NINE LESSONS FOR THE AGRICULTURAL SECTOR

by | Oct 22, 2024 | Articles

At the recent AgriSA Green Horizons Congress, held on 10 October at the V&A Waterfront in Cape Town, Prof. Nick Vink, Professor Emeritus from Stellenbosch University, provided an insightful analysis of the main influences shaping South African agriculture over the past 120 years. His address highlighted the sector’s evolution, influenced by policy, global market trends, and environmental challenges.

Prof. Nick Vink highlighted four distinct eras shaping South African agriculture since the Union: from the Union to early post-WWII, the sector expanded through domestic policies and market intervention, notably the Marketing Act of 1937. In the mid-century to democratic era, unstable macroeconomic policies and market distortions led to slowed growth and productivity challenges. The early democratic period saw trade liberalisation, deregulation, and state intervention in factor markets like land, water, and labour, with infrastructure and energy policies gaining influence. The current period is marked by failed factor market policies, increased export dependence, and heightened volatility due to global factors like climate change and geopolitical conflicts.

Reflecting on these historical trends, Prof. Vink highlighted nine critical lessons that the agricultural sector can take forward:

  1. Per capita income grows in fits and starts flat, or declining purchasing power is the norm. The impact on staple foods and high-value foods is evident.
  2. When the world became more globalised (for South Africa, effectively from the Marrakech Agreement in 1994), we faced relatively free markets; now, we face a new era of mercantilist austerity.
  3. South African agriculture is not innocent of these urges. Just look at what tariffs did to the price of chicken meat, to butter vs. margarine, and to the wine industry.
  4. Prudent macroeconomic management of the economy is essential.
  5. As a semi-arid country, we need to emphasise water management. Has agriculture been luckier than the urban areas in this regard?
  6. The agricultural sector may have reached the lowest point of employment (if horticulture continues to increase its share of output). Therefore, we need to research how to increase labour productivity.
  7. The cost of intermediate goods has outstripped the costs of labour, capital stock (land, fixed improvements, and animals), and borrowing. We need to address this.
  8. Farmers are not using more land, labour, or capital, but the cost-price squeeze is worsening. How has agriculture grown?
  9. The answer is that technology has become more and more critical.

As South African agriculture navigates the challenges of a volatile global environment, climate change, and economic uncertainties, Prof. Vink’s insights offer a critical historical perspective. His analysis underscores the importance of adaptive policies, technological advancements, and efficient resource management in ensuring the sector’s future growth and sustainability.

Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors