It is not a case of South Africa needing to support either small- or large-scale farming, but that both are important for the country’s development, says business organisation Agricultural Business Chamber (ABC) CEO Dr John Purchase.
Specifically, large-scale farming will provide food security and sustainable agriculture, while support for the development of small-scale farming will improve household food security, social stability and reduce the drive towards urbanisation.
Poor infrastructure in regions where small-scale farming takes place exacerbates the problem of high transaction costs, owing to the lack of economies of scale. Further, smallholders are generally disconnected from input and services markets, as well as output markets.
“However, South Africa’s well-established commercial value chains create access opportunities for small-scale producers. This will fuel a synergistic relationship that is becoming evident in South Africa, albeit at an insufficient level to improve the viability and environmental sustainability of small-scale, rural farming,” says Purchase.
Land degradation, both physical, such as soil erosion, and chemical, such as acidification, have not been observed in commercial farming areas, but are evident in subsistence farming areas. This means that smallholder producers alone cannot provide food security for the country, or farm on a sustainable basis, necessitating the support of large-scale commercial farming in conjunction with support structures for smallholders, he explains.
“Internationally, but especially in South Africa, there are different reasons for supporting both commercial producers and smallholder or subsistence producers, with the aim of achieving environmental sustainability. It is not an ‘either/or’ situation but rather an ‘and’ situation.”
The agrofood industry and value chains in South Africa fared only modestly well in 2010 as the recession, depressed trading and export conditions and resultant lower commodity prices impacted on the sector.
“From a production perspective, the saving grace in 2010 was that production conditions were generally fairly favourable and this assisted in the recovery phase from the recession. However, persistent droughts in certain areas impacted negatively on the industry,” notes Purchase.
To date this year, the ABC has observed a recovery in commodity prices and trading conditions, while good production conditions in the country have underpinned a significant improvement in the chamber’s Agribusiness Confidence Index, which points to moderately positive prospects for most value chains in the agrofood industry for the rest of the year, he adds.
“Improved varieties, through breeding including the use of genetic modification (GM) and biotechnology in crops, have made a significant contribution to the much-improved productivity, or yields. However, improved management practices and irrigation systems have had as significant an impact, also resulting in improved water use efficiency.”
Further, producers are increasingly implementing conservation agriculture practices, such as no, or minimal, tillage and precision farming, which not only reduces costs but also ensures much improved environmental sustainability.
Both GM technologies and conservation agriculture practices are green technologies because they reduce the use of agrochemicals, conserve soil water, are less energy intensive and use water more efficiently under irrigation conditions.
There are also many other green technologies in the pipeline from key multinational companies active in South Africa that will help to improve long-term sustainability, says Purchase.
“From an engineering perspective, the gains made in providing cost-effective and water-efficient irrigation technologies will also contribute to ensuring competitiveness and environmental sustainability. Fortunately, the South African industry has close links to a number of international companies developing these technologies and bringing them to South Africa.”
Meanwhile, threats to farming include challenges around rural infrastructure deterioration, high energy costs, negative biosecurity impacts (including avian flu, Rift Valley fever and foot-and-mouth disease) and nationalisation threats impacting on investment. These affect the country’s competitiveness and long-term prospects, he notes.
“The ABC aims to ensure an enabling environment for our members to perform competitively and profitably, and prosper as a result. This requires us to contribute to national policy development and the legislative environment, facilitate trade and provide leadership on transformation and broad-based economic empowerment as well as provide business intelligence,” says Purchase.
However, the organisation’s biggest concern is around the negative impact on South Africa’s agricultural competitiveness brought about by large price increases in administered energy and logistics costs. Further, issues around crime, corruption, land reform policy threats and proposed labour legislation are the most important challenges that the chamber and the industry are dealing with.
“Prospects for 2011 are fairly favourable, but the sword of nationalisation hangs heavy over the industry and will deter the investment necessary to ensure that the industry grows, gains new entrants, creates new jobs and ensures national food security, which we have for too long taken for granted in South Africa.
“The country has a remarkably well-developed, resilient and globally competitive agrofood system that ensures national food security. We must nurture and protect this enormous asset and not let outdated and failed ideologies hijack a vibrant and dynamic national asset,” he concludes.