The evolution of the agriculture value chain over the past decade - Agrarian reform to 2025

1. 3rd Bridge
Perspective on land issues

2. Outline
• Who is Agri SA?
• The evolution of the agriculture
value chain over the past decade
• How the industry views the quality
and price of imports versus
domestic agriculture
• The industry views on drought and
related indicators
• The land debate
• The short to medium term outlook
on investment in the agricultural
sector and food price
developments

3. 3rd Bridge
Perspective on land issues
Who is Agri SA?

4. • Agri SA is a federation of
agricultural organisations
• Established in 1904 as the
Southern African Agricultural
Union
• Members include: 9 provincial
organisations, 26 commodity
organisations and 38 corporate
members
• Through its affiliated
membership, Agri SA
represents a diverse grouping
of individual farmers
regardless of gender, colour or
creed
Who is Agri SA?

5. Farmers represented in each province
±28 000
Farmers
--------------------------
±1 000
Farmers’ Unions
Provincial
Affiliates9

6. Animal Production
Milk Producers’ Organisation, National Wool Growers Association of South Africa, Red Meat Producers’
Organisation, South African Mohair Growers’ Association, South African Ostrich Business Chamber, South
African Pork Producers’ Organisation, Wildlife Ranching SA, Aquaculture SA
Horticulture
Banana Growers’ Association of South Africa, Canning Fruit Producers’ Association, Dried Fruit Technical
Services, South African Garlic Growers’ Association, South African Nursery Association, South African
Subtropical Growers’ Association, South African Table Grape Industry, Tomato Producers’ Organisation
Growers’, Vinpro, South African Rooibos Council, Macadamias South Africa
Agronomy
Cotton SA, Dry Bean Producers’ Organisation, Forestry South Africa Medium Growers Group, Grain SA,
South Africa Sugar Association, Tobacco Institute of Southern Africa, SA Cane Growers’ Association
26 Commodity Organisations

8. 3rd Bridge
Perspective on land issues
The evolution of the
agriculture value chain
over the past decade

9. Land: Agriculture and food chain
Input
companies
Food
companies
Farmers
Traders
Retailers
Consumers
• Seeds
• Fertilizer
• Crop protection
• Animal health and nutrition
• Crop insurance
• Food ingredients
• Field crops
• Horticulture
• Animal production
• Aquaculture
• Forestry
• Game
• Crops
• Meat
• Oils/meal
• Biofuels
• Meat
• Snacks
• Beverages
• Bakery
• Dairy
• Hyper markets
• Super markets
• Small/spaza shops
• Rural
• Urban
Objective: To produce profitably
while facing
• Drought
• Climate change
• Predation
• Theft
• Diseases
• Market conditions/Labour costs
• Land reform - EWC
• Farm attacks
• Ever changing consumer
preferences & choice of products
Employment:843000

10. Employment by industry
Agriculture;
843,000
Mining, 435,000
Manufacturing
1,744,000
Utilities,
161,000
Construction;
1,476,000
Trade, 3,219,000
Transport;
1,014,000
Finance and outher
business services;
2,399,000
Community and
social services;
3,692,000
Private
households;
1,296,000
Unskilled/
semi-skilled
92%
Skilled
8%
Source: Stats SA, Own calculations

11. Economic importance of agriculture
• Agriculture also creates strong demand for goods and services, especially in rural areas
• Impact of agriculture on other sectors in terms of forward and backward linkages is considerable, with
the impact of irrigated agriculture being relatively large
Backward
linkages
•Purchases of goods
such as fertilizers,
chemicals and
implements
Forward linkages
•Supply of raw
materials to industry
and the food supply
chain in general
11
Approximately 70 percent of agricultural output is used as intermediary products in other
sectors

12. About the sector (2017/2018)
12% of the surface area can be used for crop
production of which only 22% is high potential
Expenditure on intermediate goods and
services amounted to R146 billion (6,4%
increase). Farm feeds remained the biggest
expenditure item, followed by
maintenance/repairs and labour
Net farm income increased by ± 1%
Cash flow of farmers decreased by ± 5%
The value of exports increased by 6%, from
R97,429 billion in 2016/17 to R104,577 billion
in 2017/18
Debt level increased to R166 billion. Collateral
is still available and investment is still taking
place
The primary formal sector employs approx. 843
000 people. Labour remuneration is a major cost
item, approx. R19 billion in 2017/18
The contribution to GDP, if the entire value chain of
agriculture is considered, can be approximately
between 10% & 12%. Agriculture is an important part
of our economy and in addition, ensures South
Africa’s food security.
Source: DAFF

13. Provider of food
• In 2035, South African population is
estimated to reach more than 66,9 million
• Population grew by 59% from 1991
to 2018
• Agricultural production increased
more than the population growth
over the same period
Challenges:
– Climate change/Drought
– Cost of transport/input costs
– Availability of water and quality of water
– Improving productivity
– Maintain and improve profitability
– Restrictive legislation/regulations
– Limited government support
– Cost of crime
– Insufficient service delivery
– Infrastructure constraints
6.0
7.0
8.0
9.0
10.0
11.0
12.0
Volume index of Agricultural Production in RSA
Field Crops Horticulture
Animal Production Food Production
Source: DAFF
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018*
42000
44000
46000
48000
50000
52000
54000
56000
58000
60000
‘000
Population

14. Support for Agriculture
22.8
24.8
14
53.5
9
50.9
55.7
3.8
5.9
49.2
12.3
53
18.3
2
17.8
7.5
9.9
17.3
9.6
2.4
0.8
1.9
1.7
2.3
-7.1
14.5
12.1
-20 -10 0 10 20 30 40 50 60
Turkey
Philippines
China
Korea
Colombia
Switzerland
Iceland
Kazakhstan
Costa Rica
Japan
Russia
Norway
European Union
Brazil
OECD
Mexico
United States
Israel
Canada
Chile
New Zealand
South Africa
Australia
Viet Nam
Ukraine
All Countries
Emerging Economies
OECD Producer Support Estimate (PSE) for selected
countries, 2017
The Producer Support
Estimate (PSE) is shown
as a % of gross farm
receipts. The OECD
defines Agricultural
support as “the annual
monetary value of gross
transfers to agriculture
from consumers and
taxpayers arising from
government policies that
support agriculture,
regardless of their
objectives and economic
impacts.”
Source: Agricultural Policy Monitoring and Evaluation, OECD (2018)

15. Drought
In recent years, droughts have become a more
prevalent challenge to agriculture in South Africa.
Within this context, it is important to note
Agriculture’s importance for food security, economic
development and employment:
• Agriculture is 3.2 times better at reducing poverty
than non-agriculture
• 1% in GDP due to agriculture, increases income
of the poorest by more than 6%
• Agriculture has substantial multiplier effects such
as job creation potential though extensive
linkages with the rest of the economy
• Agriculture has the potential to create economic
opportunities in rural and peri-urban areas
Source: Barclays. (2016). Agricultural workstream

16. 3rd Bridge
Perspective on land issues
The land debate

17. Context: Expropriation without compensation
• The first question that arises, and this is seemingly the question that the
Constitutional Review Committee (CRC) has posed to South Africans, is :”Is
section 25 of the Constitution an impediment to land reform?”
• Although the CRC found in the affirmative, Agri SA’s view is that it would be
unwise, even dangerous to tamper with a fundamental human right for political
reasons.
• Constitution: finely a balanced property clause is, measures it provides for have
not been implemented to their full extent, neither has section 25 been before the
courts in sufficient cases for the judiciary to really interpret it and bring clarity;
• Agri SA fully supports the findings by the High Level Panel on Key Legislation in
this respect. We believe their diagnosis of the problems besetting land reform,
are spot on. The Panel found that section 25 was not an impediment to land
reform.
• We need to jointly create a vision for our rural areas going into the future and
concretise the steps to achieve that dream. The NDP should be the basis for
that.

18. Context: Expropriation without compensation
• ANC decision on 20 December 2017
• Motion in Parliament: Feb 2018
• CRC process and recommendation
• Ad Hoc Committee on changing section 25
• Dissolution of 5th Parliament
• Ad hoc committee to initiate and introduce legislation to amend section 25 of the Constitution
• Presidential Advisory Panel process
• Expropriation without compensation
• Impact on economy
• Food security
• Currently
• Evaluate section 25 of the Constitution
• Expropriation Bill – 5 categories
• High Level Panel on Key Legislation
• Biggest challenge standing in the way of land reform is not the property rights clause, but the implementation of land reform
policies, procedures and extended entrenched corruption in the system

19. Value of Capital Assets
(2017/18)
Land and fixed
improvements R264,2 billion
Implements, motor vehicles,
tractors R74,1 billion
Livestock R149,6 billion
Total R488,0 billion
Source: DAFF
Commercial banks
Land Bank
Agricultural co-operatives
Private persons
Other debt
Other financial institutions
Agricultural Credit Act
Who Farmers owe money to
Farming debt in 2017/18 – R166 billion
R51,62 million
R975,36 million
R1.78 billion
R3.22 billion
R11,71 billion
R47,71 billion
R100,57 billion

20. Solutions
• Agri SA believes that the solutions are already catered for in the framework
provided for in the Constitution, the NDP, Operation Phakisa and various private
sector plans including the Agri SA holistic plan for land reform and rural
development
• For successful farmer establishment, the following elements should be present:
 Land
 Equity
 Beneficiary selection
 Value chain participation
 Post settlement support
 Partnerships
• It is important that we reach consensus on who owns what and how much land
has been transferred to date – not only through government programmes, but
also through the market

21. Strategy emanating from land audit

22. What do we want to achieve?
1. Establish the factual basis of land distribution as a point of departure
2. Sustainable agrarian reform
3. Economic growth and job creation
Alignment of the strategy must be in line with:
1. Constitution and the rule of law
2. Property right protection and conversion
3. NDP goals – Chapter 6
4. Operation Phakisa (agricultural development component)
Strategy emanating from land audit

23. 3rd Bridge
Perspective on land issues
Agrarian reform to 2025
• Implement Chapter 6 of the NDP – utilise the financing
models that have been developed
• Promote partnership models for joint-farming operations
between black and white farmers
• Stimulate and support efforts of commodity organisations
to assist smallholders in enhancing their productivity and
income generating capacity (NWGA and Grain SA projects as
examples)
• Commercial farmers to get even more involved with social
upliftment of farm workers and rural communities
• Transfer state farms to beneficiaries: title deeds
• Incentivise best practice models as demonstrated at
Bela-Bela Summit
• Create Agricultural Development Agency (ADA)

24. Disclaimer
Everything has been done to ensure
the accuracy of this information,
however, AGRI SA takes no
responsibility for any loss or damage
incurred due to the usage of this
information.

25. Contact details
Annelize Crosby
Head: Land Centre of Excellence
T I +27 (0) 21 554 5642
C I +27 (0) 82 388 0017
E I annelize@agrisa.co.za