‘Agriculture can and wants to make a bigger contribution’ | Fin24
 
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‘Agriculture can and wants to make a bigger contribution’

Apr 28 2016 15:03
Jacques Claassen

Since Omri van Zyl took over the reins at Agri SA in December last year, the organisation’s communications strategy is virtually on steroids.

In addition to a new website and the use of social media across the whole available spectrum, a branding and value-proposition strategy has been developed to redefine the agricultural sector locally and internationally.

According to Van Zyl, a legal eagle who worked at Deloitte for 15 years, a South African farmer is far more than a guy on a tractor; South Africa’s approximately 35 000 commercial farmers, 250 000 small-scale farmers and 2.5m subsistence farmers make an extremely important contribution to the wealth of the country.

In fact, the sector’s contribution to the GDP is approximately 20% if agriculture’s total value chain is taken into account.

In primary production alone, the sector employs about 850 000 workers. In addition, the sector exports about 40% of its production to other African countries and satisfies 61% of the Southern African region’s food requirements.

In this regard, agriculture exploits the opportunities being created by the ever-increasing footprint of local supermarket groups in the rest of Africa and the growing demand for food.

SA is the region’s bread basket 

In the three years prior to Van Zyl being appointed at Agri SA, he was the head of Deloitte’s Africa Agribusiness Unit.

Some of the most important topics that he worked on, dealt with, among others, key factors in order to develop agricultural opportunities in Africa; the management of agribusinesses’ risk accounts; and food security.

According to Van Zyl, the local agricultural sector is currently developing at the same technological rate as internationally and the business dynamics of South Africa’s commercial farming units are constantly improving.

The world is increasingly looking to Africa given the fact that the provision of food, water and energy is becoming increasingly important in the global economy, including Africa.

As in the case of South America, Africa has more land than could currently be used for food production, and in addition it’s closer to the major world markets than South America.

“And South Africa is by far still the easiest springboard for international investors who want to enter the agricultural sector in Africa, and SA also has the most developed  agricultural sector on the continent,” says Van Zyl. When asked how healthy local agriculture is, he points out that:

  • The number of commercial farmers dropped sharply from 61 000 in 1996 to the current 35 000;
  • Agricultural production has nevertheless increased thanks to continued modernisation; and
  • South Africa’s net farming income has in fact increased exponentially since the deregulation of agricultural marketing about 20 years ago to R73.414bn at the end of 2015.

He expects that consolidation in agriculture will continue and that SA will probably have only about 20 000 farmers in 10 years’ time. The tremendous negative economic impact of the drought in vast areas across the country could even speed up this consolidation.

“Given the population growth, and current weak economic growth, these two factors’ inflationary effect on one another and the need to balance supply and demand, we must again get food production on the same level as before the drought. We must in fact even try to increase agricultural production. Over the medium to longer term, this will be crucially important,” says Van Zyl. 

Farmers look to the future

“South Africa’s farmers are nowadays far more sophisticated. Despite our diverse membership, which ranges from aquaculture to game producers, there are many commonalities,” says Van Zyl.

“Nevertheless, every farmer expects information that is applicable to his specific business and they all want to have something to say as well. Our members are highly focused on the country’s future and on an inclusive sector. They are organised in more than a thousand farmers’ associations of which a number are virtual.” 

Van Zyl regards agriculture as one of the major investment bases for the economy that offers many opportunities for black empowerment.

“Some of government’s proposed land reform plans are, however, unfeasible.”

He reckons that agriculture requires policy certainty so that farmers can continue investing in their farms, and the sector also requires external capital investments.

“It has become necessary to begin to substitute the politically charged land debate with job creation and economic growth. Agri SA is currently in talks with government regarding a joint venture partnership plan. If government were able to declare agriculture a strategic industry and treat it as such, as it did with Eskom, the sector could mean so much more for South Africa.”

*We have corrected an earlier version of the article which stated net farming income increased to R73.414bn at the end of 2014, to 2015. 

This article originally appeared in the 28 April 2016 edition of finweek. Buy and download the magazine here

agri sa  |  omri van zyl  |  agriculture  |  farming
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