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South Africa’s small farmers have growing ambition

By Crystal Orderson, in Cape Town
Posted on Wednesday, 30 October 2019 09:25

Small-scale black farmers cannot compete with huge market-gardening outfits like this one in Durban. Dubes Sonego/Shutterstock

South Africa's parliamentary ad hoc committee on amending the Constitution for land reform adopted its draft framework programme on 25 October.

Ismael Motala describes himself as a political activist who thought he had left politics behind for the tranquillity of being a farmer.

A self-confessed corporate animal who lived and breathed business for years, he opted to leave the fast lane for the farming world.

Motala traded the hustle of Johannesburg for the serene beauty of the picturesque Wolseley in the Western Cape.

Motala explains: “I farm a mix of pears, peaches and plums and have a 57ha farm. I still owe money to the Land Bank, but that is another story,” he tells The Africa Report.

Motala’s dream is to have a slice of the lucrative agribusiness sector. But he says being a black farmer in the Western Cape makes this a mere “pipe dream”.

“I thought I will give up activism and start farming, but I am an activist again.” Motala is the Western Cape chair of the African Farmers’ Association of South Africa.

He says that members complain of exclusion in the agribusiness sector on a daily basis. He now wonders if there will ever be a radical transformation of the sector.

The leftist Economic Freedom Fighters have been pushing land reform – and the idea of land ­expropriation without compen­sation – high up the political agenda, forcing the African National Congress (ANC) government to engage more with the idea of radical change in terms of land ownership and agriculture.

The ANC won the 8 May national elections with a slimmer majority, and many voters are calling for quick action to improve the economy and to redress the histor­ical hangovers from apartheid on the ownership of land and control of the agribusiness sector.

In the face of alarmist predictions that land reform will mean the collapse of the banking and agribusiness sectors, the ANC and President Cyril Ramaphosa have been at pains to say that land reform will be done in an orderly way: with no land grabs or disruptions to food security.

But until the government develops detailed proposals, the long-term impact of redistribution will not be clear.

The drag of uncertainty

Annelize Crosby, head of land affairs at industry lobby Agri SA, tells The Africa Report: “Investment requires policy certainty, and the debate around land reform – and particularly threats of expropriation without compensation or at low levels of compensation – creates massive uncertainty in the agricultural sector.”

She says it’s hard to quantify to what extent the current debate has hindered growth, but “we do believe that it has definitely had a negative impact.”

In addition, while some crops like citrus and nuts are doing quite well, the agricultural sector in South Africa is recovering from a challenging two years. The most devastating drought since the early 1990s took some farmers out of business and left others under enormous financial constraints.

One thing that both sides of the heated current debate agree on is that distributing land more fairly on its own will not lead to an agricultural revolution. South Africa needs better extension services to help smallholders.

Emerging black farmers will never be able to rival the white-controlled agribusiness giants like ZZ2 (see end) without access to financing, for example.

About 55% of South Africa’s fresh produce exports are from Western Cape. Motala says the “value chain of agribusiness and the agri-­economy is zero transformed, and there is very little intention
to take a radical stand towards transforming the sector and opening up space for new and black farmers.”

Wandile Sihlobe, head of agribusiness research at the Agricultural Business Chamber (ABC), tells The Africa Report: “Agro-processing is growing, and it can be increased if we boost agriculture on the primary side. That is what President Cyril Ramaphosa sees as a job creator, and this is going to be exciting to explore.”

Agri SA’s Pietman Roos presents a bright picture of innovation amongst the top commercial farming companies: “South African farmers have been an early adopter of new technology,” says Roos.

The ABC’s Sihlobo adds that the South African markets are highly sophisticated and practices are comparable to what farmers are doing in Australia, the US and Europe. “A farm in Iowa in the US is using the same technologies as a farmer in SA – the amount of investment in the sector is high and farmers are open to new knowledge and grow and be competitive.”

But for black farmers like Motala, there are some serious policy issues that have to be dealt with to ensure black farmers are part of the discussion and the future of agribusiness.

Historical privilege

Motala and Xolile Ngqameni of the Eastern Cape Farmers’ Association (ECFA) say that farmers like them are being ignored, and denied access to financing and markets that their bigger competitors have.

Ngqameni has been a farmer for the past 20 years and farms on the banks of the Keiskamma River in the Eastern Cape. “The means of production are still inclined to be for those who are historically privileged. The developing farmer – like us black and African farmers – is not coming into the system because they need to be supported to be an active player in the sector.”

Agricultural economist Sihlobo says there are other complex problems: “The issue is not that they were excluded. It boils down to the issue of land. The reality is that you get black farmers that are farming on communal land and they are not going to have investment and cannot produce volume.”

He says South Africa needs to address the issue of communal land rights “so that farmers have tradable value of their land.”

Ngqameni says that for many of the EFCA’s members, uncertainty over communal lands makes them “shiver” and they are calling on the new government to deal with the issue of land tenure.

Critics of the government say it has underfunded agricultural programmes and failed to come up with ways to develop the sector beyond huge commercial farms.

Ben Cousins, a professor at the University of Western Cape and a prominent voice in the land reform debate, wrote last year: ‘The South African environment remains largely unfavourable to small-scale farmers who face constrained access to inputs, finance, irrigation and water infrastructure, relevant research, extension advice, transport and markets. The dominant thinking on agriculture is one-sided and biased towards the large-scale commercial model.’

Ngqameni echoes this: “There’s still much to be done to support black farmers to be active players in the agribusiness sector […]. We want to see the levelling of the playing fields to have access to markets. It is the big players that have access to the market.”

Finance is key for emerging black farmers to flourish and get a foothold in the sector, but banks are “nowhere to be seen” according to Motala.

He is particularly angry at the state-owned Land and Agricultural Development Bank of South Africa, which was set up in 1912. “The Land Bank must be shut down. It is not there for us, it doesn’t help any of our people. One can expect other commercial banks to run and shy away from us but when the Land Bank ignores you – well it’s a serious problem for us as African farmers,” he says.

The Land Bank’s Sydney Soundy refutes Motala’s analysis. He says the Land Bank is always looking for opportunities to bring new players into the sector, especially black emerging farmers. “We are bringing new entrants into the market, especially black commercial farmers, and also assisting existing commercial farmers in their business.”

Acknowledging that current funding models are not changing the situation on the ground, the government launched a new blended finance initiative with the Land Bank and the department of agriculture, forestry and fisheries (DAFF). It includes loans and grants to strengthen the Black Producer Commercialisation Programme.

Soundy says the “grant facility enables the bank to complement its loan facilities with grant funding from DAFF which, amongst others, provides the black producers with access to equity […] in order to sustainably enter the agriculture, forestry and fisheries sectors.” It is still in its pilot period, and the department of rural development and land reform has made an initial commitment of R800m ($55.5m).

Soundy argues that if land redistribution is properly executed, “it can afford more opportunities in the agribusiness sector. You cannot look at it in a negative way.”

But for farmers like Motala the question is: will Ramaphosa go far enough?

“Our president’s heart is in the right place, but does he have the political will to shake the economy? I am not convinced. We are told the agricultural sector will be destabilised if you have land expropriation, but I say it has to happen.”

—— —— —–

ZZ2’s fans and detractors

Known for its brightly coloured packaging, ZZ2 is a multi-million-rand conglomerate operating in Limpopo, the Western Cape, Eastern Cape, Gauteng, North-West Province, Mpumalanga and the nearby country of Namibia.

One of the company’s biggest fans is none other than South Africa’s finance minister Tito Mboweni, who mentioned how impressed he is by ZZ2 and its farming innovations.

The company, owned by the Van Zyl family of Limpopo Province, produces 40% of the tomatoes and one-third of the onions consumed in South Africa from its 80,000ha of holdings.

ZZ2 has not escaped South Africa’s land reform debate.

Economic Freedom Fighters (EFF) leader Julius Malema said in May: “Here in Limpopo we are supposed to be producing tomato sauce at the backrooms of our yards because we are blessed with a fertile land. ZZ2 takes the tomatoes produced here to other places where jobs are created and then returns them to us at high prices.”

During the tabling of his first medium-term budget policy statement in parliament last year, Mboweni told journalists: “Closer partnerships have to be forged between the state and commercial farmers that could lend their expertise to help new farmers succeed.”

Mboweni told local media: “Don’t chase [commercial farmers] away. If you have state land, get them to help you develop it.” He added that ZZ2 was an example of a “commercial farming enterprise that has excelled”.

But the farm is not well liked by the local community in Limpopo any more than by the red berets.

Last year, locals accused the company of destroying more than 80 graves to make way for an avocado farm.

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