Standard Bank agriculture roadshow predicts reorganisation of the industry

Standard Bank agriculture roadshow predicts reorganisation of the industry

Standard Bank’s agribusiness division is hosting a series of roadshows aimed at engaging major role players in discussions around the outcomes of current trends in the sector.

Their aim is to explore opportunities to ensure sustainability for individual farmers and agribusinesses, as well as food security and self-sufficiency for South Africa as a whole. One of these events took place in Stellenbosch on 19 March 2014.

“It is time to start talking about next generation agriculture,” says Nico Groenewald, Head of Agribusiness at Standard Bank. “Topics such as food security, food sustainability, and self-sufficiency have become highly prominent over recent years these themes have added to the usual agricultural challenges of market and consumer shifts, exchange rates, and the enduring of responsibilities of environmental curatorship. All of these geared towards ensuring the physical health of citizens, developing communities through small scale farming activities alongside with a continued focus on efficiencies within commercial agriculture, and thus making nations independent of net importation of food.”

“The pivotal economic role agriculture has always played has now expanded into a much deeper social and political responsibility. As a consequence, agricultural role players need to reorganise the way individual operations are structured in order to minimise risk and increase profitability in this new landscape.”

“This will trigger agricultural financiers to rethink their own risks and develop the will and means to finance new types of agricultural entities,” says Mr Groenewald.

Thought-leading speakers at the roadshows, aimed at 100 invited local agricultural stakeholders in each province, will address a range of topics, including training and development, supply chain efficiencies, technology, consumer demands and operating in the rest of Africa.

“The overall theme for the workshops, however, remains the new approach needed to operate successfully in an agricultural milieu that is continually dynamic,” says Mr Groenewald. “It is Standard Bank’s view that, something akin to the co-operatives of the past will be needed for smaller scale agriculture, because single players are going to find it increasingly difficult to achieve the economies of scale necessary to improve margins while increasing production.”

“The co-operatives of the past tended to focus on storage and marketing via the regulatory confined marking channels at the time. That focus is too narrow for today’s agricultural sector. But the principle of operations with similar interests grouping together for mutual advantage is a good one.

“The emphasis for agriculture in the next five years will be on size, because that is where the economies and negotiation strength lie. That does not mean that each farmer has to scale up. Collaboration confers size far more easily.”

Mr Groenewald cites the example of a group of 36 farmers, each with different input needs, banding together to be able to offer suppliers a single big ‘client’ with multiple requirements.

“There are also vast untapped opportunities in the value chain. The only realistic way for farmers to increase margin in any significant way is to have a share of the margins of everyone in the value chain. We would encourage farmers to consider the options available to add value to their product themselves – and to even extend that thinking to developing their own brand. By doing so, they can get a direct share of the consumer’s wallet.”

“All of this means that agriculture has no choice but to restructure at the farm-level, and also up and down stream.”

Mr Groenewald warns, however, that restructuring is best done from an already successful, productive base. “Any growth from a flawed foundation will be short-lived. Being excellent before you go big is the road to sustainability.”

“At Standard Bank, we see ourselves as not just a financier, but also as an integral role-player in the development and transformation of the agricultural sector. We believe in the importance of bringing all stakeholders together to ensure food security for the future,” says Mr Groenewald.

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