01.03.2018

Agbiz hosts session on current challenges in the policy and legislation environment

On 1 March 2018, Agbiz hosted a most successful half-day session for close to almost 100 role players and stakeholders in the agribusiness sector. The session focused on current challenges in the policy and legislation environment, as well as developments and opportunities in the agribusiness sector. The event was attend by agribusinesses, financiers, producers and agri-associations. 

 AGBIZ INFORMATION SESSION

1 March 2018, Leriba Lodge, Pretoria

On 1 March 2018, Agbiz hosted a most successful half-day session for close to almost 100 role players and stakeholders in the agribusiness sector. The session focused on current challenges in the policy and legislation environment, as well as developments and opportunities in the agribusiness sector. The event was attend by agribusinesses, financiers, producers and agri-associations.

Agbiz CEO, Dr John Purchase, said Agbiz has unique insight, through its representation on various structural engagement forums, into the socio-political, policy and legislation environment. In his presentation, Dr Purchase addressed the following evolving challenges: Global socio-political environment; Local socio-political environment; Consumer trends and activism – need to analyse and note; The 4th industrial revolution; Climate Change;  Increased regulation of agro-food system; Sustainable use of, and rights allocation to, water and land as critical natural resources; Utilisation of renewable energy sources – energy security;  Trade agreements – “Trade wars are the wars of the future”; Big Data; and human capital and skills.

The well-known and respected Team Leader of the Bureau for Food and Agricultural Policy (BFAP), Prof Ferdi Meyer, addressed the Agbiz Information Day on “Managing Agriculture’s Investments in Uncertain Times”. In setting context to his presentation he indicated that real agriculture prices have been steadily declining over decades, and will continue to do so to 2025 at least, as technology and improved management drive greater productivity and efficiency. The South African household disposable income per capita continues to decline, which results in less money being available for food purchases. Primary agriculture GDP growth also remains sluggish and volatile. There are however certain sectors that have been performing well and citrus at 8.7% has the highest SA share of total global exports, while apples & pears, and grapes follow with respectively 5,7% and 5.6% of global export share. Changing patterns in grain and oilseed production are becoming more evident, as declining real price trends impact on the profitability of the industry. In terms of livestock, meat consumption is set to grow, while the beef export potential is creating good and steady  demand.  Prof Meyer also addressed African markets and indicated that the rapid population growth in Sub-Sahara Africa (SSA) creates considerable opportunity, also given that SSA now imports agricultural/food products in excess of US$40 billion per annum. There are still bottlenecks that inhibit growth in the agro-food system of South Africa, such as the tariff regime SA has to compete against to get our export fruit onto preferred global markets, the unlocking of natural resource potential in especially communal land areas, and correct farmer-support programmes to ensure competitive and sustainable production. (Please scroll down to peruse the presentations of his full address. 

At the event, Theo Boshoff, Agbiz Head Legal Intelligence, offered an in-depth presentation on specific legislation, including land reform, water rights, labour legislation and climate change legislation. With regard to expropriation he explained that in the event where the state needs property for a public purpose or in the public interest, the state must have the power to acquire property even if the owner is not willing to sell. Most governments have this power under some name or another.  Section 25 of the South African Constitution does currently allow for expropriation but  is subject to ‘just and equitable’ compensation.

Wandile Sihlobo, Agbiz economist, shared his knowledge on confidence and growth in the South African agricultural sector. He said while the harvest is expected to decline marginally, the outlook on food inflation will not change significantly in the near-to-medium term due to the buffer of large stocks from the previous season (Also, for major crops such as maize, the expected crop is well above annual consumption).  Policy uncertainty will remain a key stumbling block in SA agricultural sector in the near term.  The persistent drought in the Western Cape province remains a key risk that could potentially undermine the performance of agricultural labour market an economy, along with the expected national minimum wage to be implemented in 2018 (Q4, 2017 was at 849 000 jobs, down 8% y/y).

In terms of the agricultural trade environment, Sifiso Ntombela, Agbiz Head: Interantional Trade and Investment, said South Africa's trade position is weakening  and that limited demand is expected to constrain industry growth. Despite the obvious macro economic implication of expropriation without compensation, productive land redistribution could cause more social instability if human capital is not transferred – as the case currently; infrastructure and post-settlement support is not in place; and if market access is not addressed.

For more information download the presentations linked below.

PRESENTATIONS

Welcoming and introduction
Dr John Purchase, Agbiz CEO (john@agbiz.co.za)

Confidence and growth in the South African agricultural sector
Mr Wandile Sihlobo, Agbiz Head: Agribusiness Research (wandile@agbiz.co.za | @WandileSihlobo)

Land reform, water reform and climate change policy and legislation environment
Mr Theo Boshoff, Agbiz Head: Legal Intelligence (theo@agbiz.co.za)

Agriculture trade and investment environment
Mr Sifiso Ntombela, Trade Economist and Agbiz Head: International Trade and Investment (sifiso@agbiz.co.za | @uSobahle)

Managing agriculture's investments in an uncertain environment
Prof Ferdi Meyer, Director: Bureau for Food and Agricultural Policy (BFAP) (ferdi@bfap.co.za)

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