South African Product Strategy

In order to put the South African Agricultural Production Strategy in perspective it is necessary to consider the salient features of the sector. The agricultural production environment is dualistic and has the following features:

Commercial Agriculture

Made up of less than 33,000 farming units; Covers a production area of approximately 82 million hectares; Is responsible for more than 99% of South Africa‘s formal marketed agricultural output. There has been a significant increase in the concentration of farm holdings as a result of smaller and less efficient farms, unable to take advantage of increasing economies of scale, being forced out of the sector. Despite the decrease in the number of farming units, output from commercial agriculture has continued to grow, implying an increase in the efficiency of production. Export growth has exploded, especially in the horticultural sector.

South Africa’s agriculture sector is one of the world’s most productive and robust sectors. The country is not only food self-sufficient but also a net food exporter, making it one of the less than ten countries (the US, Argentina, Canada and Australia among others) globally that exports food regularly. The country’s commercial farming is well developed despite the fact that majority farmers are still engaged in subsistence-focused practices especially in the rural areas.

The sector has however become more sustainable in environmental terms.

Smallholder Agriculture

Consists of 1.3 million farming households; Farm an estimated 14 million hectares of agricultural land; Is concentrated principally in the former homeland areas of the country, thus marginalized into regions of poor productive land, with little or no infrastructural support, and water resources. The smallholder farmers thus typically have low levels of production efficiency and engage in agricultural production to supplement their household food requirements, with surplus sold at local markets.

Smallholder farmers‘ production inefficiency is further related to their lack in sufficient farm management skills for example natural resource management, production and infrastructural management. This is further exacerbated by poor support services directed at smallholder farmers for example financial services, technical support, access to transport and other support infrastructure.

Subsistent Agriculture

There is currently a lack of sufficient data regarding the subsistent sector.

Subsistent farmers practice agriculture mainly for household consumption. However, recent studies have shown an increase in dependence on market purchases by both urban and rural households, in some cases reaching 90% of the food supplies.

Subsistence and smallholder agriculture can however play an important role in reducing the vulnerability of rural and urban food-insecure households, improving livelihoods, and helping to mitigate against high food price inflation.

Production Numbers

The value of primary agricultural production in South Africa showed an increase of 3.2% and was estimated at R288.6 billion in 2018, according to the Economic Review of the South African Agriculture 2018.

The gross income of producers for the year ended 31 December 2018 amounted to R281 835 million, compared to R278 531 million the previous year; an increase of 1.2%. This can be attributed to the increase in prices and production levels of horticultural and animal products, particularly of subtropical fruit, citrus fruit, pigs slaughtered, poultry meat, milk and eggs.

Data reflect the increasing importance of horticultural exports as a share of total agricultural output.

Variations in crop production are largely derived from the variability in maize production, which is in turn influenced by climatic conditions, producers ‘willingness to plant, and in industry average yields.

Farmers’ willingness to produce, in turn, is influenced by the profitability of production, i.e. price offers, both domestically and internationally, and the suitability of the natural resource base. The tradeoffs between these factors influence the affordability and availability of food.

Self -sufficiency levels are currently below domestic consumption requirements for most principled food commodities and are supplemented by increasing import levels. On average, agricultural production increased by 30 % over the mentioned period, while the population increased by 32 %.

Research conducted by South Africa ‘s competition commission further suggests that an increase in anti-competitive behaviour, negatively impacts food productivity, food availability and affordability within the country. High food prices may therefore not be a function of low levels of production, climate change and profitability alone.