Zuma stance may harvest a food crisis

© Johan Larson – 123RF.com

The only part of this that Omri van Zyl, the head of agribusiness at Deloitte, agrees with is that South Africa, as he spells out in a recent report, really is facing a looming food security crisis. But the only effect of Zuma's comments, whether anything comes of them or not, will be to bring this crisis forward, he says.

Zuma's remarks about foreign land ownership threatening our control over food security have no basis in fact and only add to, and illustrate, the policy uncertainty that bedevils the local agriculture sector and deters foreign investment.

"I don't know where that came from, to be honest," says Van Zyl.

Foreign investment is critical for the sector precisely to ensure that South Africa does still have control over its food security in 10 or 15 years.

Foreigners own 3% of the land in South Africa, and very little of this is productive farmland. Most of it is game farms and recreational farms.

The 12,000ha cap won't affect food security either, because the farms that produce food, including grain farms, are nowhere near this size. Only livestock farms in the Karoo qualify.

Van Zyl, 42, a lawyer by training with an MBA and a farming background, is quick to point out that there are all sorts of constitutional reasons Zuma's announcements are unlikely to become law. Nevertheless, they're damaging because they create "tension".

"I saw a potential investor from Switzerland in Cape Town two weeks ago. He was planning to invest money in South Africa, but said: 'We hear these things and we're not sure if we're going to do it any longer.'"

The absence of a clear policy guideline "creates a lot of uncertainty".

"I've been advocating a sound agricultural strategy for a long time that makes economic sense," says Van Zyl.

Land reform that involves "taking land and giving it to people who can't farm it" is far more of a threat to South Africa's food security than foreign-owned land, he says.

The real enemy of land reform is not farmers, local or foreign, but a lack of delivery - "20,000 claims are outstanding" - and strategic direction.

The facts that Van Zyl presents in his report paint a grim picture.

Food-producing farmers in South Africa are a dying breed. The average age of farmers is in the 60s, significantly older than their global counterparts. And as they retire they're not being replaced because the political, security and economic challenges are too daunting.

Which is why we're down to 36,000 farmers who are feeding the whole country.

With a likely population growth of at least 15% over the next 15 years (1.8% last year), agricultural production will have to grow at that rate "just to do what we're doing now".

If present trends continue, "in 15 to 20 years' time, we're not going to have enough food to feed the population".

He fears that, as with the electricity crisis, the government will continue to underestimate the threat "until there is not enough food in the shops, or it is too expensive for most people to afford. I don't think the government understands the extent of it."

In a painful way, he thinks Eskom may have done us a favour. "With the whole Eskom thing as a result of bad planning and politics and so on, people are starting to realise that this [food crisis] could become a reality, just as the electricity crisis is now a reality. Everything's fine until you don't have electricity."

South Africa could import its food, of course, but at a premium. Chicken from Brazil may be cheaper than local poultry, but this doesn't go for maize. Importing maize from the global maize or grain exchange is not so cheap, he says.

"You're exposed to the supply and demand curves of the world, and if you're paying a lot for maize, it will have a knockon effect on other food prices.

"Maize is the key driver of the whole food value chain. Exporting fruit and so on creates jobs, but maize production feeds the whole protein value chain. It goes into animals, livestock, poultry, fish - whatever people consume."

The drought that is destroying maize crops in North West and the Free State will give us a small foretaste of what a future without food security would be like.

"It will have a big impact on food prices because now we have to import maize to feed these sectors, and this has a knock-on effect."

Van Zyl believes that corporate farming will determine our food security going forward.

New entrants cannot afford to buy farms using bank loans because "there is no way he can farm profitably enough to return the loan".

"So I see corporate farms being established with farmers having shares in the farm. This way they're not exposed to the bank."

Corporatisation of farming has already started, he says.

There are other routes to food security in addition to large-scale commercial farming.

Thailand and, to a lesser extent, Kenya have networks of thousands of smallholder farmers who produce fruit and vegetables for export. Together they manage to achieve the necessary scale to be competitive with bigger players.

"This is a way to go, but you need competent management, support services that really help them and financial models that would facilitate success," he says.

Even so, it would not replace commercial farming. "Ideally, you'd want commercial farming supporting the small farmers so that at least you have a commercial base for sourcing seed, procuring crop protection and fertiliser and so on."