Current challenges in the policy and legislation environment

 

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, says 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.

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)

Feedback from WC session held in October 2017

Agbiz session on current challenges in policy and legislation environment

On 5 October in Paarl, Agbiz hosted a most sucessful half-day session for close to 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.

According to CEO Dr John Purchase, Agbiz has unique insight, through its representation on various structural engagement forums, into the socio-political, policy and legislation environment.

At the event, Theo Boshoff, Agbiz Head Legal Intelligence, offered an in-depth presentation on specific legislation, including land reform, water reform, labour and climate change legislation. He said expropriation without compensation could cost ordinary South African citizens R160 billion. No compensation means no finance for existing and new farming businesses and no compensation will increase the price of food twofold. Fruthermore, expropriation without compensation will short-change communal occupiers who are set to receive ownership of their land.

Wandile Sihlobo, Agbiz economist, shared his knowledge on confidence and growth in the South African agricultural sector. He said apart from policy matters, weather remains a primary driver of agribusiness confidence and growth in agriculture. The drought in the Western Cape could negatively affect the agricultural labour market. Negative impact will most likely be in field crops, horticulture and forestry. This could drift SA away from its goal of creating close to a million jobs in the sector by 2030 (NDP). Sihlobo is of opinion that in the short term, the agricultural sector will remain on a positive growth path. The effects of the WC drought will be clear in 2018’s growth (GDP) numbers.

Interms of the agricultural trade environment, Sifiso Ntombela, Agbiz Head: Interantional Trade and Investment, said structural reforms are required in the sector to unlock new growth and competitiveness has to be boosted to expand agroprocessing capacity. Even though there is a diversification of export markets, deeper regional integration is needed.

Presenting on investment environment and commodties' outlook, Tracy Davids of BFAP said SA has caught up with global commodity cycles. She highlighted the following: Though food price inflation is lower, margins remain under pressure; recovery from the drought will take a few years; lower feed prices offer opportunity for intensive livestock operations to recover; water availability and efficient use are a make or break for high value crops; rural economies are growing but financing and investment in infrastructure required; and land reform has a long way ahead.

The event programme and presentations are linked below.

Programme»

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)

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

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

BFAP 2017 Baseline (Investment environment and commodities’ outlook)
Ms Tracy Davids, Manager: Commodity Markets Division (tracy@bfap.co.za)

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