South Africa
In this regard, public provision of capital and expertise are sorely needed to ensure that such innovative developments are absorbed into the domestic economy, enabling local producers to make use of existing technologies. Finally, in the face of surging oil prices, bio-fuel production has emerged as a future prospect for agro-industry. The conversion of crops into energy and industrial materials, derived from biomass (replacing traditional plastic and synthetic materials), may offer serious future investment prospects in a lucrative market, although yet being still in its relative infancy. Technological advances and innovation may entail large future profits, but policymakers should take heed of the possible impacts on the domestic food security should such investments accumulate. With many households in South Africa living below the “breadline�, it is vital to first ensure that food products meet human demand prior to expanding primary product processing for secondary uses. The dilemma between food security objectives and utilizing technological and economic opportunities of bio-fuel production is obvious, and policy decisions are therefore needed. Stimulating private enterprise development and investment The South African agricultural community is characterized by very uneven income levels and by a very uneven distribution of opportunities. It is necessary to address this problem effectively by broadening access to income, land, other resources, and opportunities through reform efforts and by providing financial assistance to small-scale farmers. In order to enable them to make a greater contribution to the agro-processing industry, this task has to be seen as a policy imperative. This, however, requires that rural infrastructural needs be met first, as this will ensure that small-scale farmers and the rural poor have access to the means of self-alleviation from poverty, through the opportunity of providing a service in the value-addition process in a developing agro-industry.
A concrete package of measures to promote private investment in South Africa’s agro-industry is regrettably not becoming visible. Detailed and concrete public investment initiatives to complement and to encourage the private sector investments are also not really forthcoming. Facilitating financing for agribusiness and agro-industrial development The importance of ensuring financing to local agro-producers has to be emphasized strongly. Considering the unique composition of land, resources, and variety in agricultural produce, coupled with social issues of uneven land ownership and limited private capital of previously neglected farmers and agro-producers, a flexible approach is needed in the provision of resources in agro-industry. Arguably, one of the greatest hindrances to potential small-scale entrants in the agro value chain is the lack of collateral needed to obtain private credit to set up a shop. In such instances, public provision of resources should be extended on the basis of the future ability to
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SOUTH AFRICA
In order to ensure sustainable agro-industrial development, private investments and initiatives need to complement and eventually to replace public programmes and initiatives in stimulating processing activities. It is therefore vitally important to consider the factors that influence private investments and to address effectively the issues that cause low investor confidence. It is imperative for policymakers to ensure that an investment-friendly and business-friendly environment exists, which provides sufficient incentives and benefits to potential farmers and producers, without fostering dependence on these support measures. As mentioned earlier, the South African case provides policymakers with pressing social and economic objectives, with the former aimed at correcting past injustices and ensuring that land distribution goals are met. These imperatives should, however, not be seen as competing aims, but rather be pursued in a unified manner. Land distribution and labour policies should therefore be designed to complement agro-industrial development goals and should not be seen as a hindrance for private investment. Such measures should not interfere with the workings of the agricultural markets, so as to harm the local producers by affecting demand schedules and prices of processed goods.
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