National Development Plan - Vision 2030: What role will agriculture play? Johann Kirsten Department of Agricultural Economics University of Pretoria

Contents Short overview of the National Planning Commission proposals for the agricultural sector The place and role of the agricultural industry in KZN in the proposals The role of organised agriculture and commodity organisations in achieving Vision 2030

National Development Plan

National Planning Commission National Development Plan – released 11 November 2011; expanded version August 2012 Approved by Cabinet – 10 September 2012 Charting a new path to eliminate poverty and reduce inequality by 2030. Objectives include: Reduce the number households earning below R419 per month by 2030 from 39% to zero Gini coefficient to fall from 0.69 to 0.6 by 2030 Create 11 million jobs by 2030 Raise per capita income from R50 000 in 2010 to R120 000 by 2030 National income of bottom 40% to increase from 6% to 10% Education- all children in grade 3 to be able to read and write Affordable access to quality health care Household food and nutrition security Increase investment in labour-intensive sectors-incentives to employ youth Vision 2013 for rural economy: rural communities have greater opportunities to participate fully in the economic, social and political life Driving force – expansion of irrigation, unutilised arable land Agriculture has the potential to create 1 million jobs

Employment in South African agriculture: 1911 -2010 Source: GF Liebenberg, 2011

Agriculture has the potential, but SA needs to:… Expand irrigation agriculture. There is evidence that the current 1.5 million hectares under irrigation (which produces virtually all of South Africa’s horticultural harvest, and some field crops, i.e. well over a third of total output) can be expanded. Bring some of the under-used land in the communal areas and under land reform projects into commercial production over a period of time that is commensurate with the aims and objectives of the land reform programme and South Africa’s food security needs. Expand commercial agriculture.

SA needs to….. Pick and support ‘winners’ from commercial agriculture – those sectors and regions which have the highest potential for growth and specifically for employment-creating growth. Support employment creation in the upstream and downstream industries. The potential for employment creation will come from the growth in output that will result from the first three strategies. Find creative combinations between these opportunities. This will include: greater emphasis on land that has the potential or that has already been serviced with irrigation infrastructure, giving priority to successful farmers in the communal areas as land reform beneficiaries, and giving targeted support to industries and areas of high employment creation potential in order to maximise collaboration between existing farmers and land reform beneficiaries, etc. And… we assume “All appropriate policy frameworks, fiscal allocation for infrastructure development etc. are in place”

Total cultivated area Source: GF Liebenberg, 2011

Underutilized land From 2 previous maps, a further expansion potential of some +- 3m ha potential arable land (maybe 2m ha conservatively) …..yes, some of the marginal land has been taken out of production Some of this is high potential land in the former homelands. Plus reports that a majority of the land reform projects have failed- on 5.9 million ha of land

Potential for expansion of irrigation agriculture Total upper limit of irrigation potential additional 707 000 ha. More realistic estimate 500 000 ha. Over baseline period realistically not more than 145 000 ha. Ground water 270 000 ha. The upper limit of irrigation potential is approximately 700 000 ha and almost 1 000 000 ha if irrigation from ground water is taken into account. It should however be noted that expansion of the current storage capacity reflects long-term potential and would therefore not impact the baseline period considered. In addition to this the maximum additional hectares that can be irrigated from efficiency gains in existing water management areas is 282 000 ha. The full 282 000 ha is unlikely to be utilized fully in the foreseeable future since water management systems are slow to adopt new and more efficient measures of distributing water. As a result a more conservative estimate of the additional area that could be irrigated is 500 000 ha. And if the focus is specifically on the baseline period (up until 2020) it would be safe to say that 145 000 additional hectares could be irrigated during this period. Groundwater is not considered in this estimate due to the high energy cost associated with of gaining access to this resource. Groundwater might however become more accessible when new and more cost effective technologies such as solar power are considered.

More efficient irrigation practices Although SA still has some potential to expand irrigation, there are major constraints with respect to investment and infrastructure. ….not to mentioned the fact that less water could be allocated to agriculture in future Most of this potential expansion can be achieved as a result of savings through water loss control & improved irrigation efficiency. (Water Research Commission) Technical efficiency levels for irrigation practices: IRRIGATION METHOD EFFICIENCY LEVEL FLOOD 55-65% SPRINKLER 75-85% MICRO/DRIP 85-95% Source: Reinders 1992

The identification of “winners” Three approaches to identify industries that can contribute to significant growth in employment: Large export industries with high labour requirements. High volume imports that can be substituted with locally produced goods. Growing small industries with high labour requirements.

The employment creation matrix

Export Industries 2000 2009 2010 Growth (2010/2000) R 000 Citrus fruit 1 491 780 5 375 368 6 575 672 4.41 Wine 1 690 896 5 990 423 5 722 498 3.38 Grapes 1 266 120 3 438 269 3 654 392 2.89 Deciduous fruit 912 635 3 758 302 3 640 172 3.99 Maize 502 575 3 788 324 2 232 416 4.44 Ethyl alcohol 545 818 1 546 308 2 077 139 3.81 Sugar 1 856 444 3 872 753 1 812 598 0.98 Preserved fruit, nuts 860 416 1 596 712 1 553 991 1.81 Fruit, vegetable juices 646 731 1 431 917 1 517 390 2.35 Wool 351 613 1 290 036 1 330 835 3.78 Food preparations 238 268 780 339 884 962 3.71 Total 15 752 267 47 459 444 46 129 995 2.93 Source: Abstract of Agricultural Statistics, 2010

Import Industries 2000 2009 2010 Growth (2010/2000) R 000 Rice 939 029   2000 2009 2010 Growth (2010/2000) R 000 Rice 939 029 3 782 804 3 092 480 3.29 Palm oil 323 366 1 933 467 2 187 636 6.77 Soya-bean oil-cake 469,907 937 503 2 014 896 4.29 Wheat 633 850 2 337 997 2 003 491 3.16 Meat and edible offal of poultry 304 072 1 558 083 1 754 277 5.77 Tobacco 396 739 1 599 440 1 247 992 3.15 Food preparations 344 811 1 027 955 1 013 334 2.94 Sunflower- and cotton-seed oil 313 833 754 504 787 276 2.51 Preparations in animal feed 208 583 567 224 599 402 2.87 Dried leguminous vegetables 129 290 569 616 573 947 4.44 Total 10 061 625 35 039 208 34 618 072 3.44 Source: Agricultural Abstract of Statistics, 2010

Smaller Industries Macadamias Olives Avocados Pecan nuts Figs Herbs Organic Rooibos Tea Cherries Berries

Potential expansion Ha irrigated Additional jobs on farm Commodity Current area (2010/11) Potential expansion Ha irrigated Labour multiplier Additional jobs on farm Linkages multiplier (Up) Downstream jobs Sugar cane 380 000 22 800 1.00 0.30 6 840 Citrus 60 000 15 000 0.66 9 900 Grapes 23 526 4 705 1.62 7 622 1.07 5 031 Apples 21 100 2 532 1.25 3 165 0.83 2 089 Pears 11 435 377 1.26 475 314 Plums 4 227 1 057 1.46 1 543 0.96 1 018 Prunes 431 108 157 104 Peaches 8 348 417 1.20 501 0.79 331 Nectarines 2 028 507 634 418 Avocado pears 13 250 9 275 2.00 18 550 1.32 12 243 Mangos 7 583 1 517 1.40 2 123 0.92 1 401 Litchis 1 163 233 326 215 Bananas 12 000 3 600 7 200 4 752 Guavas 990 198 1.50 297 0.99 196 Pawpaws 2 710 677 1 355 0.60 406 Cotton 7 000 2 100 Tobacco 4 000 400 2.20 880 1.45 581 Potatoes 53 472 6 417 0.80 5 133 0.56 3 593 Tomatoes 9 537 4 769 3.50 16 690 1.05 5 007 Onions 6 814 4 088 0.98 4 007 0.29 1 202 Carrots 3 280 2 296 3.00 6 888 0.90 2 066 Pumpkins 5 725 2 576 2.10 5 410 0.63 1 623 Green mielies 18 667 3 733 1 120 Pecan nuts 14 000 1.30 18 200 0.65 9 100 Macadamias 17 100 11 970 9 576 0.32 3 830 Olives 2 500 0.75 11 250 0.50 7 425 Rooibos 5 000 Pomegranate 1 200 4 680 0.86 3 089 Strawberries 213 235 2.30 540 1.52 356 Flowers 545 13.00 7 085 8.58 4 676 Cherries 230 552 1 656 1.98 1 093 TOTAL 698 074 145 184 189 476 97 120

Potential expansion Ha Additional jobs on farm Non-labour intensive Commodity Current area Potential expansion Ha Labour multiplier Additional jobs on farm Linkages multiplier Up/down stream jobs White maize 1 481 000 118 480 0.01 1 185 0.005 592 Yellow maize 954 000 238 500 2 385 1 193 Wheat 610 000 61 000 610 305 Barley 83 000 6 640 66 0.008 53 Soybeans 418 000 376 200 3 762 0.007 2 633 Sunflower 642 000 96 300 963 482 Canola 40 000 4 800 48 24 TOTAL 4 228 000 901 920 9 019 5 282

Potential expansion Tonnes Additional jobs on farm Livestock Current production Potential expansion Tonnes Labour multiplier Additional jobs on farm Linkages multiplier Up/downstream jobs Poultry 1 327 000 663 500 0.0222 14 744 0.0143 9 479 Eggs 386 440 193 220 0.0400 7 729 2 760 Dairy 2 613 674 522 735 0.0286 14 935 0.0154 8 042 Beef 628 000 282 600 4 037 0.0071 2 019 Pork 171 430 25 715 0.0185 476 0.0093 238 Sheep meat 98 200 117 840 0.0083 982 842 Wool 45 500 20 475 170 171 TOTAL 1 826 084 43 074 23 550

KWANALU and the Vision 2030 Which are the relevant aspects in the National Development Plan for KWANALU and commodity organisations in KZN? “Develop strategies that give new entrants access to product value chains and support from better resourced players” “Convert some under-used land in communal areas into commercial production” “Job creation in downstream industries” “effectiveness of extension officers need to improve” “White commercial farmers, agribusinesses and organised agricultural industry bodies can help bring these objectives to fruition”. “Innovative means for agricultural extension and training by the state in partnership with industries should be sought” NPC argues that non-labour intensive livestock industry can create an additional 40 000 primary jobs and 25 000 secondary jobs.

Commodity organisations and the Vision 2030 Commodity organisations are critical in achieving the vision Many commodity organisations are already doing good work in the spirit envisaged by the plan. Aspects that could receive further attention: greater support for innovative public-private partnerships expand innovative market linkages for small-scale farmers in the communal and land reform areas improve and extend skills development and training in agricultural sector – including a new-cadre of extension officers continue the work on new farmers’ associations – will provide greater collective power to poor producers, better skills and greater income expansion of commercial agriculture in current commercial agricultural system is limited – needs to happen elsewhere.

Will SA farmers and agribusinesses invest in agriculture? Sentiment critical Security of expectations over political and economic future Leadership in agriculture and politics Need clear agricultural policy and policy on land. Smart subsidies and incentives to encourage employment and investment.

We can learn a lot from China… ..on how to be serious about rural and agricultural policy Chinese Central Government each and every year chooses one area to be addressed by their first policy document – dubbed “the No. 1 Document“ - Top of China’s Agenda In the past 9 consecutive years, the topics are all about agricultural and rural development These documents carry budget implications for the Central Government, and huge investment and subsidies are now flowing to the agricultural and rural sectors

Objectives in the ‘no 1 document’ in China 2004 Increasing farmers' income 2005 Improving the agricultural production capacity 2006 Pushing forward the "new countryside" scheme 2007 Developing the modern agriculture 2008 Consolidating the foundation of agriculture 2009 Improving the rural development & farmer’s income 2010 Balancing the urban and rural development 2011 Enhancing the rural irrigation system 2012 Encouraging the agricultural technology innovation

Closing remarks The NDP provides some hope that SA government recognises the potential role of the agricultural sector in achieving Vision 2030 Suggests that we are serious about agriculture and issues of rural poverty But… can DAFF, DRDLR and PDAs implement the programmes and remove the chaos and uncertainty to make this a reality? There still remains an important task for organised agriculture: Unity and one farmer association.