By Dr Simphiwe Ngqangweni and Matsobane Mpyana
The Agriculture and Agro-processing Master Plan (AAMP) stands as a pivotal framework for driving inclusive growth, investments and sustainable jobs in South Africa’s agricultural sector. Since it was signed on May 12, 2022, progress made in its implementation is generally under-appreciated.
In reality, some of its agreed measures were put in place already at the onset of the sixth democratic administration in 2019, and began bearing fruit soon after. For example, the review and reform of the value chain round tables was undertaken to sharpen the focus and prioritisation of market access issues for the fruits and meat industries.
A special focus on sugar and poultry started in 2019 intending to stabilise and safeguard them against the surge of cheap imports and other local inefficiencies that were diminishing the local production capacity.
Because of these strategic interventions and others, the South African agricultural economy expanded by more than 25% in real terms in the past five years, hence, the AAMP estimates a further 12% to 15% growth rate in the next years if the implementation is intensified.
The country now exports more than $12.8 billion (R239bn) of agricultural products a year, which is roughly half of the production each year to more than 181 countries across the world. This implies that the discussions and collaboration between government and industries at the value chain round tables have created new and better opportunities for exporters.
Since its formal signing, AAMP implementation has been evident on many fronts. South Africa has recently secured an export protocol for avocado shipments to China, while there is satisfactory progress in market access negotiations with India.
Furthermore, export markets for horticultural products in the UK and Europe have been sustained, although phytosanitary and sanitary issues on citrus remain a challenge in the EU market.
South Africa has further diversified its red meat export market towards the Middle Eastern nations of Saudi Arabia, Oman, Iran and Kuwait. Moreover, China was persuaded to reopen its borders for the importation of South Africa’s wool and beef following the success in containing the spread of foot-and-mouth disease in the country in 2022.
With employment being one of the critical success measures of the AAMP, the agricultural sector has been a star performer since the outbreak of the Covid-19 pandemic. Between 2019 and 2023, the sector created 113 000 new jobs, which increased the total sector employment to 956 000 people, although sectoral employment slightly dipped in the last quarter of 2023.
The rise in employment is underpinned by industry growth coupled with investments in skills development. Strategic partnerships and co-funded programmes between AgriSETA and the private sector have seen skilling of farmers and entrepreneurs in wool, fruits, red meat and other commodities.
The National Rural Youth Service Corps – a government programme for skilling rural youth – has seen thousands of young people being trained in various trades that are required for running a successful agribusiness.
A public-private partnership approach in implementation is the cornerstone of the AAMP. Positive sentiments among small-scale and communal beef farmers have been expressed as a result of market access opportunities provided by the Karan Beef Group following its acquisition of the TripleA facility in KwaZulu- Natal.
In the mohair industry, FirstRand has invested in empowering black farmers and upscaling them to a commercial level, as part of a scheme co-financed by the government.
In the potato industry, the Agricultural Development Agency, working with the government and commodity group, Potatoes SA, is expanding production for small-scale farmers and assisting them to invest downstream into agro-processing.
On the finance front, the Blended Finance Scheme (BFS), launched in October 2022, continues to perform impressively to the benefit of small and medium-sized farm businesses. Of the annual injection of R650 million from the Department of Agriculture, Land Reform and Rural Development and the Land Bank, which is expected to grow to R1.95bn by the end of the third year, over R550m (grant and loan) of the BFS funds have been disbursed to applicants across all nine provinces, with a further R400m worth of applications in the pipeline.
Though these implementation gains are positive, there remains a big concern about the sectoral structural constraints such as the provision of reliable electricity, the ongoing inefficiencies at ports, farmers, and farm labour safety, and enhancing the tenure security of land reform farms.
To mitigate the effects of these issues on the competitiveness of the sector, the government has launched the Agro Energy Fund to assist farmers in diversifying their energy sources, a move that will help energy-intensive industries like piggery, poultry and others. The government has also initiated the transfer of title deeds to farmers which will unlock private capital for the development of land reform farms.
Institutions such as Agbiz working with the government are upscaling the efforts to address inefficiencies at the ports. The fruit industry in the western regions, led by the Fresh Produce Exporters Forum, has formed a “war room” structure with Transnet’s management for the Port of Cape Town, which meets at least once a week to discuss operational issues. This platform is vital to manage exports out of the Port of Cape Town for the remainder of the season and is already yielding results.
While acknowledging that a generally strong policy foundation exists in the sector, albeit with certain gaps, the AAMP seeks to mobilise the government, the private sector, labour and community stakeholders to focus on tackling issues that impede inclusive growth in the agricultural sector. Although some pessimism still exists, the recent strides made in the sector, especially since the signing of the AAMP, suggest that there is good reason to be hopeful.
Dr Simphiwe Ngqangweni is the CEO of the National Agricultural Marketing Council (NAMC) and Matsobane Mpyana is the Programme Manager of the Agriculture and Agro-Processing Master Plan (AAMP).
BUSINESS REPORT