Experts claim South African situation ‘positive’ despite misgivings
Whether it be floundering global economic conditions, port tariff hikes or tough competition with Egyptian oranges and Polish pears, South African growers have not had an easy 2012. But at the Produce Marketing Association’s (PMA) Fresh Connections: Southern Africa event this week, listeners heard plenty of reasons why the industry should be positive for the future.
Political and trend analyst J.P. Landman said South Africa’s situation needed to be put in context by comparing it to other nations, such as the U.S. where the manufacturing sector is still 4% smaller than it was three years ago.
“The South African economy is roughly 4% bigger now than before the recession in 2009,” he said.
Landman emphasized the positive situation that South Africa currently finds itself in, including aspects of land reform that are often omitted from conversations about food security and horticulture in the country.
“When we talk about long term food security, we cannot get away from the issue of land – against the background of enormous uncertainty globally, and therefore also in South Africa, it is perhaps good to take a long term view,” he said showing how the growth rate has curved drastically upwards since 1994.
“There is absolutely no question that the advent of democracy has been exceptionally good for the South African economy.”
Landman explained that the South African economy had “tripped” twice since the advent of democracy, and both times were due to international factors.
“It’s not [Julius] Malema that did it, nor COSATU [Congress of South African Trade Unions],” he said.
He explained the ups and downs of the land reform transition process, highlighting that although “equality is not efficient” in reference to non-productive farms, it is better than not having made any advances towards democracy at all.
The overriding message was to qualm any misgivings growers might have about land reform.
Landman predicted 3.6% economic growth for South Africa for 2013, and 3.1% in 2014; rates that are much higher than growth predictions in the European Union.
“There is no question that the South African treasury is miles and miles ahead of the U.K.,” he said.
The analyst drew a less negative picture of the country than most citizens perceive, despite the fact that “roughly 20% of public money goes down the drain”. His point was that corruption was rife in all countries, developed or developing.
The talk on economical and political realities followed after an address by South African retail empresario Dr. Christo Wiese, who also highlighted the country’s potential.
“It is the growing democratization of Africa that allows the ‘warm waters of the market’ to spread within its states, a trend that, in return, reinforces the growth of democracies,” he said.
The ‘warm’ trend continued throughout the day with Standard Bank director of agricultural banking Africa Mohit Arora, pointing to the continent’s significant investor potential.
Arora predicted that the potential for African production “could quadruple in the near future”.
African exporter Brendan Langeveldt of Kallos Exporters helped conference goers envision paving new African trade activity with the fruit- hungry markets of Africa, sending the last Afro-pessimists to bed for the day.
He explained that only about 5% of the African market outside of South Africa was retail, while the remaining 95% was wet markets.
He added that transport costs and destinations were very important to consider, as sending one container from Cape Town to Mombasa cost US$5,000 a day, while traveling inland to Rwanda would cost a further US$9,000.
Despite these challenges, Kollos said “there are high risks, but high returns”, which have led to successful business conditions, fueling his belief that Africa was the new growth frontier for the fruit sector.