KwaZulu-Natal’s agricultural sector could be the key that unlocks the province’s rural economy, writes Lyse Comins.
The agricultural sector was among the worst hit by the triple burden of Covid-19, the July 2021 riots and the floods. And before that it was already facing major challenges such as land reform, sugar taxes, farm murders, flailing infrastructure and policy uncertainty.
FNB Senior Agricultural Economist Paul Makube says while officially, national agriculture historically comprises just 2,5% of South Africa’s GDP, some now estimate that its contribution is far greater, given its interconnectedness with the rest of the economy.
“Some estimate its contribution to surpass 10% if one considers the backward and forward linkages of agriculture with the rest of the economy,” says Makube. However, KZN’s total contribution to the national economy is 16% and the province’s agriculture’s is 0,6% of the SA GDP.
But, Makube says the contribution of KZN farms to the national agricultural component of GDP was almost 30%, higher than Western Cape and Mpumalanga at 24% and 10% respectively.
Agribiz chief economist, Wandile Sihlobo, says the province is a significant producer of products such as sugar, fruit, milk and poultry. “Estimates from the Bureau for Food and Agricultural Policy show that around 30% of South Africa’s dairy herd is located in KZN and significant volumes of chicken, eggs and pigs are produced with a 12% share each.”
KZN processes about 8% of the 11,5 million tonnes of maize and roughly 21% of the country’s annual wheat consumption. However, when it comes to sugar, KZN is a major player, churning out 81% of national production.
SA Canegrowers CEO, Dr Thomas Funke, said the sugar industry represents 44% of agricultural GDP in KZN and Mpumalanga, making it the single biggest field crop cultivated in these provinces.
There are 1 091 large-scale growers (who each deliver more than 1 800 tons of sugarcane a year) and 20 130 small-scale growers. The sugar industry employs 65 000 workers directly and an estimated 51 206 of them are in KZN.
But this important sector has been battered in recent years, and not just by the April 2022 floods and July 2021 unrest. “The South African sugar industry has faced significant headwinds in recent years. These include the influx of cheap sugar imports and the introduction of the Health Promotion Levy (sugar tax). The levy cost the industry more than 16 000 jobs and R2-billion in its first year alone,” he said.
The industry-specific challenges have been compounded by the unrest and the floods. These crises cost growers R84,5-million and R222,9-million respectively. Recovery has been hampered by above-inflation increases in fuel and fertiliser, both of which have been adversely affected by the Russian invasion of Ukraine. “All these factors have merged to create one of the most difficult periods the industry has ever faced.”
SA Sugar Association executive director, Trix Trikam, says the country’s total sugar production for the 2021/2022 season was 1,84 million tons, of which nearly 400 000 tons was sold on the world export market. Production of two million tons of sugar has been forecast for the 2022/2023 season.
A masterplan, adopted to address challenges like tax, sugar imports and dwindling local sales, had brought the industry back from the brink of collapse.
Makube says the agricultural sector has been hammered by the rising cost of fertiliser, weed killer, pesticide, herbicide and fuel prices. “KZN is yet to recover from the floods as infrastructure is slowly being repaired. The relatively poor municipal services and the internal road network urgently need rehabilitation,” Makube says.
And, land reform has been “pedestrian”. “Land reform should be expedited through improved policy to ensure farm ownership, which is critical for investment. Efficiencies in the disbursement of a variety of finance instruments that have been established for the benefit of farming communities (need to be improved). The Land Reform Agency will go a long way in helping expedite the process. Its setting up is long overdue.”
“Disease management is certainly not at the level that it should be and it has fallen behind. This is witnessed in the spread of the Foot-and-Mouth Disease which has not been contained and severely impacts the livestock industry.”
Added to this, policy uncertainty, crime and high levels of corruption at municipalities – which were unable to maintain roads – are among challenges facing the sector.
“Farm attacks and murders have continued and incidents relating to arson, crop and stock theft, invasion of communal and commercial land for livestock has increased.”
Le Marque says there appears to be “little progress” in land reform.
“Claims remain outstanding for more than 20 years later, largely due to lack of budget, resources and the will to resolve. Many proactive initiatives have not materialised as the public private partnership approach has not received the support it should have. The private sector has quietly forged ahead with initiatives to build and unite.”
The resolve of farmers keeps them ploughing on despite these challenges. Their “passion and sense of responsibility to produce safe food and fibre” highlights the importance of the sector for employment, poverty alleviation, food security and economic stability.
“We are addressing cross-cutting issues of land, development, disease management safety and security in a
strong, clear mandated manner and will not waiver in its efforts to influence and lobby on behalf of the rural and agricultural sector. There is much to be done and a united agricultural and rural sector can be the key that unleashes the economic growth the province needs.”
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