FROM BASKET CASE TO BREADBASKET

Eastern Cape agriculture is on the rise

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Agricultural vibrancy is not commonly associated with the Eastern Cape province. On the contrary, it has for many years been characterised by an underperforming combination of a large number of smallholder farms and vast tracts of communal land that are significantly underutilised—one of the ironies of our country, given vocal appeals for land redistribution as a perceived economic panacea. However, the Eastern Cape is rapidly turning this basket-case perception around. Indeed, Eastern Cape agriculture can boast a number of positive trends, not least, a burgeoning dairy industry and the rise of a new generation of commercial farmers.

According to Agricultural Economist, Wandile Sihlobo, writing for Business Day earlier this year, “Data from the Milk Producers’ Organisation shows that in 2015, the Eastern Cape province was the leading producer of milk in the country, with approximately 30.6% share of South Africa’s total milk production— a 3% increase from the previous year. Similar to other agricultural industries and provinces, the Eastern Cape’s milk producers were negatively affected by the drought in 2016, but 2017 could bring some level of recovery.

“Moreover, there is a rise of new commercial farmers, particularly in the grain and oilseed industries around the Matatiele, Ugie and Maclear towns. A number of these farmers benefited from the support of organised agriculture groups and private investors such as Grain SA, and Old Mutual Masisizane Fund, amongst others. Grain SA has been actively involved in the province through its Farmer Development Programme, which focused on training and skills development. The Old Mutual Masisizane Fund, together with the government invested about R46 million in farming areas around Matatiele in 2016.

“Alongside these developments, there is also an emergence of new agricultural firms, with a notable one being Matiele Grainco—a 100% black-owned and -directed grain group with a focus on agricultural mechanisation and transportation of grain across the Eastern Cape and KwaZulu-Natal provinces.”

Impediments to agricultural production in the Eastern Cape include poor infrastructure as well as the thorny problem of communal land tenure, which many financial institutions identify as a stumbling block to funding because in the absence of a title deed, it is impossible for communal land to be used as collateral against production loans. According to the World Bank’s 2016 Africa’s Pulse report, this is a common constraint to agricultural productivity throughout Africa.

“As things stand, the way to unlock the value of the land in the Eastern Cape would be by means of securing land ownership in order to give landowners access to safe credit and attract new capital investment into the sector. Moreover, organised agriculture could also play a crucial role in skills development by increasing the provision of training services to emerging smallholder farmers. The government could also play a crucial role in supporting emerging smallholder organisations through much-needed financing and growing state capacity to strengthen collective marketing schemes and farmer development programmes,” Sihlobo commented on the African Agri Council website.

Fortunately, there is every indication that the tide is turning and that agriculture will prove to be a game-changer for the Eastern Cape economy. In fact, the former basket-base may even emerge as South Africa’s breadbasket.

Speaking to an audience of farmers, academics and other delegates at the opening of the 50th congress for the South African Society of Animal Science (SASAS) at the Boardwalk Convention Centre in Port Elizabeth in September, Rural Development and Agrarian Reform MEC, Mlibo Qoboshiyane outlined a halcyon vision of the Eastern Cape’s future. Highlighting the Eastern Cape’s status as the foremost province in South Africa in terms of livestock numbers, Qoboshiyane said, “With 3.2-million heads of cattle, 7.3-million sheep and 2.2-million goats, the Eastern Cape has the highest numbers of all nine provinces for these livestock.

“Unlike other provinces with huge mineral resources, the Eastern Cape is endowed with little or no natural resources.

“However, our province is rural and has large communal and well-established commercial farming sectors that my department serves.

“Therefore, our focus on agriculture is logical, if not naturally determined.”

The Eastern Cape already produces more than 50% of the world’s mohair and 34% of South Africa’s total wool, while red meat, citrus, dairy, aquaculture and the ocean economy all have a vital role to play.

“Agriculture is the most important industry each country has, and South Africa is no exception,” Qoboshiyane added. “Agriculture contributed to pulling our nation’s economy from a recession onto a positive trajectory during the last quarter, and I thank you for that.

“We all recognise that agriculture is indeed a science and a business, and must be treated as such.”

A key contributor to this agricultural resurgence is the Eastern Cape Rural Development Agency (ECRDA), which disbursed a total of R15.7-million in loans to 159 clients in the 2016/17 financial year.

Most of these were agricultural loans, accounting for R14.4-million.

Businesses in the Alfred Nzo District Municipality received R7.6-million, while R3.7-million went to the OR Tambo District Municipality, R1.98-million went to the Chris Hani District, R1.6-million went to the head office region, R527 000 went to the Karoo region and R514 000 to the Sarah Baartman District Municipality.

“The bulk of the disbursements went to primary cooperatives located at ECRDA’s flagship Rural Enterprise Development (RED) Hubs as well as to secondary cooperatives to buy feedstock for milling.

“ECRDA is improving its loan repayment efforts. In 2016/17, loan collections were R13.6-million. The organisation continues to offer aftercare support to identify challenges early in the client businesses, which may impact on loan repayments. This allows ECRDA to put measures in place to rectify rising challenges,” said ECRDA Chief Executive, Thozamile Gwanya in a statement, adding that the ECRDA was pleased to receive yet another clean audit opinion for 2016/17: “This indicates ECRDA’s financial prudence and this also indicates that we are a trusted steward of public assets.”

According to Gwanya, a total of R22.1-million was spent on getting the agency’s agro-processing programmes implemented. These initiatives have borne fruit already: in the 2016/17, a total of 393.2 hectares of maize were sent to the silos for storage in the Ncora and Mqanduli RED Hubs.

These hubs were originally the result of a partnership between the Eastern Cape Development Corporation (ECDC) and the DBSA Jobs Fund.

“In the Mqanduli RED Hub, 257.7 tonnes of white maize were sent to the silos from the 165 hectares planted in the 2015/16 season. The maize was planted at only two of the 13 primary cooperatives because of severe drought conditions. The harvest was processed into maize meal for local spaza shops.

“A total of R775 834 was generated from the sale of maize to the Mqanduli RED Hub mill. In 2016/17, 899 hectares were planted with white maize by 10 primary cooperatives in Mqanduli. The Mqanduli mill, which has a 0.9 tonne-per-hour processing capacity was fully operational in 2016/17.

“At the Ncora RED Hub 13.,5 tonnes were sent to the silos generated from 149 hectares, which germinated due to drought conditions during the 2015/16 planting season. Revenues generated from the sale of maize to the Ncora RED Hub milling plant was R436 999. In 2016/17, 1.849 hectares of maize were planted,” Gwanya concluded.

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