Rural Development Part 2: How can South Africa use Agriculture, in terms of Land Reform, for Profitable Rural Development
By Adelene van Zyl
Photo taken by Amy Grundling
Agriculture in South Africa experienced a major shift in the late 1990s, after the ending of Apartheid, when the free market economy was introduced. Before the liberalization of the agricultural sector, government involvement played a key role in the marketing and supply of agricultural commodities. After the liberalization of the agricultural sector, it moved to a free market economy. Despite the significant decrease in the government’s involvement during the past two decades, the need for government intervention is still crucial. This can be seen in the support of small-scale farmers and land reform programs.
In 2019, Agriculture contributed about 2.14% to the GDP of the country and about 5.09% of total formal employment in South Africa. The New Growth Path (NGP) framework was created in 2011 to create 5 million jobs by 2020. Agriculture and its value chain were chosen as the sector with the most job opportunities. South Africa had about 10 million people employed in 2019, which is approximately 2.1 million more than in 2011. This means that only 2.1 million of the expected 5 million jobs were created, of which agriculture contributed to more than 100 000 of these jobs.
The expected job creation from the NGP was not achieved. The employment rate in South Africa declined by 1 percent from 2016 to 2019. Unemployment increased even further in the start of 2020 due to the Covid-19 pandemic and its associated lockdown. The government is yet again dependent on the agricultural sector to create more job opportunities.
Land reform has played a major role in job creation throughout the past years by reallocating agricultural land back to previously disadvantaged black farmers. However, some land reform programs have become politically biased and caused even further unemployment and increased poverty rates. To prevent further unsuccessful land reform attempts, agricultural and rural development must be integrated with land reform. Agricultural land reform is extremely important and creates a large opportunity to lift rural citizens out of poverty.
Agricultural land in South Africa occupies about 80% of arable land, which is 96 374 000 ha out of 125 000 000 ha. Out of the 96 million ha, about 4 million ha are used for grain crops, 75 000 ha are used for deciduous crops, 74 900 ha are used for citrus crops, 1 245 ha are used for vegetable crops and about 20.5 million ha are used for livestock as grazing. To make the reallocation of land effective and profitable, one must consider the profits that are raised from the different sectors, as well as the growth opportunities in each sector.
An example of an industry with extremely high-profit margins compared to other agricultural industries, are perennial tree crops. These include nut trees, citrus trees and deciduous trees. They all have three major factors in common: the first is that these tree crops have high establishment costs, but thereafter the annual input costs are relatively low. The second factor is that these tree crops require lots of water to grow optimally, therefore, irrigation is extremely important. Lastly, the fruits and nuts yielded from these tree crops are mainly exported. Since these crops are mainly exported, the profit margins for these crops are high. The international demand for these crops is also increasing, therefore the market is not yet saturated.
The biggest hindrance to expand these sectors, is the lack of water. Therefore, the government should once again consider irrigation schemes, such as the Vaalharts Irrigation Scheme, the Lower Olifants River Irrigation Scheme, and the Loskop Irrigation Scheme. (Read further on the success and sustainability of these irrigation schemes on: https://icid2015.sciencesconf.org/75961/document. If the government could consider investing in other irrigation schemes and reinvest in the current irrigation schemes, it would not only create more growth and jobs in agriculture, but also in the engineering and infrastructure industries. This could also be used as a water sustainable program for other African countries to follow.
To ensure the profitability of rural development, the government should shift their focus from the politically motivated land reform to supporting agricultural industries that will stimulate economic growth and create job opportunities. Through establishing successful and sustainable water schemes, it will not only benefit the agricultural sector but also the entire economy. By investing in these water schemes, rural communities will be uplifted by improved water and sanitation, infrastructure development and increased food security through improved yields. The next article will explain the government’s role in creating efficient, sustainable and profitable rural development programs which will support the socio-economic stability of South Africa.