IT IS said that Africa is not for sissies and, given the challenging start to the agricultural year, it seems the adage may prove very true, particularly for South Africa’s farmers.
The most obvious source of upheaval for South Africa’s agriculture sector to contend with at the start of a new year has been the huge spike in maize prices, which has been made worse by low stock levels and persistent drought in North West.
While maize farmers may rejoice in the higher incomes they can get for their crops, it is not likely that these are going to be sustainable because the potential negatives that could still weigh on the sector and its supply chain are likely to far outweigh the short-term positives of a relatively artificial short-term price hike.
For starters, the decline in the value of the rand, while good for exports, has the potential to push up input costs significantly. Also, labour unrest remains a constant threat and an unhappy workforce has the ability to severely disrupt farming production.
Then, of course, there is the growing effect of climate change on weather conditions, the availability of essential resources, and the consistency of yields.
The good news, however, is that while many of these issues and challenges may seem out of the direct control of farmers, there is a lot they do have control of and which, if managed correctly, can ensure that their farms not only survive, but even thrive, irrespective of external forces.
Most of these "controllable" components of modern-day farming can be summarised in one word: sustainability.
Many participants in the farming sector still have the wrong idea of what sustainability actually means.
It is important to understand that it is not just about so-called green or environmental issues, although these do play a part.
Rather, sustainability in farming is about the adoption of a more holistic philosophy and effective approach to the way you farm. It is really also the only way that any farmer can secure the future of his farm.
The obvious question then is if sustainability in agriculture is not just about being "green", what is it about?
To answer that question, we need to take a closer look at some of the most important sustainability components that today’s farmers must build into their operations, and why these sustainable practices are no longer optional.
A key, and often overlooked, component of sustainable farming is the adoption of innovative and technologically advanced farming techniques.
Just some of these techniques include the use of soil sampling and chemical analysis for yield-maximising fertilisation programmes with limited environmental impact, no-till or minimum-till farming techniques to limit top-layer erosion and maximise the organic richness of soil, and GPS-based soil profiling and differentiating for optimum fertilisation and planting practices.
While the initial investment in these types of sustainable farming techniques may seem high, the savings — particularly in production costs — that they deliver mean that farmers are likely to recoup that financial layout relatively quickly, and then convert those savings into profits that are less dependent on ideal farming conditions in the long term.
And the value of more technically advanced farming is not only seen in the resistance it offers to environmental challenges. The majority of farmers who have invested in these practices are also reaping significant rewards during the good times, with bumper yields delivering huge bottom-line benefits, particularly when produce prices spike, as is the case in the maize industry at present.
For most farmers in Africa, building sustainability into their farming practices goes beyond just addressing environmental risks and challenges, or maximising yields — it is a vital component in their ability to access the finance they need to keep on farming.
Finance provision is another area where sustainability considerations are taking centre stage as banks and other finance providers increasingly look at the sustainable actions farmers have put in place to mitigate risk and maximise production before they will even consider approving loan applications.
This is a major departure from historic financing decision-making, which was primarily based on the assessed value of the land being farmed. While this type of valuation is still core to financial provision, these days the move to leased-land farming has meant that banks place far greater importance on the insurability and hedging of the future crops.
As a consequence, multi-peril insurance is an essential form of cover for most banks.
However, the same climate-change issues that have raised the need for this type of insurance have made it more difficult to acquire, as a number of prominent multi-peril insurance providers and underwriters have recently reduced their cover — and even exited the market — due to sustained financial losses.
Those insurers who remain in operation have understandably become highly selective in terms of the clients they accept and the percentage of long-term average yield cover they offer.
As a result, farmers wanting to qualify for this vital insurance will have to demonstrate a clear commitment to ensuring the sustainability of their operations or yields, despite the possibility that they may find themselves operating in less than ideal climate conditions in the future.
Within this scenario, the proven ability of a farmer to operate sustainably, and deliver robust results, becomes an essential consideration in any financing decision.
It is also important to recognise that sustainability is not just about securing the future of a farm.
It is also essential that farmers contribute to the economic and social wellbeing of their markets — and that includes the communities surrounding their farms, from which many source their workforce.
After all, what good is a healthy, potentially high-yielding farm if it has no way of harvesting its crops and nobody to sell them to?
While labour issues are never comfortable to face or easy to resolve, sustainable farmers recognise that they rely on their labour force for their survival and place a priority on fair treatment, competitive remuneration and a commitment to community support, because they know that is the best way to maximise productivity, reduce absenteeism and prevent potentially devastating high employee turnover rates.
For some farmers, the perceived costs of incorporating sustainable practices into their operations may seem too high — particularly during challenging economic times.
However, the truth is that the long-term costs of not making sustainability a priority now are almost certain to be far higher.
If nothing else, that is the one key lesson that all agriculture stakeholders in South Africa — but particularly farmers — simply have to take out of the difficulties that so many are facing at present.
Sustainability is no longer an option for any of us; it is an imperative. And whether your role in the agriculture value chain is that of farmer, financier, processor, supplier, or even consumer, it is vital that we all start, right now, to think and act sustainably. The future of farming in South Africa depends on it.
• Meyer is Africa head: Nedbank Capital Global Commodity Finance.
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