In Africa, farming absorbs about sixty percent of the labour and earns 20% of the total GDP. In most parts of the continent, agriculture is the only source of livelihood for the vast majority of people. The sector thus has no choice but to improve productivity and become more business-orientated.
According to Dr Chance Kabaghe of the Indaba Agricultural Policy Research Institute (IAPRI), African smallholders need to improve productivity, but perhaps to do so should learn from China. He was speaking at the annual Solidaridad conference for smallholders in Johannesburg. Solidaridad is an international organization, focusing on producer support and a sustainable supply chain and market development for farmers and businesses.
“In China, every piece of land is farmed. Smallholders are also dotted around (like in Africa), yet Chinese farmers manage produce six times more crop per hectare. Eeven though African farmers are supplied with fertiliser and seed, productivity is not going up. This is because in China, farmers are brought together as a company, and each one has shares in such a company, he explained.
He further said that in such a model farmers can share skills and take advantage of economies of scale in purchasing inputs. “In Tanzania they produce only two tons of maize per hectare, while China achieves eight. How can we do likewise? It is a good idea for smallholder farmers to group together, especially when selling to markets. This makes it easier for buyers, instead of having to go to 2000 small-scale growers individually,” Kabaghe emphasized.
Kabaghe, who is a former lecturer and senior government employee, has vast global agricultural experience and holds leading positions in several Zambian agricultural companies. He also believes smallholders in Africa need to equip themselves with enough knowledge to understanding quality produce for markets.
“If you have to supply perishable fruit, like pineapple for example, to a factory 1000 km away, you have to pick them green and pack them properly otherwise they will be damaged and overripe by the time they arrive at the factory. Smallholders don’t always understand these quality requirements. If you want to produce for a sophisticated market, you need produce of uniform size, colour and so on,” he stressed.
Annie Sugrue, Solidaridad director for Southern Africa, believes that smallholders should partner with large-scale farmers in order to put themselves in better position for the marketplace. “This is unfortunately not happening. We need to build trust between all parties – smallholders, commercial farmers and middlemen. At the moment, small growers get too little out of the deal and middlemen get too much. They must all benefit equally, but we must first establish the markets and then proceed with agricultural initiatives. We need to build vibrant urban and rural communities to grow food and create jobs,” she said.
About 3000 delegates from 52 regions of the Republic of South Africa are expected to attend the second Annual General Meeting (AGM) and conference of the African Farmers’ Association of South Africa (AFASA) next week.
Under the theme “Implementation strategies for acceleration of the agricultural sector’s Economic Transformation Agenda” – the AGM is expected to be addressed by among others, the ANC Deputy President and National Commissioner of the National Planning Commission, Dr Cyrill Ramaphosa; Ministers of Agriculture, Forestry and Fisheries and Rural Development and Land Reform, Ms Tina Joemat-Pettersson and Mr Gugile Nkwinti, respectively.
Gauteng MEC for Agriculture, Rural and Social Development, Ms Nandi Mayathula-Khoza; Deputy Chairperson of the National House of Traditional Leaders, Kgoshi Sefogole Makgeru and Martin Bwalya of CAADP-NEPAD, will also address the delegates.
“It is in line lobbying and advocacy resolutions, that we take stock of the commitments made by our key stakeholders, especially government, to see how far we have come in delivering on the mandate entrusted to us by South Africa’s smallholder farmers. This promotes the ethos of accountability and transparency in the work that we do as AFASA. We would also like to congratulate government where it’s due and constructively criticize, where we find gaps, but together find solutions to the challenges confronting us,” says AFASA Secretary-General of AFASA, Aggrey Mahanjana.
Minister Joemat-Pettersson is expected to address farmers on progress of her Department in terms of linking smallholder farmers to markets.
The 2013 AGM will be held at St George Hotel & Conference Centre from 20-22 October. Kindly RSVP by no later than 18 October to, Siyabulela Makunga at: firstname.lastname@example.org or contact him @ 072 768 0238
According to MEC Nandi Mayathula- Khoza, for Agriculture and Rural Development in Gauteng, who was speaking at smallholder farmers’ event in Johannesburg on – “The role of government in supporting smallholders in the value chain,” there is good potential for growth in the province from agriculture.
“Dr Maponya is one of our newest ‘emerging farmers.’ He claims he is a smallholder farmer but he has 10 000 chickens (this is technically correct if a smallholder farmer has under 50 000 chickens), but in my understanding ‘emerging’ generally refers to people or farmers who begin their farming with very little money. Dr Maponya has been introduced to 14 hospitals in the province, which he is already supplying with eggs,” she said.
On 27 September 2007 former Pres. Nelson Mandela opened the Maponya Mall in Soweto. One of the largest shopping centers in the country, it holds more than 200 stores and a cinema complex.Maponya acquired the land where the mall is situated in 1979, at first as a 100 year lease. In 1994, after several attempts, he acquired it outright. Maponya is also known for his criticism of the government on black economic empowerment (BEE).
“It is not a real thing because it takes away the self-initiative needed from young and up-and-coming entrepreneurs who must wake up and want to do the things themselves,” he said in an interview with the Sowetan at the sixth birthday celebrations of Maponya Mall.
Department needs bigger budget
Mayathula-Khoza says agriculture in South Africa accounts for 3, 9% of GDP, but in Gauteng only accounts for 2, 4% of the economy. “There is good potential for growth in the province. Only 0, 7% of our provincial budget goes to agriculture. We are lobbying for a bigger slice of the budget. However, we know there are competing needs such as housing and healthcare, but we also need sustainable food security. Smallholders are already farming with dairy, poultry, pigs and grains – but we need to zone more high potential agricultural land for farming,” she explained.
The MEC also introduced, Tshediso Phahlane, to delegates which she described is as “one of the best young farmers in the province” who sets an example of what her Department wants to achieve with smallholders. “He supports other farmers in the province with advice and also in Mpumalanga. We, for example, need more processing factories for produce such as sunflower seeds, peanuts and maize. We thus need more partnerships with commercial farmers, mentors and industry stakeholders,” Mayathula-Khoza said.
Sacau warns on ‘oligopolies’
Johnson Bungu, Marketing Advisor for the Southern African Confederation of Agricultural Unions (Sacau), believes smallholders need to understand the fussy, demanding nature of today’s customers.
“They need to become self-sufficient and move away from donor support, and smallholders need to learn to aggregate. Smallholders need to be aware of oligopoly (limited competition among a few big producers), collusion and dumping. There is lots of uncompetitive behaviour by big seed companies, counterfeit drugs in the livestock sector, and so on. Non-governmental organisations can help to demystify these trade barriers for smallholders,” he said.
“Please join us for this journey through history so that we may together develop the South Africa of today, and of tomorrow, for the benefit of all its citizens,” Phakamani Hadebe, Chief Executive Officer of the Land Bank, 2013
Part 1 Formative Years
“By the time the Land Bank opened its doors in 1912, South Africa was well on its way to developing an agricultural industry in which white commercial farmers were sole recipients of exceptionally high levels of state support, both on terms of skills development and financial aid during difficult times such as drought.
By 1912, more than half a century of bloody battles over land with black tribes and other indigenous groups had concluded in favour of the European settlers and their descendants. The settlers then fought among themselves for control over the land and its mineral wealth, the fuel that powered economic growth at the time.”
1911 – By 1911, agriculture contributed 21.4 percent to the country’s gross domestic product (GDP). Agriculture was on track to recover from the setbacks of the South African War and the droughts that followed, but progress was slow. Few banks were willing to extend credit to the agricultural sector due to its instability in terms of production and price, its seasonal nature and its slow turnover of capital and low yield on investments. White farmers, dependent on private lenders and some commercial banks, found it difficult to raise long-term finance.
1912 – South Africa needed a financial institution that offered products and terms appropriate to white farmers. A state institution was the obvious preference, so the government passed the Land and Agricultural Bank Act in 1912 to form the Land Bank.
Part 2 Native Land Act
“Awaking on Friday morning, June 20 1913, the South African Native found himself, not actually a slave, but a pariah in the land of his birth.” – Sol Plaatjie
1913: Native Land Act – The fact that black farmers’ needs were not considered when the Land Bank was formed was more than just an oversight: it was one step in a larger scheme to systematically dispossess the country’s black population of land in South Africa. The Natives Land Act (passed in 1913) created a system of land use that denied the majority of South Africa’s inhabitants the right to own land and become farmers. It restricted the black population to 7.3 percent of the country’s area.
1920: Land Bank Annual Report – “State aid for farmers is an excellent thing, but worse than useless if it is to be mere ‘spoon-feeding’…the farmer who will not help himself had better take up some other line of industry, for state-aid is of real value only to the man who will devote all his faculties to his farming.”
1930: “The Father of the Land Bank” retires -Tom Herold was at the helm of the Land Bank between 1912 to 1930, first as its General Manager, and then as the Managing Director. This is the longest service rendered to the Bank by any Chief Executive Officer during the Bank’s first 100 years.
Part 3 Sanctions
1950s: Tomlinson Commission – In the 1950s, the Tomlinson Commission was tasked with investigating the possibility of small-scale commercial farming in the homelands. The National Party government rejected the Commission’s recommendations, effectively ruining any chance of establishing small-scale commercial farming in the homelands as a way of dealing with poverty in those areas.
1964: Sanctions – In 1964, the United Nations called on its members to impose selected trade sanctions against South Africa. Various countries banned the import of certain South African products such as armaments, crude oil, iron, steel and gold coins.
1965: Loans to “Indian farmers” – Although the Natives’ Land Act also applied to Indian and coloured people, in 1965 the Bank made a start to grant long-term loans to Indian farmers against mortgages on established farms in the Indian areas of Natal.
Part 4 Bank ‘relax’ race criteria
1966: Agricultural Credit Board – It should be noted that the Land Bank was not explicitly prevented from providing credit to subsistence farmers, emerging commercial farmers or agri-cooperatives in the homelands. However, it would have needed a government guarantee from the national government in order to do so, and this guarantee was not forthcoming. Moreover, emerging farmers were supposed to be financed by the Agricultural Credit Board in 1966.
1978: Loans to “coloured farmers” – In 1978, the Land Bank started extending credit to coloured people who owned land or leased private farm properties – similar to the Bank’s offer to the Indian population in 1965. However, there is no record of whether either Indian or coloured farmers received any loans from the Land Bank under these schemes.
1982: Formation of the DBSA – By 1982, settlement schemes could no longer uplift rural communities (Bembridge et al, 1982). The search for an alternative approach led to the Development Bank of Southern Africa (DBSA) being established in 1982. This marked a significant move towards integrated rural development. The Development Bank of Southern Africa introduced a farmer support programme to help many smallholder farmers, including those in designated black areas (Van Rooyen, 1995, and Kirsten, 1994).
Part 5 The White Paper
1985/86: Foreign banks and firms ‘pull-out’ – In August 1985 foreign banks started calling up short-term loans extended to South Africa. Foreign firms were pressured to disinvest. The United States, for example, passed the Comprehensive Anti-Apartheid Act (1986), which banned the import of products such as coal, uranium, textiles and agricultural goods from South Africa. As a result of the financial sanctions, South Africa became a net exporter of capital, with a lower growth rate.
1993: Bank offers help to black farmers – Although it was ill-prepared to finance this category of farmers, the Land Bank started to respond to credit applications from emerging farmers.
1995: The White Paper on Agriculture -The goal of agricultural policy, as outlined in the White Paper on Agriculture published in 1995, is to “ensure equitable access to agriculture and promote the contribution of agriculture to the development of all communities, society at large and the national economy, in order to enhance income, food security, employment and quality of life in a sustainable manner.”
Part 6 First loss & bailout
2001: First black CEO – Mr. M Fandeso, becomes the first permanent black Chief Executive Officer of the Land Bank.
2003/04: Net loss on loan book – The bank recorded its first loss since its inception, a net loss of R1.4 billion. This was a result of expanding the Bank’s loan book too quickly without strong credit-risk control in 1997/98.
2005: Bailout from Treasury – In 2005, the Bank approached the Reserve Bank for a standby lending facility. However, due to the Land Bank’s precarious financial position, the Reserve Bank was not prepared to accede to this request without a government guarantee, which was not forthcoming. As a result, the Bank was forced to approach the government directly for assistance. The National Treasury provided a letter of comfort for R1.5 billion, valid until June 2007, and a cash injection of R700 million.
Part 7 Turn-around strategy
2007: AgriBEE loans – For various reasons, the Bank struggled to successfully establish emerging farmers. In 2007, a moratorium was imposed on sequestrating emerging farmers experiencing financial distress. In the same year the state launched an investigation into allegations that farmers who had successfully applied for AgriBEE loans through the Bank never received their funding.
2009: Turn-around strategy – In 2009, the Land Bank started the challenging process of designing and implementing a turnaround strategy. It was now under the leadership of (current CEO) Phakamani Hadebe who, as the former National Treasury Deputy Director-General, brought with him valuable insight into South Africa’s financial sector and enjoyed the confidence of the Minister of Finance and the National Treasury staff.
2011/12: Bank regains lost ground – Some commercial farmers had moved their accounts to commercial banks as the Bank’s offerings became less attractive and mismanagement allegations were publicised. However, the Bank later started to regain its former clients and attracted new ones. By the end of the 2011/12 financial year, the total loan book was about R22 billion. By 2012, the Land Bank financed about 29 percent of total farming debt, with the remaining debt funded by commercial banks.
Part 8 Agriculture today
- Modern context: The area available for farming is gradually decreasing in South Africa due to expanding mining activities, the development of new suburbs, additional roads and a drop in the number of commercial farmers. As a result, land prices will always tend to have an upward bias.
- Perspective: If farming had been left to develop without the interference of discriminating policies, it would have resulted in a different industry structure. Farm sizes would, on average, have been smaller and farming more intensive. There would probably have been more farmers and the production pattern would have been different. Total production would not necessarily have been higher, but land ownership would have been different.
- 2030: Unemployment is a major challenge for South Africa. A restructured agri-industry open to emerging farmers has the potential to expand employment in this sector by almost 1 million jobs in 2030, according to the National Planning Commission’s National Development Plan. And given the growing need for regional integration and interaction, the Land Bank may need to support regional agricultural production, either directly or through other institutions. Food security into the future must be seen in a Southern African context.
“The history shows that the Land Bank does not exist in isolation. It is a manifestation of the interests of farmers, the government, the agricultural financial sector, investors and society at large,” Dr Moraka Makhura, Editor and Director of History of the Land Bank “Financing agriculture for 100 Years”
- Trees are the longest living organism on earth. Do you know that trees don’t die of old age? They are killed by insects, diseases or by people. Some of the oldest known trees like the California Bristlecone Pines and the Giant Sequoias have lived between 4000 to 5000 years!
- A mature leafy tree produces oxygen for 10 people to inhale in a year. One acre of tree can remove up to 2.6 tons of carbon dioxide every year.
- An average tree absorbs approx. 2000 liters of water every year.
- A single edition of a major daily newspaper uses wood from 500 trees for its paper. Every book we read was once a tree.
- Contrary to popular perception trees receive only 10% of their nutrition from soil and 90% from air.
- Trees grow from top not from the bottom. It takes about 1000 years for a branches height on the trunk to move up just a few inches.
- There are about 20,000 tree species in the world. India has the largest varieties of trees in the world. Second is US.
- The Amazon basin has the largest area under forest – around 81.5 million acres.
- Some trees can communicate with each other. When Willows (a type of deciduous trees found primarily in moist soils) are attached by worms and caterpillars they emit a chemical that alerts other trees in the neighboring region. The other trees then respond by pushing more tannin in their leaves which makes them difficult to be digested by insects.
- The most massive living thing on earth is the Giant Sequoia in the Redwood Forest of California. It stands nearly 30 stories tall and 82.3 feet in circumference. Its weight is estimated at 2,756 tons.