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March 08, 2011

South Africa banking on agriculture, agroprocessig for job growth

Lisa Steyn

Agriculture and agroprocessing are expected to create 500 000 jobs in South Africa over the next 10 years. The new growth path, as outlined in the budget speech on March 2, aims to reduce unemployment significantly by creating five million new jobs by 2020.

And the agriculture and agroprocessing sectors, identified as "job drivers", are expected to yield 10% of the target.

In the budget speech Finance Minister Pravin Gordhan said one of the key drivers for the acceleration of growth and employment was the targeting of more labour-absorbent activities in the agricultural sector.

The budget has set out R250-million for the capitalisation of the agroprocessing competitiveness fund, which will be run by the department of economic development's Industrial Development Corporation (UDC) and, according to the budget review, this is one of the largest increases in transfers.

The IDC's fund will receive R34-million in 2011-12 and a further R108-million in 2012-13 and again in 2013-14. The money for the fund was earmarked when Pioneer Foods was required to pay a penalty to the Competition Commission for collusion and price-fixing in the bread and wheat industries.

The fund is intended to boost competitiveness by encouraging new entrants into the agroprocessing sector. The department of agriculture, forestry and fisheries says the fund is part of its aim to "grow the agroprocessing sector by coordinating government and private sector players."

A larger agroprocessing strategy will be implemented by the department in June, with the aim of creating 145 000 jobs in the sector by 2020. A total of R19-billion will be spent on rural development and agriculture in 2011-12 and a further R21-billion will be spent in 2013-14.

"Government's land reform and agricultural development programmes are focused on rural job creation and poverty reduction, while expanding agricultural production and improving food security," Gordhan said.

In total the agriculture, forestry and fisheries sector contributed 2,3% to gross domestic product in 2009. "However, this contribution has been declining annually, reflecting an economy that is increasingly dependent on manufacturing and services," the department said.

In total the sector employs 660 000 workers. This figure takes into account 10 000 jobs that were lost in 2010.

Gordhan said that emerging farmers, who had been worst hit by the floods in January, would receive added support from government as the recapitalisation of the Land Bank was under way. "The Land Bank board has agreed to step up the bank's support for emerging farmers," Gordhan said. "Steps are in progress to turn failing farms that were transferred to emerging farmers under the land reform programme into successful business enterprises."

The department plans to meet its medium-term objectives in several ways, including increasing the number of smallholder farmers from 200 000 to 250 000 by 2014. This will be done through assessment, training and post-settlement extension services. Crop, forestry, fisheries and livestock production schemes will also be established for 300 000 smallholder farmers by 2015.

"Expenditure increased from R3,9-billion in 2007-08 to R4-billion in 2010-11," the department said. It is projected to increase to R5,5-billion, at an average annual rate of 11,2% over the medium term.

The department believes that the elevation of agriculture to a priority sector in the new growth path and the implementation of agroprocessing initiatives will reverse declining employment trends over the medium to long term.

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