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Simon Brown: I'm speaking to Zan Meyer, Head of Agricultural Products at Nedbank Corporate and Investment Banking. Mr. Zan, thank you for your time this early morning. I put together food security and food logistics because I think they are broadly the same thing, but I don't think the average person thinks about them much after waking up in the morning. However, the supply chain is complex, and getting breakfast and dinner on the table every day is of course extremely important.
Zan Meyer: One hundred percent. I just wanted to say that if you're eating breakfast this morning, you should think about food security.
Maybe just a little background. I believe climate change is real. I'm sure you know that last month was the hottest February on record. According to the EU's Copernicus Climate Change Agency:
Our Crop Estimates Committee just had to revise the summer crop amount from 20.1 million tonnes to 17.4 million tonnes. This is a 13% decrease.So I think [there are] The profound effects of what we are currently experiencing in the Southern Hemisphere. The effects of El Niño are much more severe than we initially expected. Considering that perspective, is South Africa food insecure? The answer is no.
South Africa produces enough food for its own consumption. Japan remains a net exporter, but going back to your question about port deficiencies, we are a net importer of wheat, for example. If we are a net importer of maize and we are unable to produce the 8.5 or 9 million tonnes that South Africa consumes due to El Niño, I would expect serious problems in terms of imports and logistics. The ability to get food to people.
This is not unique to South Africa. In fact, it is also very suitable for sub-regions. Zambia – More than half of the maize crop is at risk, purely due to El Niño, heat and the suffering of local people. So this is a real phenomenon, and we should not only closely observe it, but also ensure that small-scale subsistence farmers in other parts of the continent can actually produce food with yields that are reasonable for their regions. I think it is necessary.
Simon Brown: You make your point there, but you are referring to the “region”, not South Africa. I think we think a lot about South Africa, especially things like agriculture with climate change, as you mentioned. You mentioned El Niño. These are local issues. Frankly, climate change is a global issue, but these are more local issues. We cannot ignore our neighbors and, as you said, further north, Zambia.
Zan Meyer: Truer words have never been said. We have to realize that in southern Africa, and indeed on the African continent, close to 30% of the GDP of these countries actually comes from agriculture and related activities. In Africa, more than 70% of the population is directly involved in agriculture. It is a major and important industry in other parts of the continent. This cannot be ignored.
However, I believe it is important to draw a strong line between commercial farming and commercial farming. And now I'm talking about large-scale commercial farmers in South Africa who are taking advantage of huge mechanization benefits and economies of scale to plant crops on thousands of hectares. And then we talk about the small farmers in the rest of the region. People on the mainland do not have access to sophisticated agricultural tools. He has no access to mechanization.
Unfortunately, El Niño and climate change will hit these farmers much harder than commercial farmers.
Our commercial farmers have the ability to utilize precision agriculture and seed technology to shorten planting periods and shorten crop cycles. Small-scale farmers don't have that luxury. He has no ability or access to the kinds of things commercial farmers benefit from, such as herbicides, pesticides, and precision drip irrigation, and is completely exposed to hail, floods, storms, and insects. Unfortunately, this is not an easy problem to solve. We have been working on this problem for decades, and the solution is to not turn Africa into large-scale commercial farms.
Like I said, 70% of Africa's population is actually directly involved in agriculture, so thinking about taking those people off the farms and into the cities and turning Africa into a food basket through a commercial farming model. You can not. That won't happen.
Simon Brown: I respect your opinion on that. I like what you're saying there – it's not about taking these small farmers and trying to make them big.But then [a question of] Government aid? When it comes to hail, they may not have insurance, but can they get government assistance? Is it money or is it building their resilience and, frankly, farming? Is it a technology that can help avoid some of the challenges inherent in ? It's a tough industry.
Zan Meyer: You mentioned insurance, which is a very important element. I don't think 70% of the population can expect government support. I don't have that kind of money. of course, [UN] The World Food Program did a great job and imported $1.6 billion. [worth] Last year, just from a food aid perspective, food was sent to the continent.
they also do a good job. They are actually improving the status of farmers. I think what is important is the knowledge and training that farmers receive. World Food Program and IFC [International Finance Corporation] In fact, there are programs that ensure these farmers have access to the latest technology. But it is possible to have the best technology in the world. The adage “rain makes grain” still holds true. So if they don't have access to insurance when the rains don't come, those farmers, unfortunately, end up in a dire situation.
You mentioned insurance, and I think a lot of advancements have been made in terms of insurance that are now possible and available to smallholder farmers. Insuring farmers individually is not the solution, just from a cost perspective. These are insurance products such as soil moisture, index cover, etc. This is actually about policies that respond to long periods of warmer days than a certain temperature. These insurances pay out immediately.
It is also very closely related to agtech, i.e. agricultural, surveillance technologies such as satellites and drones. The future of small-scale agriculture on the African continent is, let's call it, index-based yield insurance products, which are already doing great work in practice on the continent. I feel like it's about leveraging technology to make sure these farmers are protected.
For example, Pula is a Kenya-based company that already provides insurance to more than 10 million farmers. So this is no pipe dream. It's actually happening. It's just providing it on a large scale to small commercial farmers.
Simon Brown: I like it – “Rain makes grain.” Leave it as is.
Thank you, Zan Meyer, Head of Commodities, Corporate Investment Banking, Nedbank, for this early morning.
