Our last day took us to the top of one of the natural wonders of the world – Table Mountain in Cape Town. The 1,000+ meter ascent by gondola was a bit nerve racking, but the view from the top was absolutely incredible. The flora and fauna are truly unique and very diverse.
As the Iowa Farm Bureau market study trip to South Africa draws to a close I reflect back on lessons learned. My observations don’t fully encompass the scope of this beautiful, diverse, and complex country but I walk away thinking. Here is what I observed.
- Water is essential: The most urgent crisis that the country faces is the drought. The lack of rainfall has decimated crops throughout the central part of the country and will likely put many farmers out of business. South Africa – typically a net exporter of maize – will see severe shortages and need to import huge numbers of bushels to meet their food demands. The importance of water either natural rainfall or irrigation can not be understated for the success of crops. Iowans are lucky that in some cases we have to tile fields to drain excess water away.
- Capital makes a world of difference: Whether you are starting a new business, expanding a farm, or just managing a yearly production operation, having capital is essential. Borrowing money is sometimes the only way to manage finances of that business and achieve success. A functional banking system and being able to cooperatively work with bankers is essential. We didn’t spend much time investigating the financial system here in South Africa but it was an underlying theme in many of the operations that we visited.
- Untapped labor potential: South Africa has an official unemployment rate of 26% (unofficially 35-40%). To me this represents a huge untapped resource for the country. If they could put even half of these people to work I have to believe that they would see a large economic growth. The downturn of the mining industry has put many out of work. The high immigration rate also leaves a lot of illegals searching for jobs. A Roosevelt era public works project may not be a bad idea to address this. Or a culture of entrepreneurship and small businesses could significantly address the problem. But the caveat is that these people need to be motivated to work. We didn’t experience it first hand but in the poorer populations there is seemingly a disinterest in improving their station.
- Risk is risky: With the drought as a primary topic of conversation we asked about crop insurance. Because the risk is so high and droughts occur so frequently, the economic model of insurance likely wouldn’t work. This puts all of the risk of planting crops squarely on the shoulders of the farmer. American farmers enjoy many subsidies and crop insurance programs that diversify the risk and provide somewhat of a safety net when planting.
- Education is paramount: Without adequate funding and appropriate standards, the educational system in South Africa is by many accounts failing. The tertiary schools are world class, but the primary and secondary schools are laughable. This is evidenced in the lack of scientific understanding of HIV, farming, medicine, and many other subjects. Witch doctors rule the rural areas and prescribe bogus treatments that might be severe as cutting of the finger or ear of a child to cure the adult. Many uneducated believe that HIV is actually spread by the use of condoms. And their president was quoted as saying that (after having sex with a prostitute) a shower immediately after would clean the HIV virus off him. A basic understanding of science could go a long way to addressing these issues.
- Rule of law and government support is key: We have heard many times about the governmental corruption that occurs. While we were in country the ANC (ruling party) met to discuss removing the sitting president. The president remains in office but is still dogged by allegations of corruption. Without a stable government that enforces rule of law it makes it very hard to make good management and business decisions. The uncertainty forces conservative decisions and being reactive instead of proactive to changing conditions. In addition, there seems to be little governmental support for farmers to ensure food security for the country or to promote international trade.
- Think outside the box: When the government began buying land and leasing it to emerging farmers (black farmers), Nick Serfountain saw potential disaster and a potential loss of his land and business. But he represented innovative thinking and began to vertically integrate his business. He began to work with the emerging farmers to ensure a steady supply for his feedlot and arbaiattor business. He started several other businesses and instead of folding under a challenged system he figured out how to work in the system and thrive. Senwes is another example of an innovative business model when they shifted from cooperative to full fledged agribusiness. Grain storage and grain marketing represents an important part of the value chain that they have been able to capitalize on.
- Address the root issue: Rhinos in Africa are threatened. Many are poached for their horn which is ground and sold to Chinese and southeast Asian markets as an aphrodisiac or medicinal supplement. Many efforts have been made to try and stop poachers or to stop the Chinese demand for the powder. But with rhino horn selling for thousands of dollars per kilo, both have had negligible success. If we can’t mitigated the demand for the rhino horn, is there a way to sustainability supply it AND promote wildlife conservation? Some argue that the legalization of the sale of rhino horn would allow for rhinos to be raised for their horn and it be harvested without hurting the animals. This would also supply revenue for wildlife conservation.
- Embrace technology: It was evident on the farms that we visited that technology was an important factor in their success. Whether it was genetically modified seed, livestock selected for specific traits, GPS tractor guidance systems, or economies of scale and efficient systems, technology played a major role.
It is hard to sum a two week trip up into a few short lessons. This barely scratches the ears of the hippo. I can with full confidence attest to the vibrancy of South Africa and highly recommend it be added to your list of future travel destinations. This quote from author Gegory Daivd Roberts resonated with me.
Fear is a wolf on a chain, only dangerous when you set it free.
Farmers here have every right to be fearful. The risks they encounter, the government they work with, and the weather the attempt to manage give cause for concern. But there is an undertone of optimism that cannot be ignored. And South Africans are not willing to set fear free.
Sorrow exhausts itself in the net of forgetting.
Apartheid is ended only a little more than 20 years ago now. Racial issues are still forefront in many people’s minds. But there seems to be a shared desire to work together and forget the past.
Anger, for all its fury, can be killed by a smile.
I found South African people – whites, blacks, and coloreds – to be warm, friendly, and engaging. There is a relaxed approach to collaboration. They regularly express frustrations with government, weather, and other stressors. But this rarely leads to anger because they are so quick to smile.
Only hope goes on forever…