Pierre Vercuiel, 70, farmer and president of Agri SA, tells Murray La Vita how farmers are affected by the Covid 19 pandemic. He says if agriculture in South Africa falls into a situation where there is no more food security, we will definitely start to look like Zimbabwe.
Even though agriculture was declared an essential service, it did not leave the industry unscathed, as the prices of agricultural products are determined by the consumer and if it does not go well with the consumer “then it works all the way back into the value chain until again at the farmer, ”says Vercueil.
“For example, the price of pork has dropped from where the producer got about R27 per kg to more or less R16 per kilo. On the beef side, the same thing happened – it dropped from more or less R47 per kilo to R39.
“It has recovered moderately now that we are at level three, but it is still very far from the levels where we should have been. The real big problem with this is bigger farmers and commercial farmers can handle it, but now you have the unintended consequences that the new farmers that we are now making great effort to help, the small farmers, can not handle this kind of thing.
“They take such a huge hold out of this non-profit that their reserves simply aren’t there to handle it.
“Then we start again. It also happened earlier in the year with the foot-and-mouth outbreak. You will find that new farmers and small farmers – I do not like the word emerging farmers, it sounds terrible to me – are people who take a lot of cattle every month to a cattle auction to sell to service its cash flow and to keep his household going.
“And then we didn’t auction at all for more than two months. Now, its influence was great again. The farmer is a price taker and what has happened to us now is that cattle farmers have been delivered at uncompetitive prices.
“It was caused by the markets. Due to the restriction time, restaurants were closed; the chain stores have ordered less because they are afraid of the shelf life of products – just now the fresh meat will no longer be fresh. So, the question just went away.
“Currently, it’s still incredibly cyclical. In the middle of the month we have a big problem getting livestock sold at reasonable prices and towards the end of the month when it is now pay time and people are getting their social support [allowance], there is a little bit of a question. “
Vercuiel, who took over from Dan Kriek as president of Agri SA in December, says he was “exceptionally blessed”, but also “did a lot of good” in his career as a farmer. He farms on Setlagole near Stella in the North West.
“I grew up in this world. My father was a farmer. The Vercueils were Afrikaans people and my mother was English. I grew up in a special house where debate was allowed and I was politically aware from a young age. ”
He matriculated at Helpmekaar High School, after which he obtained an agricultural degree from the University of Pretoria.
He considers himself a “perpetual student” and went on to study sustainable agriculture at the University of the Free State at 55 degrees.
“When I started farming, it was really difficult. My dad couldn’t take me to the farm that time. But, I was lucky and started farming in a wetter cycle at the end of ’72. I seized the opportunity and the measuring lines fell right for me.
“Today I have a big business and provide work to many people. But this is not the norm for family farming. My business has become a bit more corporate and I have partners in the business.
“It’s a mixed farming business and I started farming in Zambia about eight years ago.
“I believe in doing training and our entire business is also involved in internships for young black people.”
He says organized agriculture believes land reform should be economically feasible.
“If it is done in a responsible way, I am obviously confident that we will succeed.
“But you have to remember that politicians are short-term thinkers and farming is a long-term business with a long production cycle; it is also a highly technical business these days. And it is also true that profitability, the cost squeeze, has a big influence on it.
“Units are getting bigger. In the process, we must also be co-responsible and help our country move forward.
“Correction needs to happen, and for that we need to look at schemes where we establish partnerships with new farmers – this is already happening in the private sector – and to see if we can establish farmers because it is our business.
“That is why it is extremely important for us to retain private property. If it is to happen now that we will have expropriation without compensation, the collateral value of property will fall away and financing will just not be possible. “
They are people who talk to the state “in good faith and we believe that together we are looking for a solution to the many problems” which also include the establishment of new farmers, says Vercueil.
“But it must make economic sense. It does not help now that we try to do something that does not work, nor does it help us think that we are going to settle huge numbers of people in agriculture and then the problem will be solved. If that is not economically feasible, all those people will be dependent on the state.
“So, we are positive and say: Give us as farmers an opportunity that we can be part of the solution and make a big contribution. We also say: Let us trade in a free-market system and not through short-term political gain do such good as expropriation without compensation, because that will cause disaster. Not only in agriculture, but for the whole country – and then there will be no food security.
“So, the solution of land redistribution does not lie in expropriation without compensation; the solution lies in a strong, growing agriculture. The state must give us a chance to give them the plan of how it can be done. “
He talks about the crunch in which the Land Bank finds itself – that the state must now provide a guarantee to keep it going. Shortly after our discussion, Minister Tito Mboweni announced in his special adjustment budget a R3bn rescue buoy for this bank.
“The Land Bank has a development function as well as a commercial function. These two things do not fit together at all, because you cannot think commercially on the one hand and on the other, the settlement of farmers with subsidized interest rates, and so on.
“The Land Bank will have to make a choice whether to be a development bank or a commercial bank. South Africa needs a development bank and Agri SA believes that if we do not get development funding, we will not see land reform either.
“So, development financing that has to be heavily subsidized in the long term is important, and to find the right person to farm. You can have all this stuff right, but if you don’t have the right person in agriculture, then it’s not going to work anyway, because you also have to be a businessman.
“It’s no longer like the old days in the traditional way when anyone could farm. It’s a highly technical, capital-intensive business.
“Our discussion with the state is also about that. It also has to do with confidence that comes with it and that the state naturally wants to see the subsidy go to where the subsidy should be. However, you have a bottomless pit if you let the wrong people into agriculture for the wrong reason. This has happened a lot now.
Vercueil thinks farmers are getting too little recognition.
“And if something goes wrong, it is considered the rule and not the exception. This is a situation we will all have to manage together. If agriculture in South Africa falls into a situation where there is food shortages and no more food security, we will definitely start to look like Zimbabwe – unaffordable prices, runaway inflation, and all that comes with it. And we don’t want to be there now.
“But our farmers are ready to do our part. We have a lot of common sense stuff that is absolutely important for agriculture and if we disagree with the legislature that doesn’t mean we’re not in good faith.
“We know what works and what doesn’t work and we’re the guys doing the production right now; we are the food suppliers of South Africa. They just have to give us the opportunity to do that. “
The “biggest concern” at the moment is farm safety, says Vercueil. Also the fact that farmers have to “invest additional funds” in their own safety.
He refers to the “tremendous good work” that Agri Securitas does and the donations they receive to secure farms against attacks. There is also close cooperation with the police.
“When we were at level 4 and level 5 where people couldn’t drive around at night and do all kinds of things, there was actually a decline in crime overall, but since we are at level 3, there are huge theft problems – not only from livestock, but also from grain; and of course a lot of farm attacks where people were badly assaulted. ”
When people are hungry, crime increases, he says, and tells about the help farmers provide to hungry and needy people through large food donations, for example.
“I think we see how South Africans stand closer together across the border. You see selfless service, but at the same time farm attacks and general delinquency have increased lately. “
Ground value drop
The conversation goes back to the effects of the Covid-19 pandemic on especially smaller farmers.
“It is generally mentioned that there are currently about 20 000 farms in the market. And the collateral value of land has fallen by about 30% due to oversupply and smaller demand.
“The confidence in what’s going to happen. . . If the politicians talk about expropriation without compensation, then a farmer is a little nervous about whether he will retain his property.
“We must remember that 80% of the farms in South Africa are family businesses. In other words, these are relatively small businesses.
“The banks are relatively patient at the moment, because they don’t want the farms, either. As a result, everyone has a sit-and-wait time. We always say at the end of August there is a time of payment where farmers have to repay their loans and make the necessary financial arrangements for the next year.
“Then we will now see what is actually going on. There is already an oversupply of property right now and we expect it to get even bigger if things do not improve quickly.
“The fact of the matter is the people living in the city, the consumer, are also suffering financially. There is an overall slump in demand and this undoubtedly has an effect on the price of our products. So, the coming year is going to be a tough one again.
“If confidence comes again and all these expropriation goods go away without compensation and we can do our part again in establishing new farmers and there is a little bit of confidence in the system again, there should be a recovery to be.”
He has to keep believing, says Vercueil.
“Otherwise, one will go away. . . To give you an example: Two of my partners who have been with me for 15 years have emigrated to Canada. We see young people taking over in agriculture. . . huge numbers of them emigrate, because there is uncertainty.
“In our world it is a common phenomenon. I also have a son overseas. At least one farmer is with me. The other is a businessman and he is no longer in South Africa.
“So, this is a common trend today. And it’s the qualified people who leave. We cannot yet quantify that influence; in about two years we will feel it. ”
There is a constant decline in the number of commercial farmers.
“We have very specific challenges right now. . . But a farmer is an interesting being. Once it rains, there’s a different spirit to how things are going to be managed. “