CAPE TOWN – A sense of urgency has entered the national conversation about unemployment in the wake of an unexpected recession and devastating unemployment figures.
Perhaps for the first time, the realisation has truly hit home that we cannot continue like this.
President Cyril Ramaphosa’s Jobs Summit earlier this month, following hard on the heels of a stimulus package announcement, and the Investment Summit last week, came not a moment too soon, and will help not only to galvanise action, but also to guide increased levels of co-operation among social partners to give maximum effect to the initiatives currently under way.
On these occasions, the president singled out agriculture and the agro-processing value chain as an area with significant job-creation potential and he outlined how the private sector could contribute.
There is certainly a willingness to work together to change the economic trajectory and to promote inclusion. Agriculture – and specifically support for black emerging farmers – can be an important part of doing so. This sector has enormous potential to absorb those hardest hit by unemployment – especially in rural areas – the youth and women.
It must come to be seen as a viable pathway out of poverty and, through agro-processing, a means to beneficiate raw produce and stimulate rural economies.
As a major user of agricultural material, mainly fruit and sugar, Coca-Cola Beverages South Africa (CCBSA) has a significant role to play and, to that end, we have established a R400 million agricultural development fund which will be managed under the Mintirho Foundation.
Our experience in setting up this fund and exploring ways of investing in sustainable projects has been a steep learning curve, and the lessons we have learnt may contribute to successful implementation of other projects in the sector.
For one thing, it is clear that no single actor can single handedly deal with the challenges faced by emerging farmers, from access to capital, infrastructure and equipment, to the skills, technology and information needed to enable growth.
Pooling our knowledge and resources would go a long way towards creating a coherent framework to support black emerging farmers.
We found early on that, while there are many candidates requiring funding, few have fully developed business cases that are well documented, researched and investment ready.
Many lack access to information about funding opportunities and, while they have ambitions to grow their business, they may not have the know-how to grow at the rate they anticipate: they lack an understanding of the markets they want to service, the market for new products may not be fully developed, the logistics of getting their product to market on a large scale may not be in place and they have little marketing experience.
Support is required to develop and fine tune the business case long before the investment stage.
Lack of infrastructure is another significant challenge which will require partnerships to overcome. For example, in the case of crop farmers – where CCBSA has concentrated its efforts to support local sourcing and transformation of our supply chain – lacking a backup generator could result in a break in the cold chain and the loss of a farmer’s entire crop. And a single tractor, meanwhile, can cost between R500 000 and R700 000.
This imposes very high startup capital costs on emerging farmers which often creates a debt trap from which it is very hard to escape.
Commercial rental rates are not always viable and yet, without the equipment to produce a successful crop it is impossible to generate revenue, which in turn is required to acquire or rent the equipment. It is a vicious cycle which requires collaboration, hence our commitment to assist where we can.
Collaboration is critical and, if we all play to our strengths and identify synergies in our operations, we will be better able to boost these farmers and increase employment in the sector.
Our first aim should be to reduce the burden of debt all emerging farmers have to take on to get their operations off the ground when acquiring land and basic infrastructure, including power, water access, irrigation lines, fencing and equipment.
The Department of Rural Development and Land Reform has a key role in the acquisition and leasing of land and basic farm infrastructure, while the Department of Agriculture and Forestry and Fisheries, the Land Bank, National Empowerment Fund and other government Development Finance Institutions can partner with like-minded organisations to support the acquisition of much needed infrastructure under favourable credit conditions.
At the same time organisations like the Agricultural Research Council, AgriSETA and others can provide training and advisory support to enable the growth and development of emerging farmers.
This would allow corporate funders and commercial banks to get involved in growth funding for projects as well as ensuring market access, rather than funding land purchases at commercial rates and putting new farmers under a huge burden of debt.
The Mintirho Foundation provides funding, training and mentoring, as well as ongoing technical support to ensure that our investment in the operations we fund is successful - and similar continued support is needed for many emerging farmers.
President Ramaphosa’s support for this sector may just be the catalyst required to ensure that funders, policy makers, suppliers and customers put their heads together to find viable solutions that work for our country’s unique circumstances.
He has made stimulating the growth and development of black emerging farmers and job creation in agriculture a key priority and we have the means within the public and private sector to make it happen. We need to envision a future that we want and work towards its realisation.
Velaphi Ratshefola is the managing director of Coca-Cola Beverages SA.
The views expressed here do not necessarily represent those of Independent Media.