Afgri CEO Chris Venter believes South Africa is well positioned to become a major food exporter, and that the agricultural sector could become a significant contributor to the local economy in the next ten years.
Venter told a Gordon Institute of Business Science (GIBS) forum there needs to be policy streamlining regarding export licensing, a substantial increase in agricultural activity in the Eastern Cape and an emphasis on urban farming and hydroponics projects in order for agriculture to fulfill its potential in the South African economy.
A vision for agriculture and food security across the region and continent should feature a 50-year food security plan for SADC, and include plans for processing of locally produced products. He called for a formalised approach to export production, and “thoughtful agricultural policy” which takes into account the funding and support needs of small scale farmers.
“If we ultimately want to create one million jobs in agriculture, these can only come off the back of production and processing,” he explained.
Afgi was started as a farming co-operative in 1963 and has since developed into a diversified agricultural, food and financial services company with a banking offering launched through Grobank. The group’s investments include animal feed products, oil, and protein, grain management and equipment.
Technology and farming
While agriculture is often considered old fashioned, technology has had a dramatic impact on farming in South Africa, Venter said.
Data analysis, including soil data and weather station analysis, are becoming increasingly important to agriculture. AI-enabled machinery, such as crop sprayers that are able to distinguish between plants and weeds, are able to reduce the application of fertiliser and pesticides by as much as 90%.
“Farmers want more control over what they put into the soil,” Venter explained, as “more control means less spending as margins on farms become more pressurised.”
Advances in technology will however mean large scale commercial farms will become less labour intensive, resulting in jobless growth in certain areas of agriculture. However, Venter said small scale urban farming would drive productivity and jobs growth.
Climate and water challenges
Growth is expected in most subsectors of South African agriculture, with poultry, yellow maize, wheat and soybeans likely to experience the most growth due to changes in consumer preferences. Climate change however remains a concern and crop diversification is key. Venter said white maize would decrease in utilisation and production as consumers become more affluent and replace this staple with other forms of starch in their diets.
While seed technology has enabled farmers to plant for higher yields in dryer environments, some areas of the country are becoming unsustainable for grain farming due to climate change.
“We have enough land. The challenge is having enough land with enough water available - water shortages will be critical in the future and our current water policy framework is not catering sufficiently for water storage and distribution.”
Land reform and small-scale farmer development
Discussions around land reform and redistribution had impacted investor confidence in the sector over the past year Venter said. However, by the end of 2018 farmers had started to invest in their farms and buy capital goods again.
“Reform is a reality. Injustice was done and we need to decide how to correct it,” he said. Venter said business was encouraged by the productive engagements it had with government: “There has been a genuine approach by government that food security and the economy would not be placed in jeopardy during the process of land reform discussions. There has also been goodwill from commercial farmers.”
However, the land debate is a very complex one, and “it may not be possible to cater for all the complexities in one answer,” he said.
On the question of foreign ownership of farming land, Venter argued that the country is in “a unique situation, we have land issues and we need to deal with that first before we consider selling large tranches of agricultural land to foreign owners for export food production.”
Mega farms or large scale commercial farming is not the only productive way to farm, Venter said, but small scale emerging farmers require funding and support to become commercially viable.
Mechanisms to support emerging farmers should include a proper funding structure and access to infrastructure, Venter said. “Farming is very complex. We must look at what we really mean when we say we need to get the land productive.”
“Small farmers need know how and they need access,” Venter said. To this end, Afgri offers a five year mentorship programme to small scale farmers that includes access to finance, soil analysis and assistance with the harvest.
“Route to market and infrastructure are both major challenges and the reality is that it takes time for small farmers to gain economies of scale.”
Commercial and small scale farming are not in direct opposition to each other, as large famers push commodities and drive exports, but there was a need to “consider new urban and small scale models to enable an economic environment to grow jobs and transfer skills.”
“All our systems and infrastructure are geared for large scale commercial farmers, we have to start to look at it differently,” he concluded.