TIGHTER margins in farming because of "fierce" local competition and the entry of global players will make it "virtually impossible" for small farmers to enter the sector, an agricultural think tank said on Tuesday, raising fresh doubt about the government’s land reform targets.
The Bureau for Food and Agricultural Policy also said land reform had been dealt a severe blow by the dismantling of support services for farmers in the years of political transition, the bureau said in its latest Baseline Agricultural Outlook.
The bureau’s members are agricultural economists at the universities of Pretoria, Stellenbosch and the Western Cape and at local and foreign agricultural companies and government bodies. It is also partly sponsored by government departments, including the Department of Agriculture, Forestry and Fisheries.
In its latest report, the bureau sketched "a future agricultural industry characterised by narrower profit margins compared to the past five years".
It said these tighter margins will have to be managed by increasing "intensification and the adoption of technology and sustainable farming practices to boost competitiveness" in the food value chain, which will face "stiff competition from highly competitive international" rivals.
"The challenge … is that land reform has to take place against the backdrop of these realities," the bureau said.
"If large-scale commercial farming units that have the benefits of economies of scale experience tight margins, how much more strain will new entrants into the farming sector experience?"
It said the "key policy vision for agriculture" should be the provision of "integrated support services" that would help small farmers become commercial farmers.
Noting the 100th anniversary of the Native Land Act that dispossessed blacks of land in South Africa, the bureau said the new white farmers of the day had been given comprehensive backing. They had been supported by research, development and technology transfer, preferential tax treatment, infrastructure provision and soft finance.
In contrast, the main thrust of the African National Congress government has simply been to get blacks onto the land, but "this has not worked", it said.
"The number of people that have gained access to land has been limited and of those who did gain access, the failure rate on these farming operations has been alarmingly high."
Rural Development and Land Reform Minister Gugile Nkwinti has put the failure rate at 90%.
The bureau said that commercial farmers still had a "stranglehold" on the land, while black farmers contributed little to total agricultural production, export earnings and food security. "It is becoming clear that one of the biggest mistakes in agricultural policy was the dismantling of the support services that favoured commercial farmers. These services represented … a substantial state commitment to the sector."
The bureau said the removal of subsidies and support services from the industry and the deregulation of markets in 1997, with shifting demand patterns and crops, has led to "highly competitive marginal returns per hectare". This has led in turn to consolidated and larger farms and made "the entry of small new farmers virtually impossible".
Democratic Alliance MP Lourie Bosman, a former president of farmers’ union Agri SA, endorsed the bureau’s findings and said the most successful land reform projects were those where beneficiaries enlisted the help of commercial farmers. "I therefore share the bureau’s findings on support. I have seen many farming projects fail for lack of it," he said. "There was often no expertise available and people didn’t know how to manage, or didn’t have the capital they needed."
Mr Bosman advocated a return to the government provision of services but cautioned: "It won’t change overnight because you need to find people with experience to act as extension officers, not a college graduate who has never been on a farm."
I share the bureau’s findings on support. I have seen many farming projects fail for lack of it.
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