AGRICULTURE NEWS - When I speak overseas or to foreigners here about agriculture in South Africa, it quickly becomes clear many consider our agricultural conditions marginal.
On one occasion, an overseas ambassador said that, with our climatological conditions, they would perhaps make the largest part of our country a nature park, because farming in such conditions does not make sense.
Despite this, SA is a net exporter of food – this, of course, if the infrastructure problems can be bridged in relation to transport problems and the functionality of our ports. With more than 60 million people in SA, of which about 68% are urbanised, one realises that the greatest asset our country has is producing commercial farmers who produce food for the market.
For them to be sustainable in their food production means they must be profitable. The government has a very strong focus on subsistence farmers but according to Statistics SA, their contribution to the food basket is around 2%. These are also the persons who are largely dependent on social grants to be able to exist.
Persons living on agricultural land who plant for their own needs are part of SA’s reality, but to consider that this is the answer to food security can only be considered extremely short-sighted.
Of course, this must be addressed and plans made to help there as well to make the processes as profitable as possible.
Our answer for food security is based on the commercial sector. It is important to realise what are the criteria any farmer – but also any business – must meet to be successful. This is where there’s great concern about whether the decision-makers in parliament really have an understanding of how the economy works.
During a presentation to a portfolio committee, the comment was made that if the whites would only be willing to share the prosperity with everyone, everyone would be able to live happily here. Such comments confirm that there is no understanding of where wealth comes from.
Wealth is something that must be created and by an entrepreneur who is willing to accept the risk of doing business. No person can change these economic forces. By managing the factors of production to profitability, only then there will be an opportunity to continue with the business.
If there is no profit, the market forces will fiercely decide that there is a failure and the business will inevitably cease to function.
Successful businesses will cause the economy to grow, which can make the proverbial economic pie bigger. This is indeed the only way the social reality of SA can be solved sustainably, namely, to grow the economy.
Traditionally, there were always four factors of production – the entrepreneur, raw materials, capital and labour.
Technology and mechanisation can be considered the fifth factor of production today.
- Entrepreneur
This is the person who has the vision to run the business. Several qualities are needed as part of his or her makeup. Think here of things like a sense of urgency, future vision, acceptance of responsibility, specific expertise around the business model, prepared to manage risk and eagerness to learn. The market forces are continuously evaluating each entrepreneur for success or not. Profitability brings sustainability to the table.
- Raw materials
In the case of a farm, we’re talking about the natural resources such as land and water, but also the pasture that is used. Conservation practices are of crucial importance to ensure the resources are utilised in such a way that they’ll be available for future generations.
- Capital
In some cases, it has been built up over a period with certain entrepreneurs to be able to establish that aspect of the production process on their own. For many entrepreneurs, borrowed capital must be used to finance their input costs. The agricultural debt in SA is already at R200 billion. This is one of the major problems and farmers will necessarily have to focus on looking at their profitability. Agriculture is in a difficult position in the sense that we are price takers on the input side as well as the output side. Cost management is crucial.
- Labour
Agriculture has been one of the biggest job providers, especially for unskilled labour. The policy environment and legislation established to make it increasingly difficult for employers to employ poorly skilled labour. The government will have to seriously consider this.
- Technology and mechanisation
They are here to stay and are already making a big difference in many ways and, to a large extent, they will be utilised to replace labour. Machines do not go on strike and cannot initiate actions that could harm the production process. Labour must take note of this and the trade unions may at some point realise they should instead focus on those who do not have a job because, under the current policy, unemployment rises every year.
Van Zyl is general manager at agricultural organisation, TLU (SA)
