Nufarmer Africa
Primary agriculture is
crucial to a prospering
agro-processing sector
Dr Keith Du Plessis, CDC Business Development Manager Agro Processing at the
forefront of Agro Processing in Coega.
T
he agro-processing industry has been identified, by a range of industrialists and the
Government, as one of the sectors that can
spur growth, and turn around a declining agricultural market, which has not only seen a decrease
in job creation but also in its contribution to the
country’s contribution to gross domestic product
(GDP).
Agro-processing plays a vital role in food security,
employment and rural livelihoods and serves as
a viable source of foreign investment. It is widely
seen as a vehicle to develop rural economies and
to create much needed jobs in the underdeveloped rural areas of South Africa.
The New Growth Path (NGP, 2010) forecasts the
creation of 145 000 jobs in agro-processing by
2020, while the Industrial Policy Action Plan (IPAP
2) has conservatively estimated the creation of
66 180 jobs in agro-processing over the next 10
years. The IPAP – in its various iterations – the NGP
and the National Development Plan (NDP) have
identified the agro-processing industry as a sector primed to spur growth and create jobs. This is
mainly because of the sector’s strong backward
linkage with the primary agricultural sector.
Agro-processing is the processing, preservation
and preparation of agricultural production for intermediate and final consumption.
It is simply not possible without primary agriculture; unless one imports raw products. Essentially, no raw materials mean no processed product or simply put, ‘no apples, no apple juice’.
Investment destination: the CDC building overlooking the Port of Ngqura, strategic partners in
socio economic development.
This is where we as South Africans seem to
have lost our way and respect of the power of
raw materials. Even though agriculture and food
production in South Africa is highly developed
and the country has become food sufficient – we
are a net exporter of agricultural products – and
even though we benefit from diverse climatic
conditions which allow for a large variety of commercial and food crops to be cultivated, there has
been a stagnation and even decline in the agricultural industry.
The statistics on this are cause for a rude awakening. According to Quantec data, agriculture’s
contribution to the GDP shrunk from 10.3% to
2.5% between 1967 and 2010. The number of
jobs in the sector has dropped from 1.9 million
to 624 000 in just over 10 years between 2000
and 2011, while the people employed in the agricultural sector dropped from 19.1% of all jobs to
only 4.7% over the same period. This was mainly
driven by a decline in the state spending in agriculture over the past few decades.
Furthermore, the sector never fully recovered
from policy changes in the 1980s which led to
the removal of existing controls over the movement of labour and microeconomic deregulation
which led to a significant increase in various activities in the informal economy.
More recently, the shift in the structure of the
agricultural sector and agricultural production,
which saw a larger focus on horticultural crops
(fruits and vegetables) rather than field crops, led
to a further slowdown of agricultural production.
Despite this, a study by South African Institute of
Race Relations (2012) indicates that capital expenditure by commercial farmers has more than
quadrupled from R2.1-billion in 1993 to R11.2billionn in 2010, while their net income has more
than doubled from R3.2-billion to R7.2-billion
over the same period. The value of agricultural
exports has almost tripled over the last decade.
Reasons for this include; the introduction of new
technologies in the twenty-first century that reduce the need for large labour forces and the
increase in growth of yields of almost all grains
due to increased mechanisation, use of improved
seeds, f \