Further deterioration in the electricity crisis has been a major cause of delay in the implementation of agricultural programmes intended to grow the sector, according to the Agricultural Business Chamber’s Chief Economist Wandile Sihlobo.
Over the weekend, South Africa’s energy utility Eskom announced that it was implementing Stage 6 load shedding until further notice.
Sihlobo said there was so much in the implementation pipeline of South Africa’s agriculture policy this year, after the past four years had largely seen through various initiatives that sought to inject confidence in the sector. These were now ripe for implementation, ahead of the 2024 elections.
“A major development in recent times was the launch of the Agriculture and Agro-processing Masterplan, which offers the government and the private sector a new possibility to grow the sector, build competitiveness, attract more investment, and ensure inclusion,” he said.
The economist added that more concretely, the Department of Agriculture, Land Reform and Rural Development launched a blended finance instrument, which had been in the works for a few years now.
“This is a joint initiative with the Land Bank and the aim is to broaden participation by other financing agencies to achieve the required scale to transforming the sector.
During various addresses, President Cyril Ramaphosa underlined the soon-to-be launched Agricultural Development and Land Reform Agency under the leadership of Minister Thoko Didiza. In the past, these programmes seemed like a pipe dream. Now they are said to be nearing implementation.
“There is a window of opportunity for the government to show results in these areas since they are beyond policy development and ripe for action. If implemented effectively, these programmes could boost growth in the sector, sustain employment, and possibly attract new investment,” Sihlobo said.
Admittedly, to some stakeholders it might feel like there had been little progress on all the above programmes since the year started.
The agricultural organisation said the deterioration in the electricity crisis has been a major cause of the delay. It said that it hoped that Didiza’s agriculture energy task team’s outcomes would be tabled soon to the sector to provide guidance on practical near-term interventions to limit the damage of the crisis on intensive energy-consuming farming businesses.
“As interventions to mitigate against the energy crisis are ramped up, more energies should be directed towards widening the blended finance to include a diverse range of other financial organisations, as well as to identify other financing gaps that were previously unforeseen.
“It is important throughout the implementation of the various government programmes that the relationship between the government and the private sector is strengthened, since it is not possible to achieve any meaningful outcomes without collaboration,” Agbiz said.
For example, the success of the Agriculture and Agro-processing Master Plan depends on accessibility of affordable finance for new entrant farmers and agro-processing entrepreneurs,” it said.
The agricultural sector has maintained positive growth momentum in recent years, partly because it was well positioned to take advantage of the favourable weather conditions.
“It is crucial to build on this momentum to implement the above programmes this year. Failure to move forward risks placing South Africa’s agriculture and agribusiness on a lacklustre growth path in 2024, Sihlobo said.
“The 2023/24 season will have challenges, such as a potential El-Niño-induced drought, which could sap the energy of the sector and place role players in ‘survival mode’. Therefore, we now have the right set of conditions to implement with speed,” he said.
Meanwhile, Agri SA has called for the Budget Speech – set to be delivered by Finance Minister Enoch Godongwana tomorrow – to yield decisive interventions needed to protect local food security.
Agri SA’s CEO Christo van der Rheede said it was crucial that the minister announced measures to protect the country’s food security.
“With load shedding as the most urgent threat to the nation’s farmers, the government must be resolute in allocating resources to buttress farmers from its worst effects and ensure the sustainable production of food in the interests of all South Africans,” Van der Rheede said.
Agri SA said that in particular, Godongwana must focus on providing higher rebates on diesel and petrol used for electricity generation, implementing incentives to promote grid-connected generation capacity and reconnection of off-grid systems and lowering or removing cumbersome taxes on struggling agricultural industries such as the excise taxes on tobacco, wine and beer as well as the health promotion levy.
Moreover, it said that with Ramaphosa having announced a tax incentive for businesses to install rooftop solar, Godongwana needed to provide details on this intervention and any special provisions for the agricultural sector.
Van der Rheede said that the Budget Speech must also provide for the allocation of resources to building new infrastructure and repairing existing infrastructure, especially the crumbling road and rail networks to enable the sector and value chain partners to reliably supply food countrywide.
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