Agribusiness to face several challenges in the new year; South Africa

The South African agribusiness environment will be faced with various challenges in 2017, especially in terms of engaging with key land reform legislation, according to Agricultural Business Chamber (Agbiz) CEO Dr John Purchase, who delivered an agricultural industry forecast for 2017 on Friday 25th November 2016.

At the Pretoria-based conference focused on South Africa’s agriculture and agribusiness sectors, Purchase highlighted the revised Expropriation Bill in Parliament; the possible introduction of the Regulation of Land Holdings Bill, which proposes land ceilings; and the prohibition of agricultural land ownership by foreigners into the legislative process, as major legislative challenges that would affect the agribusiness space.agribusiness space.

“The revision of the Restitution of Land Rights Amendment Bill by Parliament, after having been suspended by the Constitutional Court, is also worrying,” he told EngineeringNews Online.

Purchase highlighted, however, that land reform was imperative in South Africa, and that provision had been made for it in the Constitution.

“Agbiz has made a number of proposals regarding the redistribution of land, such as the Right of First Refusal Programme, which has successfully been [implemented] in Namibia,” Purchase said. 

He added that critical policy and legislation impacting on the agrofood industry would surface in 2017 and would be addressed by Agbiz.

“A positive aspect is that the so-called CEO Process, initiated by Finance Minister Pravin Gordhan, can assist in creating an environment for strong and inclusive growth in the broader agrofood sector,” stated Purchase.

Trade Relations and Negotiations

Also speaking at the conference, Agbiz international trade and investment head Tinashe Kapuya noted that 2016 would go down as one of the most fruitful years in terms of South African trade policy milestones.

“In March, South Africa avoided suspension in the Africa Growth Opportunity Act (Agoa) preference programme, ensuring that duty-free quota free-market access is retained for a number of agricultural products such as oranges, mandarins, macadamia nuts and wine,” he said.

Kapuya added that, in April, a preferential trade agreement between the Southern African Customs Union (Sacu) and South American trading block Mercosur was concluded, and later implemented in October.

“This has paved the way for preferential market access into South America, while offering prospects of much-needed relief for feed manufacturers who will be able to import soybean cake at a preference margin,” he said.

Kapuya added that, in June, the Economic Partnership Agreement (EPA) was officially signed off, opening up new market access for a range of agriculture products such as wine, sugar, ethanol and fresh fruit, effective November 1.

“Looking ahead to 2017, a rebound of domestic production will expectedly boost agricultural exports going forward, with increased growth prospects to be expected in the [European Union (EU)],” he said.

Kapuya added that the effects of the UK’s official exit from the EU were not expected to have any impact on South Africa’s exports.

“However, we expect the diversification of exports to continue, particularly for fresh fruit into Asia and the Middle East.”

Kapuya noted that there was no expectation that Agoa would be repealed in the US, and that a Donald Trumpadministration was unlikely to change the current relations between Sacu and South Africa in a fundamental way.

“However, uncertainty remains in the manner and extent to which the new administration will push for reciprocity going forward. The expectation is that South Africa will retain its market access in the medium to long term, nothwithstanding the possibility of out-of-cycle reviews,” he noted.

Kapuya pointed out that the African market would remain the centrepiece of South Africa’s agricultural export growth in 2017, especially against the backdrop of a recovery in domestic production.

He added that the Tripartite Free Trade Agreement (T-FTA) negotiations would resume in February 2017, with the expectation that progress towards its conclusion would pick up speed in the new year.

“However, the T-FTA will not likely be concluded in 2017. Meanwhile, the Continental FTA discussions will expectedly gain momentum as modalities are laid out towards its negotiation,” said Kapuya.

Grain Industry

Agbiz grain GM Mariana Purnell noted at the conference that role-players in the grain industry had collectively decided to come together and discuss action plans to revive the South African wheat industry.

“The whole industry is in dire straits, not just farmers. The survival of the local wheat industry is important for the whole value chain, from the producer to the processor,” she said.

Purnell noted that several changes had been made during 2016 to help farmers produce wheat more sustainably and to address other issues of concern along the value chain. 

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