The world increasingly needs more food to meet the demand of a fast-growing population, according to CNBC Africa. According to a recent WEF report, we may run out of sufficient calories much sooner than 2050. Meanwhile, in SA the short-term economic outlook does not look great.
An increase in policy uncertainty, disappointing economic growth and an increase in government debt may lead to another credit downgrade as early as the end of 2017. Any downgrade would further jeopardise the country’s food security as a weakening exchange rate will most likely lead to an increase in interest rates and higher import costs. This would drive up inflation and the consumer will be the poorer.
This is why next week’s medium-term budget policy statement (MTBPS) is important as it presents an opportunity to boost investor confidence, avert a possible downgrade and increase the support given to agriculture – a sector that not only holds the key to our food security but also has the potential to unlock the much desired economic growth.
Agriculture contributed significantly to the latest positive GDP figures and can play an even bigger role in the economy, if given the support it needs. It is important that we continue to find ways to optimise the output of the agricultural sector and thereby guaranteeing our food security. To this end, our policy interventions need to pay attention to a number of immediate and pressing challenges the sector faces. Below I highlight some of the specific industries whose challenges must be given priority to ensure that the sector pumps on all cylinders.
In the short to medium term, South Africa’s horticultural industry urgently needs assistance with the development of water infrastructure. It is necessary to expand on additional storage capacity, sufficient maintenance of existing water irrigation scheme infrastructure, efficiency of utilisation and allocation of water.
Effective disaster management systems and aid in times of drought also need to be addressed sufficiently in the budget. In addition, the financial services providers need to explore affordable insurance products to cover against disasters, such as drought or hail.
Transformation in the sector could benefit immensely from more policy certainty, especially when it comes to strengthening property rights with regards to land restitution and reform. Also, something needs to be done about the high entry barriers are high and input requirements in order to allow new entrants into agricultural production. Sufficient budgets for proper agricultural training and education of new commercial producers could be a start to ensure success.
Finance Minister Malusi Gigaba’s speech next week may be opportune to reflect on the pressing needs of our agricultural industries and to reconsider the budget allocations to improve the productivity of agriculture. Providing more support to agriculture would go a long way in addressing our food security concerns as well as contributing to the economy. It is therefore for these reasons that agriculture continues to receive priority from policy makers.
Source: CNBC Africa