Agriculture Could Help Save Sinking SA Economy, Says Industry Expert

Whether you pour one litre of water into a bucket riddled with holes, or a thousand litres, the outcome will be the same: There will be no water left. So writes Theo de Jager, head of the SA Agri Initiative (SAAi) and president of the World Agricultural Organisation.

The bottom line of Finance Minister Tito Mboweni’s interim budget speech is that there is no longer enough water to pour into the bucket – mainly because we’ve borrowed too much money already. However, the availability is irrelevant, because failure to adjust the policy environment (fixing the bucket) will result in South Africa’s economic collapse.

This is exactly what happened in Zimbabwe.

The South African economy has been robbed blind, and almost two years after the start of the Zondo commission – which heard damning evidence about state capture and looting – not a single person has been sent to prison. As long as the demon of fraud and looting is allowed to roam freely in the civil service, the size of the budget will make no difference.

State interference in the economy under the guise of BBBEE, cadre deployment and other race-based schemes such as the COVID-19 emergency relief programme, had far-reaching consequences and there is no scope for fixing or expanding the economy, regardless of whether it is budgeted for or extorted from the private sector.

The R3 billion lifeline that was extended to the Land Bank was essential, because South Africa has never needed the Land Bank more than it does now. Unlike commercial banks, the Land Bank doesn’t have clients in the tourism, manufacturing, retail, mining or transport industries and the fact that the bank focuses solely on the agricultural sector makes it entirely dependent on land as surety. Expropriation without compensation erodes the bank’s collateral.

threat of expropriation

Mboweni is correct in saying that job creation is very important at this stage, and especially in the rural areas, where it is needed the most. However, it requires investment and financing that are reliant on policy certainty. No one in their right mind will invest in property-based businesses while the threat of expropriation hangs over their head. The policy environment is too uncertain for that to happen.

Agriculture can create more sustainable job opportunities over a wider area and in a shorter time than any other sector of the economy. This is not happening, though, because labour laws and administration are too stringent. No farmer is willing to employ extra workers only to realise later that they don’t comply with his business ethos – knowing that labour laws make it extremely difficult to let them go. Even if it is possible to dismiss an employee after an extensive and expensive process, tenure law makes it difficult to get such a person to leave a farm. Policies will first have to change.

SA farmers competitive globally

Despite a hostile business environment, South African farmers are still competitive in world markets and managed to maintain South Africa’s food security under very difficult circumstances during the COVID-19 lockdown – while still being able to produce and export large surpluses. Commercial farmers, who supply food to the majority of the urban population, received no emergency relief – not during the lockdown, not for the drought and not for the recent massive surge in theft. If agriculture’s potential is allowed to be released in a more policy-friendly environment, it can create the type of wealth needed to eradicate hunger and poverty, create jobs, bring in foreign currency and fill the state’s coffers, but the bucket needs to be fixed first.