South African agribusiness is at a crossroads and, after decades of rising farm production, South Africa is still a hungry nation – with constant pressure on food security.
The only way to address these food security challenges is through increased farm production without sacrificing sustainability. This, in turn, requires commercial farmers to look at new approaches and technologies for their operations.
PwC Africa Agribusiness explores these topics in its newly-released thought leadership – South African agribusiness at a crossroads: New approaches and technologies to grow farm enterprises.
“South Africans purchased less food in 2023 due to pressure on their buying power,” says Andrew Dale, PwC Africa Agribusiness leader. “In other words, people were simply able to do less with their salaries and wages as their income failed to keep up with inflation. The direction that agribusinesses now need to look into are ways to ensure they are amplifying their efforts to meet the increasing demand for food, while upholding the importance of sustainable practices.”
History shows us that the first green revolution took place after World War II at a time of worldwide depression and starvation. The solutions to rapidly deteriorating global food security were found in new varieties of high-yielding cereal grains, distribution of hybridised seeds, synthetic fertilisers, pesticides and herbicides, modernised management techniques, and expansion of irrigation infrastructure.
“South African farmers remain at the forefront of these methodologies,” Dale says. “However, despite this, the country essentially remains a hungry nation.”
Up to 20-million South Africans suffer severely from food insecurity, with the volume of food and beverages sold per capita at grocery stores and supermarkets declining by more than 3% last year as a result of shoppers being pressured by weaker buying power. What is evident is that – both locally and globally – there is a need for increased food security.
“To achieve this the government, private sector, labour, and community organisations need to work together to develop and implement policies that support the growth in production and trade of agricultural goods,” says Nqaba Ndiweni, PwC Africa Consumer, Industrial Products and Services (CIPS) Industry leader.
Higher agricultural output is therefore required, but without compromising resources and sustainability in the process. Here, a science-based approach needs to be relied on – one that is not necessarily driven by new techniques, but by new technologies.
This is known as the second green revolution.
PwC’s thought leadership looks at four approaches and technologies that will support South African agricultural businesses in growing their operations and increasing food production while supporting sustainability and operational efficiencies:
A family business constitution is vital to succession planning
Family-owned agribusinesses form the backbone of the South African farming sector. The most successful ones strike a balance between professional management and responsible ownership while maintaining a healthy family dynamic.
“The relationships between family members can affect the management of the company in ways that simply do not exist in non-family businesses,” says Dale.
One of these is the question of succession. Succession planning is perhaps the most critical and challenging decision for family business leaders as the foundation of an effective succession plan is the professionalisation of the family and the business.
This involves documenting and embedding procedures, governance, systems, knowledge, experience, values and business relationships. Central to this process is the creation of a family constitution.
End-to-end farm management: Where dirt and data intersect
Agriculturists increasingly have to make real progress into the digital era – and as dirt and data intersect, digital tools will provide solutions to some of the biggest challenges that agribusinesses will face in the coming years. End-to-end farm management is a comprehensive approach to managing all aspects of farming operations using integrated technologies and systems.
This approach could include – but is not limited to – financial, resource and supply chain management, operational efficiency, sustainability and compliance, data collection and integration, as well as collaboration and communication with stakeholders.
Traceability: Farmers must collect the data that food companies need
Farmers, food and beverage companies, and retailers are trying to assure the security, safety, and quality of their food. Being able to track food and know its whole journey is as much an opportunity as it is a line of defence in good food safety management.
“Traceability is an opportunity for food companies and their suppliers to differentiate the quality of their products and gain a competitive edge through having more control and visibility over food supply,” Dale says. “For farmers, the scope of data collection is wide – but data that major food companies could require in their traceability processes include information on production, harvesting, processing, transportation, storage, and sales.”
At present, traceability practices in South African agriculture leverage technologies like barcoding, Radio Frequency Identification (RFID) tags, and blockchain to track agricultural products from the farm to the consumer.
Impact measurement can help agribusiness tell their ESG story
South African agribusiness companies are facing increasing pressure from various stakeholders to assess and manage the impact they create on society.
“Quantifying the impacts of economic, environmental, and broader societal matters will lend credibility and reinforce an organisation’s value proposition to its diverse stakeholder base,” Dale says. “In our ever-evolving world impact assessments transcend necessity – they become an indispensable tool for responsible, thriving, and resilient agribusiness organisations. Failure to provide robust and credible impact data can erode stakeholder trust and diminish an agricultural organisation’s social licence to operate.”