Wandile Sihlobo: Why agribusiness in the Eastern Cape is ready for liftoff

It is almost 9 o’clock on a sunny morning as I walk out of the arrival terminal of East London airport, when I am greeted by a smiling Felix Hobson, a senior agricultural practitioner at the Eastern Cape’s Department of Agriculture and Agrarian Reform.

I am in town for an agricultural roundtable discussion, organised by the provincial government. While previous engagements of this format with the private sector have generally been through organised agriculture groups, Hobson tells me that this time around, they want to hear from the guys in the real economy, agribusinesses and farmers on the ground. 

Their expectations were pleasantly exceeded as we walked into a full hall with participants from the citrus, deciduous fruit, macadamia nuts, pineapples, chicory, grains, oilseeds, forage crops, red meat, wool, mohair, dairy, poultry and aquaculture industries.

I noticed great diversity amongst the participants, both from an age and gender perspective – a critical factor as youth and women are often underrepresented in agricultural events.

A representative from each industry or commodity was asked to share a few words, touching on three important points:

·         What are the current business or production conditions?

·         Any plans for expansion in the near-to-medium term, and what needs to be in place for the expansion to occur?

·         What do they need from the Eastern Cape’s Department of Agriculture and Agrarian Reform?

Mixed reviews

The feedback from industry was mixed regarding the current conditions. If I were to lean on the positive side, the success in most projects, such as wool, citrus, grains, dairy, mohair and chicory, amongst others was attributed to strong partnerships or joint ventures, as well as provincial government support.

"We need to move beyond transactional relationships and build real partnerships in order to drive agricultural development in the Eastern Cape," said Simphiwe Somdyala, CEO of Amadlelo-Agri, a dairy-focused agribusiness that operates in the province.

Unsurprisingly, the challenges that Eastern Cape farmers and agribusinesses face are no different from other provinces. These are largely poor infrastructure, climate change, access to markets, insecure land rights which hinder investments, and access to finance, inter alia.

If not addressed, these factors could hinder potential expansion that most agribusinesses that attended the roundtable highlighted as a goal in the years ahead.

The good news

What excited me the most was the diversity of the agricultural entities, largely horticultural, that outlined their plans to expand their operations if ongoing land policy discussion in South Africa leads more secure property rights, among other aspects.

Improvement of infrastructure (roads, silos, irrigation systems, etc.) in rural towns in the province was also highlighted a key issue that needs to be addressed.

Expansion

I have long argued that pockets of underutilised arable land places the Eastern Cape and other provinces of similar endowment, in an advantageous position for agricultural expansion.

A few things that are needed are not only to bring that underutilised land in communal areas into full production, but also the optimisation of land reform farms and transitioning them to commercial production, as well as the expansion of irrigation systems in these provinces.

Successful implementation will require strong, accountable and efficient institutions that facilitate investment flow. Fortunately, this burden does not have to be solely shouldered by the government, as it can leverage on private sector investments for human capital and other resources. This is an approach that the province’s successful farmers and agribusinesses mooted as a key strategy for agricultural development.

And cannabis?

I couldn’t have left the meeting without chatting to the province’s senior government officials about a potential commodity for unlocking – if you'll pardon the expression – high agricultural economic growth: cannabis sativa.

I shared the essay I wrote that morning (November 20) for Fin24 with senior officials – they clucked as they read, saying "ufuna silime intsangu ngoku?" – loosely translated as, "Now you want us to plant dagga?"

You will remember that about two months back the Constitutional Court ruled that the private use of marijuana is now legal.

A few states in the US – Alaska, Colorado, Oregon and Washington – have legalised cannabis for personal use, followed by California legalising its recreational use as of 1 January 2018.

These could be key markets for South Africa, in addition to other destinations where it has been legalised for medicinal purposes.

I was pleasantly surprised at how the idea was well received and I was encouraged to craft a formal research proposal that will be presented to the officials for formally opening up discussion and inviting research on this crop.

After fruitful deliberations, the real work for the province now begins, as they seek to address the challenges identified by farmers and agribusinesses for the production of the more orthodox crops.

Hobson and I drove back to the airport that afternoon, knowing that there is hope for the Eastern Cape’s agricultural economy and other provinces facing a similar agricultural growth predicament.

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