Agricultural trade and food security

FOOD SECURITY AND NATIONAL LAND AND AGRICULTURAL POLICY

From the National Department of Agriculture’s point of view the vision for agriculture is:

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  to enhance market access for South African products;
  
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  to encourage of the effective participation of old and new entrants into the sector;
  
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  to promote the increase in the supply of highly competitive products into domestic and international markets; and
  
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  to sustain the integration of the sector into the global economy in order to encourage internal and external competition⁵².
  

Own production — an important pillar of sustainable livelihoods
The most recent statement of official agricultural policy was set out in a 1998 discussion document⁵³. The document acknowledges the importance of improving household level food security as an objective of agricultural policy.
However, it claims that the contribution “own production” can make is limited by lack of availability of land and access to water⁵⁴. Instead of pressing for rapid redistribution and improved access to these productive resources, the policy says that employment opportunities are the most critical issue for improving rural livelihoods and food security.
This statement shows that of the two pillars of food security – own production and income to buy food – government policy favours the latter. While it is true that access to sufficient income is a very important component in securing a livelihood, it may not always be adequate for purposes of household food security. Sen argues that “a fixed money wage may offer no security at all in a situation of sharply varying food prices (even when employment is guaranteed). In contrast, a share of the food output does have some security advantage in terms of exchange entitlement”⁵⁵.
As will be shown below, one of the influences of trade liberalisation has been price instability, and this suggests that increasing own production (and hence direct access to food outside of the market) is an important pillar of sustainable livelihoods and household food security.
Government policy, according to the document, must also take into account the “problems faced by black farmers in general and resource-poor farmers in particular”. It also considers that growth in agriculture will come about as the result of a more diversified farm sector. There is recognition of market failure, particularly with regard to small-scale farmers, and therefore the government is prepared in principle, to consider “selective support to encourage new investments in agriculture among land reform beneficiaries and other small scale producers”.
Nevertheless, the character of this support would focus on research, infrastructure development, food safety and other similar supports not directly related to production or distribution⁵⁶. To achieve overall food security, the government approach is to:

“promote comparative advantage and the efficient use of productive resources, encouraging the development of regional and international trading links, for exports as well as imports, as required” ⁵⁷.

The objectives of agricultural trade policy are to:
”Enhance and maintain market access for agricultural products and ensure that the sector contributes its full potential to the export growth target aspired to in GEAR”⁵⁸.

The department also points to the need for a policy conducive to stable and affordable supplies of agricultural commodities for the domestic market⁵⁹.

Marketing of Agricultural Products Act of 1996
Probably the most important piece of legislation from a commercial agricultural point of view is the Marketing of Agricultural Products Act of 1996. This Act concludes the process of deregulation of the South African agricultural sector, initiated under apartheid, with the main objectives being:

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  to increase market access for all participants;
  
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  to promote efficiency in the marketing of agricultural products;
  
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  to optimise export earnings from agricultural products; and
  
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  to enhance the viability of the agricultural sector.
  

From these it is clear that the approach to agriculture is to enhance competitiveness and efficiency in the sector, with a strong element of global integration.

Government’s draft position paper on agriculture and food security

The government’s draft position paper on agriculture and food security, released in September 2001, details these issues further⁶⁰. It outlines a number of key objectives, and a few suggestions of the actions that may be pursued in trying to achieve the objectives.

The objectives are set out in broad terms and, unsurprisingly, focus on improved agricultural productivity and sustainable natural resource management. The paper sets out four conditions that must be met to achieve food security:

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  economic growth must resume
  
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  policies to slow population growth and rural-to-urban migration must be put in place
  
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  resources should be allocated for rural infrastructure, agricultural research and the provision of credit and assistance to farmers
  
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  methods need to be developed to manage natural resources and prevent environmental degradation
  

Issues absent from the paper
Many assumptions underpin the draft paper, and many crucial issues have been left out altogether. It is assumed that competitiveness and comparative advantage in the agricultural sector are sufficient to solve the problems of food insecurity. This is evident throughout the paper.
Of the issues absent are first those concerning redistribution of resources. Economic growth is assumed in itself to lead to improved food security for all households. But without a fair distribution of resources, this need not be the case, and is likely to lead to uneven results.
The paper asserts that agricultural growth can benefit the rural population (and hence food security) directly by providing opportunities for work, and indirectly through “expenditure linkages with non-farm productive activities in the rural areas”. However, the direct benefit neglects to consider the quality of the livelihood that is created on the basis of agricultural employment.
The poverty and malnourishment of many farm workers and their families suggests that formal agricultural employment does not necessarily improve food security a great deal. Likewise, the supposed benefits of the multiplier effect in the broader rural economy do not take into account the ownership of both agricultural and non-agricultural businesses in the hands of a rural elite. Most of the population is thus excluded from the benefits of ripple effects on the rural economy more broadly.
The “provision of assistance to farmers” is not more clearly defined. Given the government’s most recent agricultural and land reform policies it can be assumed that the bulk of assistance will go to a commercially oriented farming class rather than the broad base of subsistence producers who at present produce small amounts of food for themselves and their households.
This is reinforced by the stated aim of integrating resource poor livestock producers into commercial livestock marketing and processing. As one element of a broader strategy to diversify the base of producers in South Africa this is a positive contribution. However, there is little mention of expanding the base of producers. This is most apparent with the omission of any mention of greater access to productive resources for existing or new food producers.
The draft paper recommends that the sustainability of small farming is improved, but it says nothing about the expansion of small farming to a larger base. Greater access to productive resources (land, water for productive use and genetic resources) is one important element in a food security strategy, yet this is not mentioned at all. The approach is premised on commercialising agriculture where it is not already commercialised.
The government’s position on agriculture focuses on market access, and the diversification of production for export. The paper explicitly mentions abolition of export subsidies, lowering of tariffs and reduction of tariff escalation, and a “substantial reduction” of domestic support by developed countries to their agricultural sectors. It also mentions the transfer of knowledge and technology through foreign direct investment, although it does not specify the preferred content or purpose of the knowledge and technology to be transferred.
The paper makes a case for “rule making in favour of developing countries” in the WTO combined with the reduction of domestic support in developed countries. It is argued that trade rules must allow flexibility in developing countries to address their real development needs, although neither these “real needs” nor the mechanisms whereby they will be achieved are spelt out.
The overall approach by government, therefore, is to ensure the global integration of South African agriculture into the world economy by allowing the market to operate to encourage international competitiveness, and to remove ‘inefficient’ producers. Agriculture is also considered to play an important role in generating foreign exchange, and therefore the global agricultural markets and the prices on these markets, should dictate what is locally produced. Constant growth is seen as the requirement for redistribution to take place, and this redistribution is thus premised on sharing the dividends of future growth rather than a redistribution of existing assets.
Redistribution is thus dependent on economic growth. Since prospects for growth in South Africa are dependent on global growth if this strategy is followed, it ties South Africa into strategies aimed to generate international growth. Under the current neo-liberal framework, it is argued that global growth will best be achieved by increasing trade. Greater trade is therefore prioritised above other imperatives, since it is assumed that it will ultimately lead to poverty reduction and improved standards of living through the “trickling down” of wealth.
The practical application of the policy
So much for the policy. Now, what about the practice? With regard to own production, land reform and agricultural support are the most important parts of domestic policy. The post-apartheid land reform policy is in the process of being overhauled, with an important aspect of the new direction being captured in the Land Redistribution for Agricultural Development (LRAD) sub-programme⁶¹.
The sub-programme focuses on land reform for agricultural use. Without going into too much detail, LRAD offers a sliding grant to land reform beneficiaries depending on how much capital they put in for themselves. The more a potential beneficiary puts in, the higher the contribution made by the government (although the lower the share the government grant will be in the total project cost). Therefore, while the programme clearly includes support for food security/subsistence agriculture, it favours support for commercial agricultural production. Amongst the objectives of LRAD are to improve nutrition and incomes of the rural poor who want to farm on any scale and to stimulate growth from agriculture⁶². The programme states that at least one-third of land transferred through the programme must go to women.
The realities of land reform
Despite the rhetoric of land reform, the actual provision of resources to ensure that it takes place has not been forthcoming from government. In 1999/2000, the Department of Land Affairs (DLA) spent a total of just 0,3% of all government expenditure on all its activities (of which land reform is only one part)⁶³.