PROMOTING THE COMPETITIVENESS OF SOUTH AFRICAN AGRICULTURE IN A DYNAMIC ECONOMIC AND POLITICAL ENVIRONMENT

Abstract

South African (SA) farmers are faced with a dynamic global economic and trade environment caused by the liberalisation of international markets and rapid advances in information and communication technologies In addition to dealing with the deregulation of domestic agricultural markets in the 1990s, SA farmers also have to adapt to a dynamic political environment and other challenges, including land reform, AgriBEE, new labour legislation and minimum wages, property taxes, skills levies, uncertain water rights, HIV/Aids, a volatile exchange rate, and high transport and communication costs. The main factors that will help promote the competitiveness of SA farmers, and the agricultural sector in general, include good governance at all levels of government and industry, institutional innovations for commercial and small-scale farmers, improving the quality of (school) education (particularly in mathematics and science) and skills training, promoting research in agriculture, and farmers adopting new technologies. Government should focus its relatively scarce resources on providing physical infrastructure (especially improved transport and communication infrastructure) and legal infrastructure (secure property rights and contract enforcement) to reduce transaction costs, including risk, so that markets for products and resources work more efficiently; relax restrictive labour laws; reduce uncertainty regarding land claims, AgriBEE and the rural land tax; improve efficiency in disbursing LRAD grants to approved projects; reduce crime rates; and promote education, agricultural R&D and skills training.