21 September 2021 | Story Leonie Bolleurs | Photo Pexels (Mark Stebnicki)
There is a big market for superfruits such as cherries, avocados, and blueberries abroad, believes Tommie van Zyl, the Chief Executive Officer of the ZZ2 farming group.

The University of the Free State (UFS), in partnership with the Mangaung Chamber of Commerce and Industry and Standard Bank, presented a lunchtime webinar focusing on the state of agriculture in the country and the impact of the COVID-19 pandemic. 

All three panel members – Tommie van Zyl, Chief Executive Officer of the ZZ2 farming group; Wandile Sihlobo, Chief Economist of the Agricultural Business Chamber of South Africa (Agbiz); and Nico Groenewald, Head of Agribusiness for Standard Bank’s business and commercial clients – agree that the South African agricultural sector is in good health. 

Sihlobo says the numbers speak for themselves; the sector experienced about 13,4% of growth in 2020. It is estimated that the sector will grow between 6% and 7% in 2021. The favourable rainfall, the best since 2008, is one of the main factors contributing to the significant growth in the sector. 

Good weather conditions

He adds that the sector will continue on a growth path – between 2% and 4% in 2022. The key factor here is another La Niña, with prospects for above normal rainfall. 

Although there is a level of confidence for the next season, added by the favourable weather conditions, Shlobo says it will not take away the fact that 2021 is different from the previous seasons. “We do see input costs rising at a much tougher pace. Better yields and commodity prices remaining at higher levels will, however, pull farmers through,” he believes. 

According to him, exports are doing well, and the country needs to open more export markets. “In 2020, South Africa’s exports reached the second largest level on record of around 10,2 billion dollars. Even in 2021 we are seeing some good momentum in our exports. Looking at the first half of this year, export brought in about 6,1 billion dollars; that’s up with 26% if you look at it on a year basis,” he says.  

Van Zyl is also excited about the future of export markets in the agricultural industry. He says the export of superfruits has an important role to play in the future of agriculture. “There is a big market for superfruits such as cherries, avocados, and blueberries abroad. South Africans know the overseas market and we also have the geographical benefit of being closer to the markets than our competitors. Travel time from the Durban port to Hong Kong is 18 days. For our main competitors – Peru, South America – travel time to the same destination is taking 31 days. Exporting superfruits to these up-and-coming markets should be a very strong focus for the South African agricultural sector, going into the future,” he says. 

Although exports are doing well, logistics is becoming an increasingly difficult issue and needs the attention of both agricultural and business stakeholders. “More so, as South Africa’s agriculture is export orientated; we export about 49% of what we produce. With predictions for growth in the coming years, efficient logistics to move these commodities will be important,” he adds. 

Van Zyl pointed out other constraints that are hampering the sector. These include increasing energy costs and unreliable energy supply, the deterioration of national fresh-product markets, and an inflexible labour market. “Due to these constraints, we are increasingly dependent on creative solutions outside of South Africa,” he says. 

According to Sihlobo, the sector could also have grown much faster with farmers being allowed to import the technology to boost their productivity, with better animal decease management, and an investment in infrastructure at the ports and roads. Forging a social compact for agricultural water usage and addressing rural crime would also have helped. 

He also strongly believes that the expropriation without compensation debate is not very helpful. “We used enough energy to debate the matter. Right now, we can look at other instruments to drive land reform,” he says, suggesting the use of the land reform agency idea that the President talked about in his state of the nation address for driving the redistribution part of land reform. Sihlobo also recommends using state-owned land and bringing it into full production. 

Van Zyl adds: “Create new assets. We do not need to redistribute existing assets. Invest in young and upcoming industries.”

Productivity and performance

South Africa is one of the most productive agricultural sectors in the world. The competitiveness of the prices of South African products globally is testimony to this. 

Van Zyl feels that to be competitive, resource optimisation is important. “We will also need to think about alternative energy sources, and we will have to manage constraints, whether it is physical constraints such as the roads or legal or environmental constraints. It is part of our duty if we want to be exemplary in what we do.”

Another important point when thinking about the future and exemplary performance, is the era of digitisation. Van Zyl is of the opinion that many of the problems in the sector will be mitigated by this development. With information technology being systematically employed, we now have the ability to access real-time data information and knowledge that enhances our decision-making abilities and our competitiveness tremendously. 

He concludes: “Change is a reality, and we must be able to manage it to survive in the present era. The ability to manage this change is a prerequisite for sustainability. The focus is also increasingly on the other rather than on the self, and everybody is part of the decision-making process. If you can achieve this in your organisation, you are going to survive.”

From a banking perspective, Groenewald talked about reconstructing your business to stay in the game, sharing a reset strategy to build resilience. He believes that the agricultural sector is used to facing events of abnormal impact, such as droughts, floods, and disease outbreaks, to mention only a few. 

His reset strategy focuses on strengthening digital capabilities, using technology optimally and sensibly, maintaining business continuity and finance, the ability to adapt and evolve to stay ahead, investing in human capital, and new ways of working. He believes the world is changing and that solutions need to change as well. 

He also brought an interesting perspective to the discussion on climate change, asking the question – is climate change affecting agriculture or is agriculture affecting climate change. The World Bank is increasingly looking at climate-smart agriculture. Last year, a large percentage of the World Bank’s finances targeted climate adaptation and mitigation. Groenewald believes that the agriculture sector also has a responsibility when it comes to mitigating climate change.

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