Business Maverick


Presidency gains insight into grain farming and the state of our roads

A photograph made available on 06 June 2013 shows a tractor delivering grain to a grain storage site near Johannesburg, South Africa, 06 June 2013. It is now grain harvesting season and the grain is transported to the major cities after being stored in the site. EPA/KIM LUDBROOK

Commercial grain farmers and the South African Presidency have been talking on a range of issues and seem to be finding some common ground, according to the head of industry group Grain SA. Expropriation without compensation (EWC), like a hooded figure wielding a scythe, still looms in the background. But, says Jannie de Villiers, Grain SA’s CEO, in an interview, promising seeds have been planted.

There was a first this week at the annual Nampo agricultural show in the heart of South Africa’s maize belt. An official from the Presidency accepted an invitation and rocked up.

And guess what? He got a puncture because of the potholes,” Jannie de Villiers, Grain SA’s CEO, told Business Maverick on the sidelines of Nampo. “And he said to me ‘Jannie, now I understand why farmers are mad at us, why can’t we fix that road?’ For us this is an unintended consequence of Nampo.”

This has not been Grain SA’s only engagement with the Presidency. De Villiers said a host of issues have been raised between the two sides that look set to grow into policy initiatives.

We have engaged with the Presidency as they are putting together a five-year plan ahead of the incoming administration. The private sector gave the input and this has become part of the government’s plan. This is a major breakthrough for the private sector and the government,” he said.

Last year we had a major focus on EWC. This year, it hasn’t gone away, but the focus has shifted and we are talking about how we fix the economy. We are taking the government seriously when they say we are not going to expropriate productive land. We need to build the trust and if the government says we’re not going to do it we need to take them seriously.”

One area that looks promising is blended financing models for emerging farmers. This is a well-known problem: farmers in the former homelands can’t access finance because they lack title deeds, and the communal lands they till are effectively run by tribal chiefs. Also, many of the commercial farms that have been transferred to black farmers are owned by the state, so they also lack the collateral required to get bank loans. Surprisingly few initiatives have been rolled out to address this issue, one of the key obstacles to the government’s land reform drive.

We said our number one problem is that the emerging black farmers don’t have any finance. So we have brought in proposals about partnering between the government and the private sector,” De Villiers said. Under Grain SA’s proposal, “the farmer will get a proportional grant from the government and a loan from the commercial sector. So the fact that the farmer has a government grant lowers the risk and makes it possible for the bank to do something in terms of the credit act”.

Asked if the presidency has been receptive to the idea, De Villiers said: “The presidency has been very receptive. You will hear about it in his next state of the nation address after his inauguration.”

We want the small farmer to get to a commercial yield so they can sell the excess still sustain themselves. But to get to a commercial level you need financing to take them there.”

He also said that Grain SA has been pushing to open new market opportunities for South African crops.

Can we get a free trade agreement with China so we can start exporting soya beans there? While the Americans are having a fight with China we must step in there and start selling our crops.”

Time will tell how such proposals shape up. But at least the Presidency has some first-hand experience with the miserable state of the roads in maize country – the roads that are needed to get the inputs to the farms and the produce to market. Fixing those would also be a good step. DM


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