This research report aims to identify opportunities to develop the regional value chain in agricultural inputs, and the opportunities within that value chain for regional trade. It also aims to detail policy initiatives to be undertaken by the South African Department of Trade and Industry to capitalise on those opportunities in order to promote regional integration and growth and development supported by expanding regional value chains.The study covers the following countries: South Africa, Mozambique, Tanzania and Zambia. The research aims to answer the following questions:
Session 7: Agricultural value chains and sustainability
There is scope for a number of strategic interventions by the South African government to support agro-industrial production. These could make a significant difference to the country’s foreign trade and its domestic employment record. This policy brief outlines the potential impact that a more labour-intensive agriculture sector, which is also focused on high value-added products, could make in reducing the balance of payments constraint and support transformation and employment, particularly in rural areas.
The policy brief makes a case for agriculture’s central role in growth, transformation and empowerment. It is based on TIPS research on Agro-processing, wage employment and export revenue: Opportunities for strategic intervention by Christopher Cramer and John Sender.
Report produced by Trade and Industrial Policy Strategies for WWF-SA, South Africa. WWF received funding from the British High Commission to establish a programme to provide the South African agri-food value chain with tools and information to understand and proactively respond to climate risks in the value chain thereby supporting on-going productivity in South Africa and continued local and international market access for South African supply farms.
Should you wish to reference this paper, please do so as follows:
Zwane, M. & Montmasson-Clair, G. 2016. Climate change adaptation and agriculture in South Africa: a policy assessment. Report compiled for WWF-SA. South Africa
Agro-processing is an increasingly important market access point for agricultural producers. The development of the agro-processing sector thus has significant potential to create opportunities for smaller agricultural producers, thereby supporting the creation of new employment and livelihood opportunities in rural areas. However, market access points are not homogenous from the point of view of smaller producers. Policy needs to incorporate the possibility of the adverse inclusion of smaller producers into established markets. The likelihood of beneficial inclusion outcomes will be enhanced by a stronger focus on net farm income projections for individual producers; farmer cooperatives at the processing level; innovation in the location and structure of agro-processing infrastructure; and better policy co-ordination among the various government actors.
Session 8: Agricultural value chains in the region
Fertiliser is a key input for commercial agriculture. However, there is generally low fertiliser use in Sub-Saharan Africa and hardly any production of fertiliser in countries in Southern and East Africa, aside from South Africa. Studies have emphasised the importance of transport costs in the price of fertiliser paid by the farmer as well as the detrimental impact of lack of competition in the trucking sector in increasing prices. Many reviews over the years have considered the various reasons for the high costs of road freight in southern and East Africa, including regulations restricting participation and competition, the role of national and regional transport associations, inefficient borders and poor roads, and lobbying and rent-seeking by powerful local transport interests. This paper considers the different reasons and their changing impact over time.
Session 8: Agricultural value chains in the region
Paper to follow
Session 10: Agricultural value chains in the region
This paper examines the reasons for the growth in the poultry industry in Malawi in the past 10 years.
Session 10: Agricultural value chains in the region
Authors: Helanya Fourie, Western Cape Department of Agriculture and ASSET Research, and David le Maitre, CSIR
This case study provides a comparative analysis of two different initiatives designed to promote the smallholder sector in metropolitan Cape Town.
The City of Cape Town has developed an urban agriculture policy and initiated a joint venture between itself, the Provincial Department of Agriculture and private sector partners to put in place a fresh produce market in the Philippi area. The objective of the market is to provide the “suction force to enable the establishment of more than 2 500 emerging farmers and the development of more than 5 000 hectares of farmland over a five-year period in the Philippi and Cape Flats area” (Provincial Government of the Western Cape, 2006).
Abalimi Bezekhaya is an NGO with over 20 years of experience in supporting homestead growers and group gardens. It has focused on developing a comprehensive range of services to promote and ‘push’ small farmers to find their place in a production continuum encompassing survivalist, subsistence, livelihood and commercial scales and modes of production. Abalimi supplies small farmers with inputs and infrastructure, provides technical advice and institutional support, and recently introduced a planned production and marketing process known as the Harvest of Hope.
We examine what is involved in these different initiatives which aim to pull or push small growers into production and the market place. We profile the Philippi fresh produce market initiative and the services provided by Abalimi. We examine the three groups which Abalimi characterise as their most successful. In the process we assess what must be put in place to develop an enabling environment for a more vibrant and sustainable urban agriculture sector which enhances household food security and generates livelihood opportunities at different points along the value chain and identify lessons for improved policy and practice.
In 1997 the EU introduced a requirement that beef imports be traceable through a computerised system. To ensure continued access to the EU market, Botswana introduced the livestock identification and traceback system (LITS). The objectives of this study are to estimate the costs associated with implementing the system and determine the effects on Botswana's beef exports to the EU market, government's export revenue from the beef sub-sector, and cattle producers' incomes and rural employment in the cattle industry.
Maize is the most important staple cereal consumed in the Southern African region. Global warming and accompanying increased volatility in rainfall, rising populations and the shift to maize-fed biofuels pose risks of substantial price increases in the future that may affect food security.
The general view is that a combination of factors was responsible for the 2006-2008 food and oil crises, including increased demand for food and oil, rising prices, currency fluctuations, climatic conditions in producer countries, export restrictions, speculation in commodities markets and lack of productivity growth in key sectors.
Sugar cane remains a major contributor to the Mauritian economy. In 2003 it was cultivated on 85% of the arable land by 28 000 planters, with most planters being smallholders. One in three rural families is directly or indirectly involved in the sugar industry. Annual sugar production averages 575 000 tonnes of which 507 000 tonnes are exported to the EU under the African Caribbean and Pacific (ACP) - European Union (EU) Sugar Protocol, the Special Preferential Sugar Agreement, which provides a guaranteed price well above the world market price. The share of the sugar industry in the Mauritian economy has dwindled from 25% of Gross Domestic Product (GDP) in the 1970s to about 3.5% in 2003, but still represents about 19% of foreign exchange earnings.
This report reviews the performance of the South Africa's agricultural sector over the past 15 years; with special emphasis on the period 2004-2007 and identifies the main agricultural policies and support instruments introduced since 1994. The report also assesses their impact on the structure and performance of the sector.
Maize is the most important staple cereal product consumed in the Southern African region. The purpose of this paper is to examine the origins of the global 2007/8 food price crisis and the impact this had on the trade in maize within the SACU customs union as well as to consider the impact on consumer prices of maize. The reason why maize is central to this issue is not simply because of its roles as the principle staple food product of the SACU region but because much of the global crisis that occurred in 2008 had its origins in changes in US ethanol policy which were related specifically to the maize sector. The paper also considers whether in fact changes in VAT policy with appropriate and targeted poverty alleviation programs will achieve the objective of decreasing poverty in the SACU region. Lastly the paper considers duty on maize meal and processed maize products which serves to raise the import parity price for meal in an already oligopolistic market.
Agriculture plays a unique and multifaceted role in the South African economy. While it contributes less than three percent to the country’s GDP, it provides almost 10 percent of the country’s formal sector employment. The sector has, according to all measures, relatively large linkage effects with the rest of the economy, and is a major earner of foreign exchange: currently more than 8 percent of the country’s merchandised non-gold exports are primary agricultural products. The sector also plays an important safety-net role in the lives of poor South Africans. A survey conducted in 2007 found that more than 14 percent of the labour force had participated in some form of agricultural production in the preceding year (General Household Survey 2007).
Despite this positive contribution, the general consensus amongst policy makers and development practioners is that the South African agricultural sector can, and should, play a bigger role in placing the economy on a higher growth trajectory, reducing poverty and halving unemployment by 2014. However, this pro-poor growth potential has been undermined by the dualistic structure of South Africa’s agricultural economy that comprises both a commercial and a small-scale, subsistence sector.
The large-scale commercial sector is made up of an estimated 4 818 farming units, covers a production area of approximately 82 million hectares and is responsible for more than 99 percent of South Africa’s marketed agricultural output (StatsSA 2002; StatsSA and NDA, 2002). The emerging or small-scale sector, in contrast, consists of 1,3 million farming households with access to an estimated 14 million hectares of agricultural land principally concentrated in the former homeland areas of the country (NDA 2006). Typically, these farmers achieve low levels of production efficiency and engage in agricultural production to supplement household food requirements.
Over the past 15 years, the post-apartheid South African government has struggled to narrow the development gap between the country’s two agricultural systems. In part, this can be explained by the nature of the agriculture that relies on land as a core factor of production. Land represents a high capital barrier to entry and the agricultural investment cycle is long and beset with both market and production risk. This has been further exacerbated by the changing nature of agribusiness that is becoming increasingly competitive and complex in terms of product offering and management requirements. Climate change, supermarket procurement practices, biotechnology and commodity price volatility are just some of the issues farmers have to contend with and larger producers have been better placed to internalize these issues.
The number of policy levers that the South African government has been able to use to tackle this inequality has also been limited. The agricultural deregulation and liberalisation policies that were introduced in the 1990s abolished single channel marketing systems and price controls. While they strengthened the competitiveness of the commercial sector, they also transferred risk to all categories of agricultural producers and eliminated the policy space to shield smaller producers and new industry entrants from the vagaries of market forces.
Consequently, much of South African agricultural policy in the post-apartheid period has centred on land reform and strengthening small-holder development through project support. In the case of land reform, despite a well-formulated policy framework, slow implementation has meant that less than five percent of commercial farm land has been transferred to Black South Africans since 1994. Furthermore, there is evidence to suggest that only 50 percent of these land reform beneficiaries have been able use the land productively (Bosman 2007).
In terms of project support for small-holder development, a broad range of ad-hoc initiatives has been implemented by the nine provincial departments of agriculture tasked with this responsibility. Business development support through the formation of cooperatives, onfarm infrastructure investment and niche-commodity schemes are examples of the types of projects that have been undertaken by government in an attempt to strengthen small-holder development. By and large these initiatives have not been successful: their narrow focus together with weak implementation and oversight have contributed to the high failure rate.
The case-study presented here – the Siyakhula/Massive Maize Production Programme – outlines the design and implementation of a government small-holder development project in the Eastern Cape Province. What makes this case study significant is that it was an attempt on the part of the provincial government to move beyond the narrow, project paradigm and restructure the way in which small-holders engage in crop production. From the outset, the Siyakhula/Massive programme was intended to form the foundation of the Province’s agrarian reform strategy and strove to induce systemic change in the structure and performance of the Eastern Cape agricultural economy.
The aims of Siyakhula/Massive were ambitious. At the most basic level, the programme focused on strengthening food security in the Eastern Cape through increasing maize production. However, promoting black economic empowerment in the agricultural sector, stimulating private sector development and markets in rural areas, as well as promoting environmental sustainability through encouraging conservation farming were also core programme objectives. In addition, the Siyakhula/Massive programme was designed to have an immediate, tangible impact and therefore it required a large budget to implement the five-year programme to scale. The crop production component of the programme was allocated R250 million and a further R250 million was set aside for the mechanization component. This investment was expected to deliver significant results which the architects of the programme quantified as follows:
“When fully implemented there will be 800 tractors with the associated equipment, which will yield 160 000 tonnes (40 000ha) of maize providing food for over 1,2 million people per annum, valued at R352 million.”
The objective of the case study presented here is, firstly, to describe the role-out and implementation of the Siyakhula/Massive programme and, secondly, to assess the extent to which this initiative was successful in achieving its stated aims and objectives. The impact of the programme on the macro, meso and micro level of the Eastern Cape economy will also be examined and special emphasis will be placed on the extent to which the Siyakhula/Massive programme as able to catalyse systemic changes in the broader Eastern Cape maize marketing and production system .The key lessons that can be distilled from the programme will also be presented. This analysis is especially timely in light of the ANC’s Polokwane Manifesto that reaffirmed government’s commitment “to embark on an integrated programme of rural development, land reform and agrarian change”.
Within the ambit of the Accelerated and Shared Growth Initiative of South Africa, government is leading a process to define a Second Economy Strategy. One of the opportunities that has been identified is the agricultural sector, in particular fostering a larger number of smallholder agriculturalists. The study seeks to identify the key elements of an implementable programme to support the smallholder sector. The core of the exercise entailed identifying successful South African smallholders active in different settings, and examining the factors that contribute to their success, whether these are personal, contextual, institutional, etc. Although the study was not designed as an evaluation of interventions as such, in the process of conducting the smallholder case studies (and in combination with an extensive literature review), the efficacy and relevance of different intervention and support strategies also came into focus.
For purposes of the study, we assumed a broad definition of agricultural smallholders, including those who operate independently, those who farm in groups, those for whom farming is mainly for subsistence purposes and those whose orientation is mainly or purely commercial. (We therefore employ the flawed but useful distinction between ‘subsistence’ and ‘commercial’ smallholders.)
Ultimately, we conceptualise ‘supporting the smallholder sector’ as consisting of four distinct strands, namely the prospects and measures for:
The paper has attempted to contribute to a key issue in the current debate on economic development: the link between trade and poverty. The paper focused on the impact of imported chickens on Zimbabwe's poultry industry. The general aim of the study was to find the impact of imported chicken on producers, consumers, retailers and government. The study relied on primary data collected through a survey. Questionnaires and interviews were used to gather information on the impact of imported chickens on producers, consumers and government. The method of ordinary least squares to estimate the model suggested to explain the linkages between trade and poverty. Quantity of domestically produced chickens, quantity of imported chickens and a dummy variable have been used as explanatory variables top rice of chickens, the depended variable. The quantity of domestically produced chickens and the dummy have been found to be significant in influencing the price of chickens on the local market. The quantity of locally produced chickens has been found to have an insignificant effect on the rice of the chickens
The results emanating from the study indicated that the imported chickens have had varied impact on the relevant players in the poultry industry. The consumers and retailers benefited, while producers lost. From the study the consumers benefited from a price reduction of chickens as a result of the influx of imported chicken in Zimbabwe. This translated to an improvement in welfare and hence has poverty reduction effect. The consumer surplus gain was estimated to be $24 334. Producers generally faced stiff competition from imported chicken and hence their production was reduced. Retailers benefited most from price differential margin. They imported chicken at lower price and tried to match though generally at lower price the local producer's prices. Other significant results found were that the imported chickens have an impact on employment. There was an increase in unemployment as a result of closure of companies which are directly linked to poultry production.
The paper concludes with proposing strategies that can be adopted to deal with the supply side constraints of the poultry industry so as to improve its competitiveness and production.
A number of research organisations around the world have recently attempted to capture and explain the impacts that biofuel policies have on agricultural commodity markets. Previously, food price inflation has gone along with the general inflation trend but this has changed. On the supply side the international market has experienced a slightly shorter supply of commodities with weather conditions being one of the most important factors involved (Westhoff, 2008).