ANC Policy Discussion Document: perspectives on agro-food system

©Elena Elisseeva via 123RF

This document correctly asserts the necessity to assess the "Balance of Forces", both domestic and global, and consequently the role the ANC can play in effecting its much stated "National Democratic Revolution" and "radical economic transformation" within its sphere of influence. Rural development, agriculture and land reform are central to this policy discussion.

In the 2015 State of the Nation Address (SONA 2015), the president further indicated government's nine-point plan to rejuvenate South Africa's economy, with the agriculture and agro-processing value chain a key priority of the initiative:

Drivers:

1. Revitalisation of the agriculture and agro-processing value-chain.
2. More effective implementation of a higher impact IPAP (includes Agro-processing).
3. Advancing beneficiation (adding value to our mineral wealth).
4. Unlocking the potential of SMMEs, cooperatives, township and rural enterprises.
5. Growing the Oceans Economy.

Enablers:

1. Resolving the energy challenge.
2. Managing workplace conflict.
3. Scaling up private-sector investment.

Cross-cutters:

ICT, transport infrastructure, science and technology, and water.

Conflicting approaches

There is much debate on how to restructure and transform the economy to ensure inclusive growth in order to address unemployment, poverty and inequality, but when it gets to how these challenges need to be addressed, there are hugely conflicting positions. These conflicting approaches are increasingly becoming more polarised and find themselves more and more bedded in hard ideological dogma, viz. socialism versus an open, liberal and competitive market environment.

It is against this background that the ANC's NGC Policy Discussion Document questions the current agro-food system and the benefits that accrue to South Africa and its people. The document contends that "the liberalisation of agricultural and food markets have not, as expected, created a more competitive market with lower prices to consumers", and that the sector "still exhibits high concentration and vertical integration by a few major firms with evidence of abuse of such dominant market concentration".

While the document makes a number of good points, also around the slow pace of transformation in the sector, it is necessary to challenge the over-ambitious expectation that government has on the agro-food system to be the key driver of economic growth and employment in South Africa.

Blame must not be laid before the agro-food system

By all accounts, South Africa is one of the countries that has the most affordable food on the planet, probably the major and key aspect of food security. Sure, too many people in South Africa do not have the means (discretionary household income) to purchase the necessary daily quantity of safe and nutritious food for a healthy and productive life, but this blame must not be laid before the agro-food system.

Entrepreneurs in the agro-food system risk their capital in an environment, especially in the South African context, which is uncertain and risky from both an environmental and policy perspective. South Africa's agro-food system is generally fairly globally competitive (net exporter of food, earning very valuable foreign exchange), despite low levels of support. Many large global corporates are already investing in our agro-food system, bringing new cutting-edge technology and skills to drive productivity and efficiency.

For various reasons private sector investment in the agro-food industry remains fairly weak and government would do well to listen to the expectations of private sector in order to develop a policy and support framework that builds business confidence and creates an environment to attract private sector investment.

Enhancing competitiveness

We should focus on enhancing our competitiveness through infrastructure support, research and development, training and skills development, proper extension, access to development finance, safety and security, labour reform and, above all, market development that create far greater access across the spectrum of enterprises in the agro-food system. If we get these right, we will create more globally competitive value chains that will create huge opportunities for new entrants to access, participate profitably and sustainably in, and provide affordable food to South Africa.

If we go the way of ill-conceived protectionist and interventionist measures, these will lead to significant food price hikes and even violent food riots, which will be extremely difficult to control. Government and business will need to find common ground on these issues. We need to debate this as a matter of urgency.