Person:

Sturzenegger, Federico

Combining satellite data with FAO potential yields we provide a new measure of South Africa's current and potential crop farming output. We find that field crop production is twice its census estimate, contributing 1.4% of GDP rather than 0.7%, and that achieving potential could increase its contribution a further 0.5% of GDP. Estimating horticulture potential is more difficult. We find that its 0.7% contribution to GDP is massively unreported, with actual production at 2.5%. Reaching potential could increase this number a further 0.5%. The distance from current to potential output represents over 100 billion 2017 rand of additional gross income and about 350.000 thousand jobs and is unevenly distributed across the country and concentrated in four provinces: Free State, Western Cape, Kwazulu-Natal and Eastern Cape. Our result suggests that there is room to expand agriculture, but because the potential gains are geographically concentrated, the solutions should have a strong location dimension.

We discuss three cases of corporate-smallholder partnerships in South Africa’s former homelands, which have tried to bridge the problem of low productivity by supplying technology, technical assistance and financing along with established channels for sales and distribution. The cases are indicative of some key difficulties faced by such ventures: building trust, finding a suitable partner, successfully transferring technological to small farms, and reducing risk, particularly climate related. In order for these types of partnerships to help close the gap between South Africa’s two agricultures, solutions to these problems must be provided at greater scale. We explore mechanisms to achieve that scale, drawing lessons from South Africa’s successful franchising sector, as well as newly emerging business models and technologies from abroad.