Can gov't cure its P8bn headache?
Mbongeni Mguni | Friday November 27, 2020 14:39
The minister of agriculture, his assistant and the numerous technocrats at their disposal have lately been using the same buzzword to pinpoint what government believes is the solution to the underperformance of the agricultural sector: ‘value chains’.
A comprehensive definition of this proposed agricultural sector antidote is that a value chain includes “development and dissemination of plant and animal genetic material, input supply, farmer organisation, farm production, post-harvest handling, processing, provision of technologies of production and handling, grading criteria and facilities, cooling and packing technologies, post-harvest local processing, industrial processing, storage, transport, finance, and feedback from markets”.
A simple definition is that a value chain describes the system required to bring an agricultural product from production in the field to final consumption.
The simplest definition, however, is that rather than importing P24 million of sunflower seed oil in September, local farmers could have produced enough to cover the gap, in the process creating jobs, incomes and reducing the weight on the country’s fragile foreign currency reserves.
Although import substitution has been a government priority for decades, this year two factors are driving its urgency. One is the COVID-19 pandemic, which has not only increased the demand for imports such as food as people stay home, but also seen the country risk shortages as its traditional neighbouring suppliers focus on their domestic markets.
Another is the weakened state of foreign reserves, the coffers that the Bank of Botswana (BoB) manages and releases to the local market to allow them to pay foreign currency and import products.
In July, the BoB’s head of research and financial stability, Tshokologo Kganetsano revealed that with exports crashing due to the coronavirus (COVID-19), the country was rapidly running out of the resources to pay for imports.
“We are receiving about P3.5 billion from the Southern African Customs Union every three months, but our monthly import bill is about P5.5 billion,” he told journalists.
“There have been very little mineral and other exports in 2020 due to the pandemic and just from these numbers, it’s clear there is a very urgent need for diversified revenue sources.”
In August, the foreign reserves were measured at P62.4 billion, compared to P73.4 billion a year earlier. Of the figure in August this year, about P11 billion was attributable to the Government Investment Account, a fund government uses to cover budgetary shortfalls.
Food imports, meanwhile, are estimated at about P8 billion annually and as at the end of September, food, beverages and tobacco imports had reached P6.7 billion.
Technocrats at Statistics Botswana appear sensitive to the urgency of import substitution, recently releasing the inaugural itemised monthly breakdown of food imports. The numbers show that for July, Botswana imported P675 million worth of food, with cereals (maize, wheat, rice) as well as beverages and sugars accounting for nearly 40% of that figure.
“This is the first time Statistics Botswana publishes the Food Import Bill publication (and) this was meant to guide users on what food products can be produced in the country for import substitution or possible exportation,” Ketso Makhumalo, Stats Botswana director of stakeholder relations told Mmegi.
“Similar publications covering different products from the import bill may therefore be produced based on the evolving needs of the various users of statistics.”
Those watching the numbers include Beauty Manake, the assistant minister of agriculture, who has been very vocal lately on the initiatives government is embarking on to drive import substation.
Her task is a mountain to climb. Besides the vagaries of climate change that have traditionally hampered the different policies government has attempted to boost local agricultural production, Manake and other technocrats have to fight against the established value chains amongst powerful producers in neighbouring states like South Africa.
Locally, those value chains, such as food processing, storage, testing, enhancement and even marketing, are deficient, meaning even if a local farmer was able to get their product to the shelves, it would suffer stiff competition.
“We are importing more than $800 million in food annually and this is mostly in the value chain or processed food,” Manake told last week’s virtual Global Expo. “This is because we are still very inefficient even in storage and post-harvest facilities, as well as technology. “However, through COVID-19, we have seen that we have the capacity and we can be disruptive. “If there’s going to be a time when South Africa focuses on feeding its own, what will we do as a country?”
In response, the ministry says it has conducted an analysis dividing the country into productive zones and categorising farmers, looking at their profiles, capability, track record and their areas of expertise. Funding has been sourced to be channelled through entities such as CEDA and the National Development Bank as well as commercial banks in order to increase production and kickstart the value chains.
In fact, agriculture is one of several sectoral priority areas identified by the P14.5 billion Economic Recovery and Transformation Plan (ERTP), government’s blueprint to lift the economy out of COVID-19 and set it on a more sustainable path. The final ERTP document approved by Parliament shows that government intends to spend P1.95 billion in the next two years on various agricultural initiatives. “There’s a lot of capacity as a country and in Pandamatenga, we had a bumper harvest there with good yields,” Manake said.
“We realised that we can produce cereals like wheat where we are currently importing about P300 million per year, and we can even process it locally. “There is also the Zambezi Agro scheme that we have always been talking about that has been held back by financing.
“Even with sugar and beet, we have the capacity.
“That ethanol, animal feed, refined sugar and others can be produced in Botswana.
“We are taking the disruptive route. These are things that Botswana is not used to producing, but we are going that route to produce jobs for the country.” According to Manake, government intends to drive greater uptake of technology and mechanisation in the country’s agricultural sector, partly as a way of driving costs down and enhancing production, but also bringing youths and innovation closer.
This year, the seasonal inputs programme, ISPAAD, will incorporate drones, which will help the ministry measure the sizes of fields for beneficiaries.
Youths will soon be approached to pitch apps that can provide extension services that can reach farmers where government officers cannot readily do so.
Manake says her ministry will also soon be launching a guide that will motivate import substitution within the local agricultural sector.
“My vision is that agriculture remains the green diamond of the country and there’s a lot of potential, especially in different value chains,” she says.
“There are huge opportunities in this country that can create decent jobs and wealth for our people towards Vision 2036.”
In a perfect future, more focussed funding and government support will boost agricultural production and the key value chains needed to wrestle back the shop shelves from powerful neighbours.