ABOUT TWO or three decades ago around 60 000 to 70 000 commercial farmers ensured South Africa had enough cheap food for its own needs, with some left over for export. In the late Nineties the number fell sharply to around 45 000 commercial farmers. The latest figure, according agricultural organisation TAU SA, shows there are now only around 37 000 farmers who must feed almost 50m people. This means that every commercial farmer in SA has to feed around 1 500 people compared with, say, France, where it's one farmer for every 100 people.

So the number of commercial farmers is falling drastically while the number of mouths to feed is rising sharply. Admittedly, production per hectare of all crops has increased through improved cultivars, as well as better farming methods and management. However, with the sword of land reform, farm crime and other negative factors hanging over the industry many are concerned about how long food security can still be guaranteed.

Despite all these problems, confidence in agriculture has increased over the past two quarters. The Agricultural Business Chamber's (ABC's) business confidence index for the industry, which is compiled in conjunction with the Industrial Development Corporation (IDC), reported in first quarter 2010 the index grew by around 11% to 43,3, compared with first quarter 2009. It was also 9,4% higher than the 39,6 recorded in last year's final quarter. Though that's still negative territory, it confirms farmers and businesses in the industry are still hopeful.

Lindie Stroebel, the ABC's manager for economic intelligence and compiler of the index, says this means SA's business confidence in agriculture has recovered to almost the same level as at year-end 2008. "However, it would be unwise to assume confidence will return to the high level before the downturn in the middle of 2008. Low commodity prices, the strong rand and fluctuating weather patterns cause great uncertainty."

Obviously, agriculture didn't escape the economic recession and is still struggling to recover. However, economist Mike Schüssler says, despite all expectations, SA's economy grew by 3,2% last year but the agricultural industry is still in a recession.

Schüssler, who was guest speaker at the recent annual symposium of the Grain Handling Organisation of Southern Africa (Gosa), said many South African consumers are still hesitant about high-priced items. "Though there will be growth, it will remain low for most of this year."

This means all SA's agricultural sectors will again have to watch cost reductions in order to remain competitive and maintain their profit margins, Schüssler said. "Our farmers don't receive any State subsidies and they have to compete against imports on their own. Many are exporters - which shows in many cases our agricultural industry can compete against subsidised products from developed countries."

The ABC feels the improved growth prospects for SA's economy compared with the beginning of last year contribute a great deal to improved business confidence. Unfortunately, companies aren't prepared to put much money into fixed investments and human capital.

However, Rian Coetzee, head of the IDC's unit for food, beverages and agricultural industries, says it's striking how SA's agribusinesses focus, rationalise and reposition themselves in poor economic times. "The benefits of such actions over the past year are now clear in an expected increase in market share."

However, exports and export prospects don't look all that good, largely because international demand is still poor and the strong rand makes SA's products uncompetitive.

Price prospects for maize and other products being produced in abundance this year are also poor. "With an estimated maize crop of 13m t and the third consecutive year of worldwide record crops that's to be expected," says Gosa president Annatjie Loio. "With maize prices that have already fallen by 40%, prices are under enormous pressure."

Fortunately, the agricultural wheel turns: a few seasons ago there was talk of worldwide food shortages and demand pushed prices up. Many farmers and agribusinesses are therefore trying to make the best of it until the current oversupply falls and prices rise accordingly. That's the story of agriculture.