The State of the Nation Address and Agriculture - South Africa

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Underneath is an interpreted summary of the aspects covered in the SONA on agriculture. (Full SONA attached in MSWord). It will be interesting to see how the national budget on the 20th February will allocate funds in support of the vision set out in the SONA. The importance of agriculture was highlighted a couple of times.

Focused investment plans for agriculture

Agriculture was single out as a sector where leading companies needs focused investment plans. By implication it is expected that the agricultural industry will substantially expand investment over the next five years and will create a vast number of new jobs. The demand for locally produced agricultural products needs to be enhanced, the labour environment must be stabilised and conditions for doing agribusiness needs to improve.

Easy of doing agribusiness

Government aims to remove the constraints and address the policy-, legal-, regulatory- and administrative barriers that frustrate agricultural investors. Producers are amongst the biggest investors in agriculture. Government will address the ease of doing business in South Africa. This is essential to attract investment in agriculture. According to the World Bank, South Africa ranks 82 out of 190 countries. South Africa needs to be amongst the top 50 global performers within three years.

Develop the potential of agriculture

Government will focus on the policies and programmes to develop the potential of agriculture to create jobs and grow the economy. South Africa has large areas of underutilised or unproductive land. There are about 250 000 small emerging farmers who need support to fully developing their businesses.

Agricultural exports and food security

Agricultural exports are an important source of revenue for our economy and developing our agricultural sector is key to enhancing our food security and for attracting investment. Focusing on being a net exporter of agricultural commodities and products we will ensure food security of sufficient, wholesome and affordable food at export price levels. South Africa are fortunate to have an agricultural sector that is well developed, resilient and diversified. The sector is an asset in which stakeholders produce food efficiently at half of the global average rainfall. The free market environment and price signals increase the resilience of a sector that need to compete with subsidised competitors in developed countries in our own and export markets abroad. To stimulate growth in the economy, build more businesses and employ more people we need to find new and larger markets for our agricultural goods and services. Government will focus greater attention on expanding exports. As an example the export market for lemons to China needs urgent attention as we need preferential trade agreements to access the Chinese market in preparation of the substantial increase in our future expansion in the production of lemons and soft citrus.

Value add to primary agriculture

The establishment of special economic zones dedicated to produce specific types of products such as clothing and textiles will be looked at. The production and value add to natural fibres such as cotton, wool and mohair should benefit by successful interventions in future. President Ramaphosa acknowledged that the competitiveness of our agricultural exports needs improvement as well as the costs of electricity, trade, communications and transport.

Land reform should expand agricultural output and improve economic inclusion

The agricultural sector has a solid foundation to be developed further for the benefit of all citizens in South Africa. An accelerated programme of land reform needs to focus on expanding agricultural output. At the same Government aims to promote economic inclusion. Expect that policy and legislative interventions will aim to ensure that more land is made available for agriculture. Government will support the work of the Constitutional Review Committee to set out provisions for the expropriation of land without compensation and alongside this constitutional review to fast- track land reform. Land parcels owned by the State have already been identified for redistribution.

As part of the stimulus package in agriculture Government have invested significantly in comprehensive farmer development support to ensure that restituted and communal land is productively utilised. Priority will be given to develop targeted skills and to build the capacity of small holder and emerging black farmers.

Export potential and challenges

Government will continue to focus on high value agricultural products with export potential such as fruit, wine and vegetables as well as poultry and meat. The lifting of the EU ban on the import of ostrich meat and the ban on the export of South African beef due to the Foot and Mouth Disease outbreak should therefore receive priority attention. In addition to direct jobs the food and agricultural industries are counted amongst other export industries that could generate together 2 million more jobs in the next 12 years. Government will deepen the partnership with agribusiness to realise this vision.

Fourth Industrial Revolution

President Ramaphosa stressed the fact that the world we inhabit now is changing at a pace and in a manner that is unprecedented in human history. Revolutionary advances in technology are reshaping the way people work and live. The devastating effects of global warming on our climate are already being felt with extreme weather conditions damaging our agricultural economy. South Africa are faced by a stark choice between being overtaken by technological change or harnessing it to serve our developmental aspirations. We need to share prosperity through innovation. It is also true for agriculture and the fourth industrial revolution. Our producers need to continuously re-invest in the latest technology available world-wide in order to remain sustainable, competitive and productive as we compete with our subsidised counterparts in developed economies. We need policies, strategies and plans to position South Africa as a global competitive player within the digital revolution space of agriculture in order to remain competitive.

The State of the Nation Address by President Ramaphosa are recognised by many economists as the best SONA delivered. President Ramaphosa identified and listed the priorities for South Africa as a vision to follow. Agriculture should keep the relevant Government departments to task to implement the vision in close collaboration with the private sector. Embrace the latest agricultural technologies, increase investment, improve agricultural output, ease the doing of business and further exports through infrastructure development in 2019 and beyond.

Kind regards

Wessel Lemmer & Conce Moraba ABSA