CHAPTER 3: LAND REFORM PROJECTS REVIEW
3.11. Local Competitiveness Perspective
The majority of rural communities are faced with serious challenges of poverty and underdevelopment. Theirs is lack of basic services in most local municipalities. The revenue stream of rural municipalities is very low and agriculture is mostly dominated by a few private companies. The local people mostly offer their labour to the farming communities. The land reform programmes brings a different perspective in how the rural poor now sees and values the land they have been working on for decades, if not centuries. The biggest impediment is the lack of skills for the rural poor to be able to compete with their local counterparts and be competitive internationally.
According to Abu and Kirsten (2009), “Prior to 1997 South Africa’s maize marketing system had a single-channel system that discouraged entry by potential competitors, thereby suppressing competition at the milling stage. In 1997 the South African agricultural market was deregulated. In general it was expected that this would lead to, among other things, a more efficient and competitive agricultural marketing system and increased investment and employment in agriculture. Specifically,
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the deregulation of the maize market was expected to encourage a proliferation of small-and- medium-scale maize millers, thereby resulting in better competition in the sector and ultimately a reduction in real maize meal prices. These expectations were based on evidence from other countries where deregulation had resulted in improved market conditions, increased intensity in competition, effective resource allocation, higher levels of efficiency and lower prices”.
In South Africa, the majority of maize produced is for human consumption by the majority of the population. About 60 per cent of the maize produced here is white, used primarily for human diets, and the rest is yellow used mostly for animal feed. Abu and Kirsten (2009) conclude that “Since the current deregulation of the maize milling industry, the survival of less efficient small-and-medium- scale maize mills has become highly uncertain as they become less competitive. They therefore need to improve their internal efficiency significantly so as to become competitive in the South African maize meal market”.
“Small-scale irrigation farming is envisaged to play a progressively larger role in rural development and to help reduce some inequalities in South Africa’s space economy. Since the late 1990s, the government has aimed to ‘revitalise’ government-owned small-scale irrigation schemes, many located in former homelands. Its macro-policy shifts seem to favour the creation of black farming elite. Important questions are whether neoliberal policies will harm the poorest and most vulnerable in irrigation farming communities, and whether a new class of petty commodity producers can establish themselves in global commodity chains” (Tapela,2008).
According to D’Haese, Verbeke, Van Huylenbroeck, Kirsten and D’Haese (2005), “The World Development Reports of 2002 and 2003 focus on respectively building and transforming institutions for economic growth. Both reports add to a new (post) Washington consensus that trade liberalization and institutional change are two sides of the same coin. In particular the World Development Report 2002 focuses on new institutional arrangements supporting farmers connect to the commercial supply chains. Yet, the role of the government in this area, and in creating an enabling production and market environment, is still widely debated”.
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The rural emerging farmers in South Africa face similar challenges as the rural farmers in Latin American countries – lack of access to markers. Most of the farmers do not control areas of the value chain. What they produce depends on whether the millers/producers, who also own farms, need their raw materials which impacts on prices and eventually affects the profitability of small farm holdings.
Small scale farmers are not organized like commercial farmers and compete with them for access to markets, access to finance etc. Small scale farmers must handle this dilemma in an organized manner to voice their opinions and concern with the relevant authorities such as government bodies, funders and communities across farm boundaries for mutual benefits.
The main alignment challenge is whether local players take the Provincial Growth and Development Strategy key priorities when planning for local land beneficiaries. The challenges have been identified: unemployment, poverty, food security and rural development. These need to be addressed urgently with vigour to put the development strategies on the right track.
According to Tapela (2008), “The problem is that the vision of a significant role for black petty- commodity producers involved in irrigation farming seems rather ambitious when viewed against the following factors:
The majority of black arable farmers in South Africa practice commercial rainfed cropping rather than irrigation, and subsistence rather that commercial farming;
Black farmers face significant constraints to effective participation in the highly competitive and globalised commodity production sectors owing to their lack of financial resources, technology, technical and managerial skills and access to markets, and therefore their requirement for significant investment in farmer support;
The proportion of black farmers who can benefit from agricultural commercialization is constrained by water scarcity;
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Effective participation by black farmers emanate from world market conditionalities. Trade liberalization policies, such as the World Trade Organization’s Agreement on Agriculture, compel developing countries to phase out subsidies, exchange controls and trade barriers without imposing the same conditions in countries in the north”.