1 22 September 2009 AEASA GALA Dinner Speech BY Andrew Makenete by sdsdfqw21


									22 September 2009

                                AEASA GALA Dinner Speech


                                      Andrew Makenete:

Thank you Master of Ceremonies, Good Evening and welcome to all of you.

This is truly an honour, to be tasked with the responsibility by the AEASA Steerco for the
2009 conference to address the Gala Dinner. In the many years that I have attended AEASA
conferences, I know what prestige is attached to this speaking engagement for the Gala
Dinner and I am very humbled, and hope I will be able to live up to the expectations of the
hosts, and at very least offer some insights and views that are useful and interesting to you
the members of AEASA and for the guests here tonight.

The theme of the conference “Promoting the competitiveness of South African
agriculture in a weakened global economy” could not have been more appropriate or well
timed. Seems to me only a few things were missing in terms of the timing and associated
appropriateness of this conference: 1. The conference should have formed part of the
breakaway for the Midrand Cosatu 10th Conference (The worker comrades who lead the
Alliance partnership and pronounced on the Zumafication of the ANC could do with some
rigid and well researched academic inputs); 2. The ANC NEC should have waited a bit
longer for its indaba for some of the papers presented here to be used as information and
briefing notes before it made further pronouncements on Land Reform, Rural Development
and Food Security. (God bless us all cause they mean well and have the best of intentions
for all of us in South Africa, it’s just that they may well be taking us down the wrong path,
whilst most of us sit still on the sidelines or on the perches of tree’s chirping and speaking to
the wind as the muddled show goes on below).

So what is my opening gambit? Essentially it’s about our relevance as agricultural
economists / economists / development agents to the SA political economic agenda. Who
here is having any influence or impact in terms of the critical discussions that are taking place
and shape in our midst around us. I will be very kind – and say that maybe a handful (e.g.
but not limited too Ronald Ramabulana and ever improving team at the NAMC, the excellent
Professor Karaan from Stellenbosch, who at least gets invited to address the new Minister
and Ministry of Agriculture, Forestry and Fisheries, Prof Kirsten and the BFAP crew and also
a smattering of mid level government officials or strategic advisors in posts like the Water
Research Commission etc). If truth be told, we as agriculturalists, economists and the section
(i.e. the intelligentsia) of the economic cluster we serve farmers, academic institutions,
agribusinesses, financial institutions and the like are so on the outside trying to get a peak in
through an “SKA type telescope” that we might as well all be on mars trying to get word
through to the Martians on earth. In these difficult and trying times of a global economic
environment very much in chaos and punctured by unsustainable economic practices
manifested primarily by unconstrained excesses of capitalist greed underpinned by
unfettered and unregulated markets, unprincipled executives and weak ungoverned
systems. The magical hand of the “market” has failed or rather been made to fail. As we sit
up to take notice and try to react to an economic theory and practice gone horribly wrong
despite the leadership that comes from a newly elected Obama and a rather fragmented
leadership of the Western Developed world. China, India and Brazil show the quickest and
most sustained signs of recovery, but as some of the great panellists and economists here at

this conference have intimated – this recovery will be slow and painful. The BRIC’s will
emerge more powerful and continue to demand a greater say on the world stage.

Will South Africa be there with them and continue to share this world stage as so carefully
crafted by President Thabo Mbeki? In all likelihood not!! President Zuma does not have the
world on his horizon. Quite naturally he has a lot more - closer to home on his plate. Despite,
the claims of unity within the Alliance – it remains truly at odds with itself. The fight for control
of the ANC and its agenda and economic direction (and most certainly control of assets,
resources and therefore influence) is intense. The “red brigade” saved his bacon and he
owes them a lot. They are putting pressure and exerting themselves. The strikes, civil
disobedience, and challenges of the status quo are manifestations of this struggle for control
and influence. On the other hand – those in the ANC likely led by Trevor Manuel who have
delivered a more centrist aligned ANC are quietly fighting back (must be careful here – its
fighting back and “not fighting black ala DA”, they most certainly don’t need that additional
baggage). The centrist economic principles espoused by the ANC of Thabo Mbeki is called
in the red brigade circles the “class of 96 project” and rejected as a dogma. They want to
change it all – but they won’t succeed and in all likelihood manage much in the long term.
South Africa and South Africans’ are too entrenched in this imperfect “free market system” as
espoused by the west and indeed endorsed by most South Africans black and white, poor
and rich. It’s what they know, and likely all they know.

Moreover, greed and crass materialism abound aplenty even amongst the “red brigade and
its assorted crew of supports and hangers on – some of whom are without a doubt as
capitalist as Rothschild or Rupert. Methinks – it’s not the system that is critically being
challenged but access to, allocation of and control of resources. The method and system
including its ownership that controls these resources becomes important. The alliance
partners felt marginalised and disenfranchised by the Mbeki regime that rammed through
dramatic and drastic reforms in a very short space of time. By and large these reforms were
successful hence the sustained growth for over a decade in South Africa. Many of these
reforms had a profound impact on the shape and form of the SA economy and agriculture in
particularly. President Zuma was a critical part of this regime, after all he served for many
years in senior roles including as Deputy President. Furthermore, it is clear that President
Zuma despite / in spite of being carried to victory on the back of the “red brigade” is not
instinctively in synch with them (“the red brigade”) on economic theory. After all the man from
Nkandla seems more conservative and centre rightist than neo liberal or for that matter

Now why is all this commentary necessary, after all I’m supposed to be an economist not a
sociologist or political commentator (those commentaries are however available on request
and at a price – Dr Thompson and my ex colleagues at UN – PMB can attest)? With regards
to the ongoing Cosatu congress that I made mention of above in the opening, the lead
Alliance partners seek to set the tone and direction for the next few years, President Zuma
has already displayed the capacity and courage to stand firm on some key points and issues.
It is most certainly interesting and noteworthy. He stands firm in his defence of Trevor
Manuel and also on the continuation by the ANC of current economic policy. Yes, reforms
are necessary. Yes, some mandates must by necessity be changed and those changes must
not be cosmetic and most certainly be seen to impact on improving the livelihoods of the
broad masses, underpinned by labour which has abrogated for itself (despite the inherent
contradictions), the right to be spokesperson of both the employed and unemployed. This is
very important to understand since Labour as represented by COSATU and its allies
represents directly only some 2 million unionised workers, in a more generalised form maybe
the 8 million who are employed, but more astonishingly the other 35 plus odd million South
Africans, of whom a good 25% are unemployed (10 million). This is their “food security

paradox”. How are these people to be fed and accommodated before they go on riot. After all
we already bear witness to some of these symptons. Zuma recognises this and hence the
need for the ANC and his regime to become a more inclusive, caring and accommodating
body. It will listen to and often as is the nature of compromise politics accept and get
direction from the alliance partners but the ANC will continue to lead, hence the emergence
of a very strong and powerful Luthuli house.

What does it means for us – i.e. those of us sitting on Mars looking in with our SkA’s. The
fact is that there is a crucial opening and space for us to climb back in into the debates that
will determine the future of SA for our children and children’s children. Specifically as the
new ANC focuses on 3 key issues that directly affect the areas in which we work – rural
development, land reform and food security. The ANC and its alliance partners cannot be
having this debate alone or as it is largely “uniformed, uneducated and or uncritisized” (I
again must be careful here – the point being made is that there seems to be little critical
debate or academic rigour applied in the systems, recommendations and processes that are
being proposed and suggested).             The thought processes, discussions, debates,
rationalisations seem to me to be severely undercooked. It has been questioned here and in
other forums for example wherther they is a clear understanding of what is meant by “Rural
Development”? For who, whom, how and what? Yes, some 40% of the population live in
rural areas, many if not most desolate and disparate. The stats are downright depressing.
Most of these are the people that consistently vote ANC and yet have seen not material
improvement in their livelihoods. In fact it seems like things get worse not better. The ANC
knows this and is awake to its dangers. So after years of seeing jobless economic growth
despite a small and influential burgeoning black middle class, protected and nurtured by an
upper middle to rich “white class”. It cannot sustain this without it being in danger itself,
hence the need for redress. So it assumes instinctively, that there must a program for rural
development. At the core of this program or underpinning this program must land and
agrarian reforms, and an attempt to deal with Food security. Yes any country with so many
unemployed who have no incomes will have severe food insecurity.

“The instincts of the ANC are most certainly correct. If they don’t deal
quickly with these issues they us custodians of SA Inc will be booted out.
It won’t be a Polokwane revolution that sends its leader packing his bags,
but a revolution that unseats the ANC”.

So what is our calling as Agricultural economists, though really it’s a call for all of us involved
in Agriculture in general, whether it’s as practioners, academics, operators, commentators,
and business people? Because the setting and scenario sketched out (whether it is out of
desperation or necessity by the ANC and its alliance partners) is in our space. We need
urgently to claim our rightful role in this space. It is going to be very very difficult and
challenging to do so and we may come seriously short in this endeavour. Already, many of
us have not been consulted (yes cheerio JZ appointed a right leaning Boer Boekie as Deputy
Minister as he tries to corral traditional farm interests), but on the whole we are not at the
party. Lets us not under-estimate how hard this task will be to get heard. There is hope
however, because at a technical level some positive changes are emerging. Two new
ministers, young and eager to please. Important, two new heads willing to listen consult and
interrogate issues. The less said about the previous minister the better. She was not alone,
15 plus years of neglect has a dangerous way of showing, as we have seen with the
dramatic effects of the last year (global meltdown, high food prices, high and volatile energy
prices, climate change concerns etc etc). An already very weak and ailing SA agriculture was
put further onto the ropes. She nearly saw to it that agriculture in SA was well and truly sunk.
The well intended reforms and initiatives were sent scattering, and people and key staff put
to pasture. We had a “dumbing down of agriculture”.

Part of the reason, was that the stakeholder (s) were not seen as legitimate. Yes, some of
those stakeholder’s don’t seem the desirable type (picture a rather large man from
Ventersdorp on horseback with boots, long socks, khaki kit, and a Swatzsticker on his arm
and you’d understand). They and his ilk most certainly didn’t represent the ANC’s
constituency. Well as for the rest and this includes most of us serving agriculture – and it’s
called collateral damage were swept unaware under the carpet. We as has been said by
numerous speakers didn’t seem to exist nor matter to decision makers in the new SA. If the
“class project of 96” architects of he economy were right – the new SA would industrialise
quickly, open and deregulated markets would bring about reforms that would deliver cheap
and available food to all, and the services sector and other areas of the economy open up
create jobs and agriculture (that reserve of the Nationalists) would become insignificant. After
all why would you continue to support and aid this sector and industry – that exploited its
workers, and provided “huge returns” to its select and undeserving few. So, indeed they (3
sets of government) set about their merry ways – starving agriculture of capital, investments,
resources, skills and the list goes on.

Agricultural Economist’s must take the lead become the “modern day activists”. They must
take on the mandate as dictated by the Zuma administration, activate, and develop the
initiatives and reforms needed to transforming South Africa inc. We must become not only
involved but key to informing not only the thought processes and thinking that can and will
need to the requisite changes and amendments of our agricultural and rural economies. Our
time and calling has surely come. Some indeed are already stepping up to this calling. We
see the NAMC reforming itself at great pace under the astute and steady leadership of
Ronald Ramabulana and solid research work of Prof Andre Jooste, Karaan and others. The
Agricultural Research Council has begun a long and painful journey uphill led by Dr
Moephuli. Even the Land bank is changing as the bleeding stops under Phakamani Hadebe.

My thoughts on some key areas for our attention:

I hope we can deal with these very sensitive but interesting topics in an effective manner. I
am really excited that it can be done.

   1. Dealing with the confluence between sustainable land reform and agricultural
      production. The issues centre around the medium between sound agriculture policy,
      land reform, and the more problematic processes of redress. Land in South Africa like
      most sub-Saharan Africa is a very contentious and emotional. We all know that in the
      past we’ve had a very destructive system, a system that actually was designed to
      marginalise a certain group of the people, and to actually dispossess them, not just of
      their rights to the land but to actually make them seem incompetent as land operators.
      But we all know agriculture is a very important economic driver in this country, less so
      than it has been in the past maybe but as the events of the last show, very important
      still. Some of the macroeconomic decisions that this government have taken have a
      direct bearing in terms of where agriculture is and the role agriculture plays in our
      economy. Then of course, the whole issue of this dualism between what happens,
      between small scale agriculture vis a vis, large scale agriculture. Then of course,
      again from a historical perspective, whether it was a reason that was fundamental to
      the Nationalist cause, but South Africa was perceived as having to be food self-
      sufficient and food security was a very important component in the Nationalist
      government, specifically to attain self-sufficiently emanating from commercial white
      farmers. So there are some of those perspectives that become very, very important in
      terms of outlining where we have gone.

      Land policy and land reform in South Africa was driven by the social reformists. And
      the social reformists were talking about rights based issues, social reforms such as
      redistribution and restitution. And somewhere at the back of this is tenure reform
      where at least some economic considerations are made. Of restitutions and
      redistribution there’s no doubt; there’s nobody in South Africa who can debate the
      justification for restitution or the justification for redistribution. But the big mystery was
      what do we do with tenure reform? Everybody in this room can depict to you what their
      vision of tenure reform is, but actually if you asked for one person from the next we
      would get very different answers to a future of how land reform should pan out. The
      willing buyer willing seller debate is just a red herring. The government does not have
      the resources to address land reform by buying up the land. So they and their allies
      make excuses because they cannot face up to the reality that the land program cannot
      and will not work as is. Land markets work well in SA as we see it with property
      markets. We don’t hear government saying that property markets in SA do not work or
      that property prices are high. So, don’t let’s get fooled. There is another argument at
      hand here. What of land rental markets and other institutional arrangements and
      instruments that allow for rights of use, co-habitation, transfers etc?

      Agricultural economists must help SA Inc get consensus with regards a picture of the
      agricultural landscape in SA that should have at its base sustainability,
      competitiveness and transformation. The theory thus far is restricted and not well
      developed since we seem constrained ourselves and are more reactive than
      instructive. Economists stand and come up with solutions.

   2. Agricultural Marketing

 In the excellent work done by Herman Van Schalkwyk, Jan Groenewald and Jooste in
Agricultural Marketing in SA, 2003 they suggest quite critically that South African agriculture
having come full circle to and from heavy state intervention to market liberalisation, free
markets and the opening up for international trade, needs somewhat of a rethink. They say
and this needs to be picked up those of you in here by determining crucially what and by how
much that “neither of the approaches proved to be successful in creation of economic
growth”. Even then they said a new paradigm concentrating on making SA’s agricultural
sector more competitive is needed” away from price concerns only. That new approach
should amongst others involve that supporting industries be developed and research and
training be focussed and coordinated (I guess its Prof Karaans way of saying implicit
subsidies need to exist for agriculture to perform). They say correctly in my view that it is
necessary to expand agriculture’s capacity to pursue process innovations and technology
upgrading, increasing product and service quality and expanding market opportunities. A
sad fact is that the SA agriculture is only food focussed, which is extremely limiting. The non
food agriculture value and supply chains just simply don’t exist.

Agriculture is much more than just food, its fibre, services, pharmaceuticals, and materials
and much much more. WE urgently need the investments in the non food value chains as a
key to expanding the size, shape and form of agricultural markets. The non food agricultural
value chains offer the opportunity to look beyond the small local food market – since SA is
hardly a player in the international trade market for agricultural goods and services (yes I
know horticultural products and some niche products do very well with exports). It is unlikely
to get better in the immediate future with the structural, institutional, logistical and
infrastructural constraints we have that make transactions costs in agriculture so prohibitively
high. The development of non food markets is key. Addressing the deficiencies in market

development, market information, market infrastructure, extension are all very important. (I
was asked by some good friends not to say anything of biofuels – but I cannot resist the urge
to say that bio energy provides an excellent, and unparelled non food market for SA. Making
energy and enhanced agricultural products makes good sense to me. They are different
limitations to these markets).

   3. Institutional reforms and changes

The whole institutional framework of agriculture needs to be reformed from the Ministry itself
and all its supports including the Land Bank, ARC and others. The most surprising thing is
that the mandates given to these institutions were very poorly designed, or in fact, were very
poorly informed. How do we remake these institutions and are they others we should

 And of course in agriculture you also had the labour market reforms which have had a direct
and some would say negative bearing on agriculture; some of those labour market reforms of
course resulted in farmers evicting their workers and doing a whole range of things such as
transforming their businesses into more capital intensive businesses.

We need to go and ask the critical question: How do we meet the social imperatives whilst
addressing the economic outcomes? AS we are seeing now – the ANC has identified land
reform as being critical for poverty alleviation and also securing food security for the people.
Then, as has been said, land reform and land policies must ensure that the people’s common
cause is served. And we must unpack what this people’s common cause is. In many ways
the people’s common cause is upliftment of their livelihoods.

In past 15 years agriculture has witnessed profound reforms. Despite the neglect SA
agriculture has served SA fairly well. As I conclude my talk I am forced to reflect. Agriculture
that has shed nearly 1 million jobs, lost over a 1.5 million ha in land under production and
seen relative low levels of investment in the sector happen. It is an agriculture that has shed
over 20, 000 commercial farmers, has only 20,000 active emerging farmers, and narrow base
for agribusiness which has led to consolidation, meaning monopolies, and oligopolies. Has
the “class of 06 project failed SA?” If so, why did we as agricultural brains trust let it fail
agriculture, because many of us were in some way or another involved. The consensus view
in the 90’s what that change was needed, and also that the core must be kept intact. Today
we say, all is not well we need more and different reforms. As the world economy staggers,
we in SA have faltered but somehow stayed upright. Agriculture had a role in keeping the
ship above water. High and volatile food prices are causing us to examine our structure
particularly as they impact the poor. The structure and content much change. It is about
alignment and consistency in policy. Agriculture fundamentally must get itself back in a
position whereby it creates jobs and opportunities. After all a job in agriculture that comes in
at R50,000.00 / job makes much more sense than an industrial job at over R500,000.

AEASA and agricultural economists “state your case and contribution to the nation”. SA
Inc needs your inputs now. I hear the call for competitiveness, but maybe the call should be
more simplistic to the government and stakeholders. How does agriculture create more and
sustainable jobs and opportunities? Surely, with the resources at hand agriculture can
absorb and create 1 million new jobs putting more land under production, creating new and
varied value and supply chains. Yes, for this to happen it must be competitive – but it’s not
about competitiveness alone. The 8 million tax payers are not going to sustain the over 35
odd million people. The real contribution agriculture can make beyond feeding, clothing and

housing its people by providing fibre and other agri-related products on mass. Agriculture
must break free of its harness in South Africa and lead to a new revolution both locally and
on the continent. The rest of the world has awoken not just to Africa and its potential. Even
the ANC and its allies are awake from their slumber. However, their dream is blurred since
we are not there to clear it up a make it real. The best way to deal with food security, rural
development, and meet the challenges of land reform is unlocking the shackles that prevent
agriculture growing boldly into the future.

(It is in this spirit of change and engagement that I also am committing myself to becoming a
part of the solutions from inside and taking up the position of Head of Strategy at the
Landbank, leaving the money and comforts of the private sector. I think it is important to
make ourselves available if as in Obama’s mantra of “make that change happen in our time”).

Thank you again very for bestowing this responsibility on me tonight.

God Bless you and God Bless South Africa.


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