Inequality and Economic Inclusion

Monday, 01 June 2009

Review of the Eastern Cape’s Siyakhula/Massive maize project

  • Year: 2009
  • Organisation: TIPS
  • Author(s): Norma Tregurtha
  • Countries and Regions: South Africa

Agriculture plays a unique and multifaceted role in the South African economy. While it contributes less than three percent to the country’s GDP, it provides almost 10 percent of the country’s formal sector employment. The sector has, according to all measures, relatively large linkage effects with the rest of the economy, and is a major earner of foreign exchange: currently more than 8 percent of the country’s merchandised non-gold exports are primary agricultural products. The sector also plays an important safety-net role in the lives of poor South Africans. A survey conducted in 2007 found that more than 14 percent of the labour force had participated in some form of agricultural production in the preceding year (General Household Survey 2007).

Despite this positive contribution, the general consensus amongst policy makers and development practioners is that the South African agricultural sector can, and should, play a bigger role in placing the economy on a higher growth trajectory, reducing poverty and halving unemployment by 2014. However, this pro-poor growth potential has been undermined by the dualistic structure of South Africa’s agricultural economy that comprises both a commercial and a small-scale, subsistence sector.

The large-scale commercial sector is made up of an estimated 4 818 farming units, covers a production area of approximately 82 million hectares and is responsible for more than 99 percent of South Africa’s marketed agricultural output (StatsSA 2002; StatsSA and NDA, 2002). The emerging or small-scale sector, in contrast, consists of 1,3 million farming households with access to an estimated 14 million hectares of agricultural land principally concentrated in the former homeland areas of the country (NDA 2006). Typically, these farmers achieve low levels of production efficiency and engage in agricultural production to supplement household food requirements.

Over the past 15 years, the post-apartheid South African government has struggled to narrow the development gap between the country’s two agricultural systems. In part, this can be explained by the nature of the agriculture that relies on land as a core factor of production. Land represents a high capital barrier to entry and the agricultural investment cycle is long and beset with both market and production risk. This has been further exacerbated by the changing nature of agribusiness that is becoming increasingly competitive and complex in terms of product offering and management requirements. Climate change, supermarket procurement practices, biotechnology and commodity price volatility are just some of the issues farmers have to contend with and larger producers have been better placed to internalize these issues.

The number of policy levers that the South African government has been able to use to tackle this inequality has also been limited. The agricultural deregulation and liberalisation policies that were introduced in the 1990s abolished single channel marketing systems and price controls. While they strengthened the competitiveness of the commercial sector, they also transferred risk to all categories of agricultural producers and eliminated the policy space to shield smaller producers and new industry entrants from the vagaries of market forces.

Consequently, much of South African agricultural policy in the post-apartheid period has centred on land reform and strengthening small-holder development through project support. In the case of land reform, despite a well-formulated policy framework, slow implementation has meant that less than five percent of commercial farm land has been transferred to Black South Africans since 1994. Furthermore, there is evidence to suggest that only 50 percent of these land reform beneficiaries have been able use the land productively (Bosman 2007).

In terms of project support for small-holder development, a broad range of ad-hoc initiatives has been implemented by the nine provincial departments of agriculture tasked with this responsibility. Business development support through the formation of cooperatives, onfarm infrastructure investment and niche-commodity schemes are examples of the types of projects that have been undertaken by government in an attempt to strengthen small-holder development. By and large these initiatives have not been successful: their narrow focus together with weak implementation and oversight have contributed to the high failure rate.

The case-study presented here – the Siyakhula/Massive Maize Production Programme – outlines the design and implementation of a government small-holder development project in the Eastern Cape Province. What makes this case study significant is that it was an attempt on the part of the provincial government to move beyond the narrow, project paradigm and restructure the way in which small-holders engage in crop production. From the outset, the Siyakhula/Massive programme was intended to form the foundation of the Province’s agrarian reform strategy and strove to induce systemic change in the structure and performance of the Eastern Cape agricultural economy.

The aims of Siyakhula/Massive were ambitious. At the most basic level, the programme focused on strengthening food security in the Eastern Cape through increasing maize production. However, promoting black economic empowerment in the agricultural sector, stimulating private sector development and markets in rural areas, as well as promoting environmental sustainability through encouraging conservation farming were also core programme objectives. In addition, the Siyakhula/Massive programme was designed to have an immediate, tangible impact and therefore it required a large budget to implement the five-year programme to scale. The crop production component of the programme was allocated R250 million and a further R250 million was set aside for the mechanization component. This investment was expected to deliver significant results which the architects of the programme quantified as follows:

“When fully implemented there will be 800 tractors with the associated equipment, which will yield 160 000 tonnes (40 000ha) of maize providing food for over 1,2 million people per annum, valued at R352 million.”

The objective of the case study presented here is, firstly, to describe the role-out and implementation of the Siyakhula/Massive programme and, secondly, to assess the extent to which this initiative was successful in achieving its stated aims and objectives. The impact of the programme on the macro, meso and micro level of the Eastern Cape economy will also be examined and special emphasis will be placed on the extent to which the Siyakhula/Massive programme as able to catalyse systemic changes in the broader Eastern Cape maize marketing and production system .The key lessons that can be distilled from the programme will also be presented. This analysis is especially timely in light of the ANC’s Polokwane Manifesto that reaffirmed government’s commitment “to embark on an integrated programme of rural development, land reform and agrarian change”.