Agriculture in Africa is set to become more prominent, helped by a growing population and the recent signing of the African Continental Free Trade Area agreement. In the second of our two-part series on agriculture, Kim Cloete speaks to Fanus Truter, a Moore Stephens director in the Southern Cape, about prospects for farmers, boosting exports and shifting gear to keep up with new technology.
How do you see the outlook for agriculture in 2018?
South African farmers have shown they are adaptable and our agricultural products are fast becoming more popular in the rest of the world. Our farmers provide good quality produce coupled with proper packaging and grading systems. If we can succeed in entering into more trade relations with the rest of the world, farmers will be able to provide more for export markets.
Despite severe drought in parts of the Southern Cape, farmers from all over South Africa are still keen to relocate to the region. This will lead to a positive injection for the agricultural sector.
What is needed for South Africa to grow its agricultural sector in the year ahead?
Water, water, water. It's time for government to realise that the only way for agriculture to create more jobs is to give farmers more access to sustained water resources. Irrigation creates work. The weather cycles have changed in such a way that we now have longer periods of intense drought followed by periods of sufficient rainfall. The problem though is that water flows unecessarily into the sea. The farmers want to build dams, but with red tape, it takes far too long to get approval for a dam. It’s also up to the government to build dams.
Desalination plants can provide drinking water for humans and animals, but they are not economical for irrigation and commercial use as well. Underground water, meanwhile, will not be sustainable after prolonged periods of withdrawal. I recently heard on the radio that boreholes at Beaufort West which were supposed to deliver 500 000 liters of water have now scaled down to 100 000 liters for the same period.
Trade relations with the rest of the world must be improved. Infrastructure such as ports and railways should be used more efficiently and we can longer afford to have so many trucks on our roads.
Red tape remains a challenge, with strict labour laws hindering growth. I’m concerned that unless legislation becomes less stringent, farmers will turn to more mechanisation and need less labour. This will lead to further job losses.
Farm attacks are also increasing and nobody can function properly if his or her safety is threatened. I would like to see more leaders use their public podiums to condemn farm attacks.
How do you assist clients who want to invest or expand further in the sector?
I maintain a low profile in this regard. However, I am the chairman of the Mossel Bay Business Chamber. From this perspective, I try to build trade relations with other countries. Indonesia and China are currently very interested in importing more agricultural crops from our area. We are also in serious negotiations with the Mossel Bay port, the George Airport and the railways to create and improve the way we move products to foreign countries as quickly as possible. We have the luxury of a port and an airport in the Southern Cape, yet almost all of our exports go via other ports, such as Cape Town.
I am also actively trying to ensure that the correct business structures are used for farming, creating proper provision for father and son to farm together in harmony.
How should farmers adapt to challenges and shifting trends in the agricultural sector?
It is important to keep debt levels as low as possible and to spend funds on income-producing assets. Be careful not to acquire too many luxury private assets. The agricultural sector is also developing at a tremendous pace in the fields of mechanisation, technology and new crops.
In order to stay competitive, the farmer is forced to switch to the latest technology and the crops that deliver the best quality yield. If it were not for these conversions, many of our farmers would have had a lot more money in the bank today. These conversions will, however, ensure that farmers will run to the bank smiling in the future.
As agricultural land in the Southern Cape is expensive, farmers must ensure that they get good returns. Economies of scale are very important. Smaller dairy farmers struggle to be profitable. Farmers need to try to add value through grading, packaging and preparing for export markets. The farmer cannot do it alone any more. An extensive management team is needed to get the work done.
There is a tremendous shift towards exports. Unfortunately, bird flu put ostrich meat, feathers and skin under pressure. They were among the Southern Cape's top export products. Many of the smaller farmers moved to products that were very popular in the area in the 1970’s, such as seed and tobacco cultivation. With the challenges in Zimbabwe, there’s been opportunity for growth in tobacco cultivation in South Africa. But the local farmers will have to ensure they create a solid foundation before Zimbabwe makes its comeback.
Angora goat hair is still a stable export product, although the area is currently battling with severe drought.
The Southern Cape is the only place in South Africa where hops are grown. Due to several factors, hops had become less profitable. We have played a role in helping farmers to get a better price for their hops and become profitable again. The growing craft beer market is blowing new life into hops farming.
Blueberries, figs, pomegranates, nuts (pecan nuts, macadamias and almonds), avocados, truffles, honey bush tea, kiwi fruit and strawberries are also farmed as export crops in the area.
What advice can you offer Western and Southern Cape clients who have been hit hard by the drought?
Keep debts and costs as low as possible, increase your productivity as much as you can and gear up to grow as soon as the drought is over. Productivity and effectiveness are key. Make sure you use the correct methods and procedures. Use your organised structures to put pressure on government to facilitate and even subsidise the construction of dams to reduce the effect of drought.