chief economist at the Agricultural Business Chamber, also known as Agbiz.

Thank you very much, Wandile, for joining us. South Africa has prided itself for the longest time on being a fairly food-secure country, so what’s happened now that we’ve been found wanting in this global index?

WANDILE SIHLOBO: Indeed, Nompu. We have held the top position in the continent for quite some time. Now we are sitting at number [five] in the continent, with Morocco, Egypt, Tunisia and Algeria being on top. I think the key thing there is really on the affordability side, because the index overall, Nompu, has about four such indices, food affordability, availability… quality and safety, and the last is natural resources (and resilience). If you look at those sub-indices, there are capability issues, the one where South Africa is shown falling off the ladder, and that meant that we fell off in our ranking, technically by just one point from there to 2019.

But, because other countries saw an improvement within jobs, that (falling above?) 1% in affordability, the food price started rising in the fourth quarter much more aggressively than compared to the three quarters of the year.

As you rightly said, we had a good agricultural season, and agriculture pretty much opened. The key driver of food prices was largely on grains, and that was the rising demand from the southern African region, but also global grain prices being higher, as well as the exchange rate. The combination of those is really what saw the food prices rise and the large fall in that index.

NOMPU SIZIBA: So where in South Africa is food insecurity particularly prevalent?

WANDILE SIHLOBO: I think it may be mainly three provinces – Eastern Cape, KZN and Limpopo. That’s where we see a lot of hardship. If you look at the numbers coming out of Stats SA, they point to those provinces.

But also more recently, the work being done by *** the economists at Stellenbosch University and these teams, that work is showing that there is an increase in hunger, but also those provinces are now facing a much more difficult time.

NOMPU SIZIBA: So you’ve been reporting for quite some time that South Africa, especially with its good rains of late, is likely have a good harvest for maize as well as other crops. Do you think these developments will help ease the food price increases that we saw during 2020?

WANDILE SIHLOBO: Yes, absolutely. I think they will, because already, looking at food-price inflation, that is somewhere around 5% for the year. So we do think that the increase in the grain prices, as you have observed in the fourth quarter coming into the beginning of this year, I think from round about the end of March going forward you could see that softening. And obviously there’s always the lag about two to three months before that filters through to the retail prices. But I think there will be some softening on prices going forward.

NOMPU SIZIBA: But in the meantime, with government only being able to provide additional assistance to the poor through the special Covid grant until the end of April this year, are you not worried that that’s going to drive so many more people into extreme hunger? And, if so, given that you look at agriculture all the time, do you not think there are mechanisms that can be put in place to ensure that poorer South Africans don’t go hungry, because surely there’s enough food for all of us?

WANDILE SIHLOBO: I do think that the issue of increasing hunger definitely will probably do that, because already, Nompu, the fundamental thing that makes the Eastern Cape, KZN, Mpumalanga have the highest level of poverty is the fact that there’s also high unemployment there. So without economic opportunity we will see that.

I think in the near term … agriculture there isn’t much that we could do…. But if people are out of work and they have no money to buy food, that would be the challenge. But in the medium term to long run I do think that boosting agricultural activity in those provinces pretty much tells them that message along the master plans that have been developed, and making sure that there could be some job creation, agro-processing, agriculture and other industries, that could assist those provinces that we have mentioned.

NOMPU SIZIBA: Yes, that would be a good development, given that the fourth-quarter labour stats showed that agricultural employment declined by 8%. Now we know that people like the winemakers had a hard time and they weren’t employing people during last year, but what were some of the other drivers behind the decline?

WANDILE SIHLOBO: I think that was one of the major ones. Nompu, if you look at the agricultural jobs on the fourth quarter, there are really three provinces that saw a bit of an improvement in jobs – Mpumalanga, Gauteng and the Eastern Cape. Most of the provinces were pretty much on the decline, but I think the other added factor on the wine side, is the fact that seasonal labour is the one that you would see boosting up job opportunities in the last quarter of the year, especially when you have had a flat to good agricultural season. But because now they have to maintain social distances and all of those things following the health protocol, which are necessary, I think that also contributed to the muted job opportunities that we saw in agriculture.

NOMPU SIZIBA: Now I see that there are concerns that have been raised about agricultural workers’ minimum wages being raised by 16% to R21.69/hour. That’s basically the national minimum wage. On the face of it, it does look like a very low wage, but just explain to us what the issues are for employers from an agriculture employer’s of view – is it the rate of increase or what?

WANDILE SIHLOBO: I think many people are complaining largely about the rate of increase. But this is a difficult thing, Nompu, because at the same time you want welfare for people who are working in agriculture to be better off, have some better living standards; but at the same time the employers are facing rising input costs. So it’s a balance. But I also do think the message there is different, depending about which sub-sector you’re speaking about.

The people that I’m worried a lot about are those folks in the wine business, given that they were really facing some cashflow challenges because of the recent bans on sales. I do think they will struggle.

But overall for agriculture, I do think that we will have to look at the second quarter/third quarter numbers or data to actually see if there will be massive unemployment, or what really will happen. But certainly I haven’t personally done some modelling to see what the impact of the outcome will be. But my sense, judging from experience, is that it would be *** value chain by value chain and also sub-sector by sub-sector.

NOMPU SIZIBA: Now there are many factors that influence food prices, but what’s your outlook for the year around the food price trajectory? And to what extent does a major cost driver like the fuel price affect the picture, because we know that Brent crude oil has been hovering well above that $60/barrel level and doesn’t look like it’s going to be slipping anytime soon.

WANDILE SIHLOBO: I think the rising fuel prices are one of the upside risks, and you will remember, Nompu, that roughly 70% or so of South African grain is transported by road. So that always is one of the key cost issues to watch. But overall, if one looks at the output that we are expecting, as well as the price forecast for agricultural commodity prices, we do think that food-price inflation won’t be an issue from the second quarter. In the first quarter you might see a bit of a continued uptick, but from the second quarter ……. for the year we have just under 5% on average for South Africa’s food price inflation, slightly higher though, than last year, because last year’s average was around about 4.8% or so. But overall I do think that it will still be a good year.

NOMPU SIZIBA: Super. Wandile, always a pleasure talking to you. Wandile Sihlobo is chief economist at the Agricultural Business Chamber, also known as AgBiz.

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The three provinces with the best rainfall are the most food insecure? I put it to you that that is not due to lack of agricultural potential.

In modern times, food insecurity is always a political issue and never the result of a natural disaster. Famine controlled the population size during ancient times, before the development of property rights and rule of law. A society can get by without property rights when there is an abundance of food. Communalism and collectivism thrive under such circumstances of the abundance of resources.

The fact that population growth and droughts led to the scarcity of resources necessitated the development of property rights. The price signal, the cost structure and economic value are the most important contributions of property rights. The price signal allocates scarce resources in the most efficient manner. Collectivist societies lack the price signal to allocate resources efficiently. Therefore, they waste and misallocate scarce resources. Think about the Estina Dairy project or most emerging farmer projects for that matter.

This is why countries north of the Sahara and commercial farmers in South Africa provide enough food under difficult circumstances, while people suffer famine in the rest of Africa where agricultural resources are abundant.

When a nation moves away from property rights and the market system, to embrace collectivism, they set the Malthusian Trap and the population size will be forced to shrink to reflect the lack of property rights. We see evidence of this process in Zimbabwe and Venezuela.

Very well put as usual @Sensei.

“The sharp decline in agricultural employment and seasonal labour, as well as rising food and petrol prices, may have been major contributors to lowering SA’s ranking in the index: Agbiz economist Wandile Sihlobo.”
With All due respect to Mr Wandile, he needs to get his head out of his rear end…

It is very clear that the threat of EWC is causing a cliffhanger in the commercial food production sector. Why will the modern farmer take any risk and re-invest their earning and knowledge with this guillotine hanging above their heads?

The roman empire grew for 2 main reasons: Strong Property Rights and a Sound Money System whilst they developed infrastructure and maintained it.

South Africa is collapsing for exactly the opposite reasons. Weak Property Rights (Add in Security and Protection thereof), Money Printing and a Lack of Reinvestment to not only maintain existing infrastructure but to develop more for society to grow.

https://oxford.universitypressscholarship.com/view/10.1093/acprof:oso/9780198728924.001.0001/acprof-9780198728924-chapter-7

https://oxford.universitypressscholarship.com/view/10.1093/acprof:oso/9780198728924.001.0001/acprof-9780198728924

Well let’s just say it like it is:the 3 provinces that are the most food insecure are the ones with the most land in the hands of the traditional rural communities. Much like Zim it simply highlights that land doesn’t equal food; farming is a specialised, capital intensive industry and requires scale to reward the former two factors. Why isn’t this discussed more openly in our perpetual land debates? Decent paying jobs feed people; not land.

You keep threatening farmers and chasing them away with violent attacks and then you wonder why your food security is threatened. You are your own worst enemy

Societies that treat their farmers like the voting majority treats local commercial farmers, exterminate themselves through famine, without failure.
Take any businessman from anywhere in the world and explain to him the local issues like the barriers to entry into agriculture, plus the production risks, political risks, currency risks, labour risks, and crime stats, and ask him to invest his money to earn the expected return. He will laugh at you and call you crazy.

It takes a very special and scarce breed to farm in South Africa. Anybody can farm in Europe and the USA because the taxpayers subsidise them. A farmer in the USA and Europe, who operates a unit of the same size as the average South African farm, earns R1.5 million in benefits from the state before he has produced anything. Their farmers receive the social grant, while our farmers pay the social grant.

Any emerging farmer project is dead in the water because they cannot compete with the subsidies in wealthy nations. Local commercial farmers subsidise the local consumers with the difference between their return on capital and the deposit rate on a bank deposit.

The local farmers are the real worker-bees that overexert themselves to feed the nation that wants to steal their property.

End of comments.

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