The National Development Plan identifies the agricultural and agroprocessing sectors as drivers of growth, job creation and increased exports, as well as being key for the growth of small, medium-sized and microenterprises.
However, it also identifies a number of obstacles that could potentially hinder the achievement of these goals, former Finance Minister Nhlahlha Nene said on Wednesday.
Addressing an audience at the Standard Bank Agribusiness Roadshow, in Centurion, Gauteng, he highlighted that addressing barriers to entry in these sectors requires a deep understanding of the challenges faced, including a lack of access to infrastructure, especially to irrigation and farming equipment, and a lack of access to consumer markets.
Nene added that the agricultural value chain, characterised by successive levels of processing and value addition, on the whole did not promote the ability of farmers, especially entry-level farmers, to participate in the agricultural and agroprocessing industries.
This depends on how they fit into the value chain and how that value chain is governed.
There are also substantial scale effects and a lot of time required to build production capabilities, he highlighted.
“Addressing barriers to entry must be considered as part of the agriculture and industrial policy framework. There are no quick fixes.”
He added that funding new entry is risky and that payoffs take a long time to materialise. “Development funds are required for this and incentive programmes are poorly designed, burdensome and difficult to navigate.”
Nene stated that new entrants into the industry must have a thorough understanding of the entire agroprocessing value chain to be successful.
Also speaking at the conference, analysis firm mindofafox scenario strategist Chantelle Ilbury listed land reform and climate change as the biggest challenges facing the agricultural sector this year.
She noted, however, that climate change could be mitigated through innovation. “Looking at different technologies and techniques, we can examine the effects of climate change and work within that structure.”
“There is a lot of noise around the redistribution of land without compensation debate and it scares the industry. It’s also negatively impacting the global perception of the South African agricultural and agroprocessing industry,” Ilbury said, pointing out that the agricultural sector is looking at preparing for a ‘failed State’ scenario and wants to further diversify its geographic footprint, owing to uncertainty about policy and land reform going forward.
Meanwhile, strike action revolving around the implementation of a national minimum wage and mechanisation could also negatively impact on the agricultural sector this year.