Black South African farmers need support to create an inclusive agricultural sector

Most affluent and developing countries have some sort of program to help early career farmers establish themselves in an agricultural or agribusiness business.

However, according to South African agricultural scholars, the country stands out like a sore thumb, even against many African countries, by not having one.

This is an analysis by Nick Vink, professor of agricultural economics at the University of Stellenbosch, and Johann Kirsten, director of the Office of Economic Research at the same university.

The two academics have called for subsidies for black farmers in South Africa, saying they are justified as they would help provide a more inclusive agricultural sector and redress past racial biases.

“The country previously had an extensive support system for farmers. Under apartheid, white farmers received a multitude of subsidies,” they explained.

The two said that, based on our five decades of collective research into the country’s agricultural sector, they believe that South Africa needs to introduce a more comprehensive, broader and more flexible agricultural support framework to enable farmers blacks to join the ranks of commercial agriculture.

“Here, we draw on the experience of previous support programs for white farmers and those for black farmers implemented by the Development Bank of Southern Africa in the 1980s to offer a support program that, in our view would have a rapid and industry-wide impact,” the two said in their op-ed.

“These lessons provide the principles for a new nimble and broad support program that should enable the creation of agricultural enterprises that were previously excluded from commercial agriculture. We deal specifically with direct financial support to farmers.

“We are not addressing other important government tasks that are also part of the agricultural business support framework. These include research, agricultural product standards and a state-supported land bank.

“But there are two conditions to our proposals. It is neither possible nor desirable to simply reimplement what existed before. In addition, any new support program must be tailored to today’s unique circumstances. This includes taking into account the country’s current budgetary constraints.

Academics said that since the formation of the SA Union in 1910, several initiatives have been introduced to support the development of commercial agriculture. However, the initiatives only benefited white farmers.

This included the Land Bank in 1912 and, after the post World War I recession, the creation of the Farmers Assistance Board in 1925.

“The substantial increase in public investment in agricultural research and development preceded support from industry and continued to grow until the mid-1970s. By the early 1990s, however, all subsidies to farmers had phased out,” Vink and Kirsten said.

Other initiatives included the establishment of irrigation schemes, support programs for sharecroppers, and the development of local agricultural market infrastructure and organized agricultural marketing arrangements.

Second, it has been accompanied by the removal of support measures, from direct subsidies to indirect market interventions, from funding research and extension to the withdrawal of subsidies on conservation work.

“The result was that ‘new’ or ’emerging’ black farmers were denied support services that had previously been denied to them. Many attempts have been made to remedy this situation, but in all cases the interventions have been piecemeal and unsuccessful.

The academics added: “The support program we are considering for new entrants into agriculture is linked to the country’s land reform programme. It is designed to support the transformation of the agricultural sector to create a much more diverse and representative body of farmers in South Africa.

“A useful starting point is to effect a sustainable and productive settlement of farmers and eligible beneficiaries on land already acquired by the state under the progressive land acquisition program, whereby the state acquires agricultural land from willing sellers in the white farming community.”

The scholars argued that the land to be settled should be offered to potential beneficiaries through a notice published by the relevant district land committee in the official gazette and in all major newspapers.

“The ad might already have a business plan in place if, for example, it is known what type of farming business would be pursued. If there is no business plan, the applicant must provide one.

All interested persons would have to comply with certain criteria which would be used in the selection process. Minimum requirements (in addition to the existing beneficiary selection policy) would include:

“Be at least 18 years old, but less than 50 years old. Have qualifications and experience suitable for productive use of the land.”

They said preference should go to recipients who have previously farmed or worked on commercial farms and who intend to personally occupy and work the land.

They must also be of good character, not guilty or charged with any criminal offence.

“Able to access sufficient operating capital to develop and operate the holding company. Selection should be objective and free from political influence or patronage.

“A program like this would play a vital role in ensuring the success of South Africa’s land reform program and creating a new ‘culture’ of black, business-oriented farmers.

“The purchase of the land by the selected beneficiary would be financed by a long-term mortgage (25 to 40 years) from the Land Bank at advantageous rates and conditions. Interest and principal payments for the first two or three years would be deferred and amortized into outstanding debt to make the initial phase of the business financially viable.

“This would require the Land Bank to change its funding model to support the bank’s development mandate. The focus should be on long-term mortgage financing.

Lana T. Arthur