What does the Agriculture and Agro-Processing Master Plan hope to achieve?
Wandile Sihlobo from the Agricultural Business Chamber of SA considers the outlook for implementing the plan and the prospects for the agri sector in the new political dispensation.
By Simon Brown 4 Jun 2024 10:07
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SIMON BROWN: I’m chatting with Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa. Wandile, I appreciate the time today. The Agriculture and Agro-Processing Master Plan – give us a sort of high-level view of what this plan is and what it would hope to achieve.
WANDILE SIHLOBO: The Agriculture and Agriculture-Processing Master Plan, Simon, is a co-creation of various stakeholders, government, private sector, organised agriculture and labour all coming together and saying: ‘We have an agricultural sector. What are some of the challenges that it faces. where are there areas for growth, which commodities, corridors and regions should we be prioritising and coming up with this plan – which suggests that, if implemented correctly, we could unlock about a 30% improvement in the gross value added to South Africa’s agriculture. We also could see jobs increasing and economic activity in the rural regions of South Africa. So in essence this is a plan to drive inclusive growth and hence the competitiveness of the South African agriculture and agro-processing sectors.
SIMON BROWN: And jobs – particularly in rural areas – are hugely important. So from that, two questions come to mind to me. How old is the plan, and how has it been progressing?
WANDILE SIHLOBO: The plan, Simon, was launched around May 2022. There have been some elements of implementation here and there, but not in an aggressive and coherent manner – which one would’ve liked for a number of reasons. One, just after the plan was launched, in the following year South Africa was hit by immense load shedding, which put a strain on the agricultural sector, given that 100% of our food and vegetables are under irrigation. And of course the poultry sector and dairy industry are all dependent on electricity, so energy was moved towards the power issues, as we were escaping the issues of power with all of the renewables that many people devoted a lot of resources to, installing alternative energy sources.
We were then hit by animal diseases, foot and mouth disease, avian influenza. All of these things I would say slowed the implementation of the master plan. But I think that – this time around, especially when one thinks of the new administration that will come into our sector – the core focus should be around relentless implementation of the master plan, along with some of the supportive legislation around land reform and blended finance, which will ensure that everything that is outlined per commodity and region perhaps could see a better rate of success.
SIMON BROWN: I take your point on the avian flu, etc, the foot and mouth disease and the load shedding – the curve balls in a sense.
You mentioned the new administration. As we chat, we’ve done our job, we have voted. Now the political parties are negotiating coalitions. I have to say, my sense from the world out there is that an agricultural minister – most people don’t think about who that would be – is critically important to industry because industries are involved and communities are involved in the plan, but really a minister’s going to drive this aggressively at best.
WANDILE SIHLOBO: Absolutely, Simon. And I do think that you are right in putting agriculture in this context of elections, because this is a sector that always hangs out into the political discussion, particularly on certain legislation. I would pinpoint here that of agriculture, as well as the issue of whether we will have someone to champion this master plan.
My thinking when I look into this, Simon, is that we are where we are now as South Africa, and if you look at the top four parties that are trailing the ANC, and you think about their agricultural thinking and land reform thinking, two in my eyes stand out. They are the uMKhonto Wesizwe [MK] party and the Economic Freedom Fighters, which have an aggressive push for expropriation without compensation – which in my view is something that is not favourable for investment, long-term inclusive growth and job creation.
But if you look at the other two parties that are there, the Democratic Alliance and the IFP, the DA has been implementing the policies of the South African national government in the Western Cape. So I’m inclined to think that they would continue with the master plan and the other aspects that we already have. The IFP, if you read their manifesto, speaks profoundly about the need for partnerships in agriculture, the private sector, the public sector, even communities – which is in the spirit of the master plan. They also talk about the need for supporting agriculture interventions, for which I think the blended finance underway between government and the banks is something that mirrors that.
But where there’s ambiguity in the IFP plan is that on expropriation. They say, look, you can expropriate with some form of compensation. I think I would then say the message of the DA and IFP is more in line with what we have, while if you look at the MK and the EFF, I think that you get a stark contrast to these policies – which then again would say that whoever is in the coalition, one would like someone who respects property rights, who drives the master plan and is cognisant of the need for growth and jobs in rural South Africa.
SIMON BROWN: I take your point, and of course land reform – I don’t want to say it’s at the heart of agriculture, but it’s an important component, as you say, of strong property rights. But also, the government is the largest landowner and it’s that release of land, importantly with title deed, for individuals.
WANDILE SIHLOBO: I would say so. So not necessarily the largest in the country, but a substantial [amount of] land could be transferred to people. Under Minister Thokozile Didiza we have seen roughly 2.5 million hectares that was in the government hands, they’ve already begun releasing some of that with title deeds. The hope then is that either Minister Didiza returns to the department, or there’s a change in leadership [and] whoever comes in, works with the director-general as well as the deputies there to continue with that process of releasing land with title deeds, because we have to strengthen tenure so that we attract investment in the sector and we continue to ensure that we maximise its potential for growth and job creation.
SIMON BROWN: Yes, and that’s perhaps where the IFP also comes in, because of course, most of the KwaZulu-Natal land is held in a trust managed by the king. That gets maybe a little more complicated.
But we’ll leave it there. Wandile Sihlobo, chief economist at the Agricultural Business Chamber of SA, I always appreciate the insights.