*This was first published in Wandile Sihlobo’s column for Business Day on 5 January 2017.

Last year was a challenging one for the South African agricultural sector, characterised by an El Niño-induced drought. Fortunately, this weather event appears to have passed and there is a promising production outlook for 2017.

During the December holidays, I took an agricultural tour of the Eastern Cape, from the northern areas of the province — driving from Aliwal North, passing the Magwa tea plantation on the outskirts of Lusikisiki to the sugarcane fields in Bizana in the Alfred Nzo district.

The vegetation across the province painted a mixed picture. The northern areas remained dry, posing a challenge to farmers. Meanwhile, the central and southern regions were reasonably green, almost typifying the normal summer vegetation. The condition of field crops and veld across many towns was favourable.

The Eastern Cape is not renowned for its agricultural vibrancy. In fact, it is commonly cited as one of the provinces with large underutilised tracts of land under communal tenure, as well as a large number of smallholder farms. Although this suboptimal land use assessment is true, it often overshadows some of the emerging positive trends in the province’s agricultural industry, such as the growing milk industry and the rise of new commercial farmers.

Data from the Milk Producers’ Organisation show that in 2015, the Eastern Cape was the leading producer of milk in the country, with a share of about 30.6% of SA’s total milk production — a 3% increase from the previous year. Similar to other agricultural industries and provinces, the Eastern Cape’s milk producers were negatively affected by the drought in 2016, but 2017 could bring some recovery.

Moreover, there is a rise of new commercial farmers, particularly in the grain and oilseed industries around the Matatiele, Ugie and Maclear towns. A number of these farmers have benefited from the support of agriculture groups and private investors such as Grain SA and the Old Mutual Masisizane Fund, among others. Grain SA has been actively involved in the province through its farmer development programme.

The Old Mutual Masisizane Fund, together with the government, invested about R46m in farming areas around Matatiele in 2016.

Alongside these trends, new agricultural firms are emerging, a notable one being Matatiele Grainco, a 100% black-owned and directed grain group with a focus on agricultural mechanisation and transportation of grain across the Eastern Cape and KwaZulu-Natal.

These developments are refreshing, but there are still a number of challenges that hinder agricultural production in the province, such as poor infrastructure (roads and silos) as well as communal land tenure, which is not recognised by many financial institutions.

Smallholder maize farmers who manage to harvest more than a tonne of maize usually have a surplus… However, getting smallholder farmers’ produce to the market remains a major stumbling block

This year promises some degree of recovery from drought in most areas of the Eastern Cape, and crop yields could see an improvement from 2016 levels, thereby improving household food security. Typically, an average family of six consumes one tonne of maize in a year. Smallholder maize farmers who manage to harvest more than a tonne of maize usually have a surplus that can be sold on the market. However, getting smallholder farmers’ produce to the market remains a major stumbling block. Many experts agree that a lack of economies of scale and high transaction costs have a bearing on market inaccessibility, as well as the unavailability of critical infrastructure such as secondary roads and storage facilities.

Although there is an increase in new commercial farmers in some parts of the province, they remain hamstrung by these market challenges. The process of agricultural development in the Eastern Cape could gain momentum if there was a greater effort by the government and the private sector. Perhaps as the debate about land-reform policy continues financial institutions could play a part by developing innovative financial products that could serve farmers in the interim.

The World Bank, in its 2016 Africa’s Pulse report, highlighted that insecure property rights over land remain a key constraint to Africa’s agricultural productivity. This rings true for Eastern Cape farmers, who continue to struggle to secure production loans due to lack of collateral. One way to tackle this would be to give individuals title deeds or a tradable long-term lease.

Overall, my agricultural tour revealed that the Eastern Cape is showing signs of recovery and 2017 promises to be a better year for the province across a number of agricultural industries.

This article may be viewed online at: http://www.businesslive.co.za/bd/opinion/columnists/2017-01-05-wandile-sihlobo-eastern-cape-shows-agricultural-promise/

Wandile Sihlobo
E-mail: wandile@agbiz.co.za