Domestic investment in primary agriculture in South Africa

Abstract

In recent years, the South African farming sector has been experiencing important restructurings that pertained to the industrialisation of agriculture.2 These restructurings can be attributed to the development of farm financing and investment instruments by the increasing engagement of corporate entities interested in financing the sector in return for ownership of the land by incorporating primary production into their portfolios.3 When examining the performance of the South African agricultural sector and the policy reorganisation, it is necessary to take heed of its historical context. It was during the 1950s and 1960s that the government invested in research and development, infrastructure, extension services, direct subsidies for conservation works and debt relief, which grew the commercial sector’s agricultural output with guaranteed markets and prices for most farm commodities.4 However, by 1979 the economy had moved into a recession and economic policy prioritised its deregulation of the financial markets in South Africa.5 These events birthed the process of liberalisation in trade and deregulation of agriculture that was only partially completed by the early 1990s.6 The undeniable consequences of these transformations are the effects to the family farmer’s status as landowner to now being merely a service provider.7 In response to the failing land reform projects and in the absence of alternative successful investments and production models, these transformations are of course supported by the South African government.8