OBG talks to Chris Venter, CEO, AFGRI

Interview: Chris Venter

How vulnerable is South Africa’s agro-industrial sector to climate volatility?

CHRIS VENTER: The country has always been water scarce, and methods and planting cycles have been adapted by farmers in the maize industry. Technology and developments in the agricultural sector are advancing all the time, and drought- and water-resistant maize – which has shown good results in South Africa – is available. Advances like this will help farmers mitigate the risk of drought and climate change.

To what extent do tariffs help protect against dumping and ensure competitiveness?

VENTER: The tariffs imposed on the poultry industry, coupled with the exchange rate, are certainly helping the local industry. In the global market, South African industry remains fairly small when compared to the size of poultry processing facilities in Brazil, as an example, where industry is also assisted by government rebates. Much consolidation has taken place in the local market of late, and we do believe efficiencies will continue to take place in the industry, as well as a slight repositioning of product offerings. As in the case of AFGRI, greater focus is being placed on fresh products, as well as portions sold to the quick-service restaurant segment.

Are subsidies required to sustain growth?

VENTER: The complexity of the South African economy makes subsidies very difficult when there are basic services that require much of government’s attention. Local players like ourselves are working together with the government on initiatives which will make a difference to the lives of people in our country and on the continent.

Further investment is required by the industry into emerging farmer training and development programmes, as well as Black Economic Empowerment development projects. Such programmes can offer a range of practical and theoretical training where farmers are further assisted by mentors advising them throughout the agricultural value chain.

What can be done to improve the integration of smallholders into the agricultural value chain?

VENTER: We are guided by research that shows that the largest challenge in accessing production equipment in the agriculture sector is cost, which means emerging farmers have to fight to make the leap from small to intermediate. This is due to equipment being expensive and access to loan facilities difficult, coupled with an inability to find storage for grains and then to sell at the right time and price.

Partnerships between the private sector and cooperative federations to improve smallholder productivity via increased access to equipment could be a suitable tool. Cooperative unions could engage members to contribute maize towards the acquisition of farming implements through a scheme. AFGRI is engaging in such a partnership with the Zambian Cooperative Federation, and has seen it give farmers a better chance of making the transition to becoming viable commercial farmers. The advisory and training services mentioned would help as well.

What measures do you think could help to improve investor confidence in the sector?

VENTER: We have been involved in agriculture for more than nine decades, and we understand the factors, macroeconomic conditions being only one of them, that farmers have to manage in order to harvest a successful crop. Farmers need to consider rainfall, the best time to plant the crop, what seeds to use, what influence international markets will have on local crop prices, insurance, the size of the local crop and many other factors. It is well documented that South Africa’s economic growth rate has declined, and it would seem that the government is behind a scheduled infrastructure spend, which should help improve confidence in the local market.