Information and history

ID #5471

The Disastrous Impact of Apartheid on Farming in South Africa.

One is inclined to think of Apartheid in purely political terms. However it was more than that – it was an attempt by control-freaks to control everything and everyone. In that sense it had much in common with both communism and fascism. And like those two "systems”, this grand attempt at social engineering was finally swept away by a tidal wave of revulsion and economic readjustment.

Travelling around South Africa you may notice many abandoned railway lines, their sidings and infrastructure falling down. If you look closely you may also notice street names like Market Street, Markplein, etc yet, strangely, no market is to be seen. Less obvious, it might strike you as odd that, in a place like Alexandria in the Eastern Cape, dairy farms can be seen from the R72 yet one is unable to buy fresh milk from such farms.  It may also surprise you to learn that milk, produced and sold to milk processing companies in Alexandria for less than R2.00 per liter, costs over R6.00 per liter upon return to its source -- a 200% increase. What is the cause of such dislocations?

There was a time when small rural (platteland) towns all had, at their core, a market.  Farmers from the surrounding area would descend en-masse on the town on market days (Tuesday and Thursdays in Port Alfred where I grew up).  Clearly it was an advantage to be first in the queue.  But quality was equally important so many farmers would be up long before dawn to ensure that their crop was as fresh and attractive as possible.  They would unload their goods (which could be almost anything) from all manner of vehicles (including ox-wagons on occasion) and wait for the auction to start. Buyers consisted of all races and creeds – black, white, Indian and Coloureds – all mingling and chatting happily together, talking about the lack of rain, the flooding of their fields, the poor quality of the potatoes this year, etc.  Before the auction started they would wander about assessing the produce on display with a critical eye. Some were interested in better quality but more expensive produce while others, selling into less sophisticated markets, were willing to accept lower quality in return for a lower price. Eventually an auctioneer would climb up onto the display tables and start his patter (Bobby Gilder in Port Alfred).  After two or three hours, everything having been sold, the auction would be over and, after a few goodbyes, everyone would depart, re-energized by the sober realities of the marketplace.  Nothing was wasted -- even the rubbish left over was picked up and used to feed someone's pigs.

This process embodied several important principles, including:

•    Intense rivalry between both producers as well as consumers.  In spite of the jovial discussions, all would search for ways to realize higher prices and gain advantage over their competitors. So any snippet of information they might glean that gave them a competitive advantage would be seized upon with alacrity.

•    Social Interaction: The lively discussions (and of course gossip) that took place ensured that the market was the very heart of the town.  Indeed one might argue that it was, in many instances, the raison d’être of the town itself. 

•    Middlemen: Apart from a small fee, producers sold directly to consumers. In other words, there was no middleman to increase prices.  

To the intellectual giants of Apartheid, this process was anathema. White people having to compete with blacks, Coloureds and Indians on a level playing field?  All races mingling happily together?  Unthinkable! So they created an alternative which they called “Single Channel Marketing”.  Laws were passed that prevented producers and sellers from unilaterally negotiating with each other. Instead, everything had to be sold via a single marketing agent set up by government decree – e.g. an

•    Egg Control Board,

•    Chicory Control Board,

•    Milk Board, 

•    Peanut Control Board,

•    Maize Board, and

•    Meat Board, and so on. 

Who do you think was in control of such organizations? Unsurprisingly, most were members of the ruling political party. A huge infrastructure of bureaucrats was set up to administer the system. Intolerant of competition, they created barriers to entry by anyone but themselves.  And of course a fee was levied on all such commerce which was received by whom?  You guessed it – it was used to pay the salaries and wages of the bureaucrats. And the calibre of such bureaucrats? I know of one whose driver would regularly escort him on a pub crawl in Phalaborwa. On one occasion he was seen lying on the floor hopelessly drunk while other patrons of the bar in question urinated on him. I once told another --a huge hulk driven about the country by a chauffeur who was obviously on the take -- that he was nothing but a communist -- an opinion to which he objected. Needless to say my boss at the time took exception to such comments, but he did so with a twinkle in his eye and a broad smile on his face. 

To legitimize such entry barriers, sophisticated arguments were developed to persuade consumers that such barriers were in their best interests.  For example:

•    Pasteurized milk:  Laws were passed that prevented milk from being sold by anyone who did not comply with stringent health regulations.  Farmers could no longer leave their stainless steel milk cans beside to railway line, to be picked up and delivered to customers by the “Milk Train”. Instead it had to be transported in trucks to a central processing facility owned by – you guessed it – the Milk Board.  This spelt doom for the Milk Train and district railway lines throughout the country. Likewise it spelt doom for the milk distribution companies that used to deliver milk to one’s door in the early morning. Yet I never heard of anyone getting sick resulting from the drinking of contaminated milk. http://www.youtube.com/watch?v=cSgtMFjtlQw&list=PLA1EFCA5C1101C123

•    B&B’s:  All were required to be registered with and graded by the Tourism Board, who demanded that high standards were maintained. They made it illegal for anyone to run a B&B that did not have an all-stainless steel kitchen -- an unnecessary expense introduced by the hotel industry to limit competition.  

•    Peanut Board:  It became illegal for producers of peanuts to sell peanuts to passers-by.

•    Meat Board:  Farmers were no longer permitted to slaughter and sell meat from their farms. Instead such animals had to be transported to, slaughtered at and sold from huge centralized abattoirs dotted around the country.  

•    Fruit and Vegetables:  All fruit and vegetables had to be transported to and sold on centralized markets such as City Deep in Johannesburg.  As an example, Tzaneen in Limpopo Province is an important fruit and vegetable growing area.  However it was not possible to buy fruit and vegetables from Tzaneen in Phalaborwa nearby. Instead it had to be transported from Tzaneen to City Deep In Johannesburg, after which it was transported all the way back to Phalaborwa – a distance of over 1000-km.  Needless to say the quality of the fruit and vegetables delivered to Phalaborwa was poor because it spoiled during the long journey.

An immediate casualty was that the markets disappeared and, as a result, communication between producers and consumers ceased.  So too were the livelihoods of small farmers who supplemented incomes by selling surplus produce when the opportunity arose. Instead of continuously adapting to changing circumstances, large-scale farmers lobbied the government for a price increase. In addition, farming input costs (e.g. fertilizer, insecticides, fuel, electricity, tractors, etc) were similarly minipulated. So farming – that bastion of independence and free enterprise in most countries -- became progressively more political and less competitive.  

Thankfully, after Apartheid was abandoned, sanctions were lifted and the Control Board structure was swept away. Perhaps more importantly our markets were opened up to global competition when import duties were abolished.   When faced with such competition, much farming in South Africa simply collapsed. Farms too small to be economically viable were sold, leading to the creation of huge farms. For example, it is readily acknowledged that, in the Karoo, farms smaller than 30000 Ha (that’s right 300 km2) are no longer economically longer viable.  The owners of small farms in the Karoo and elsewhere sold out to larger farmers and disappeared. Since they no longer purchased goods and services from the nearest town, this in turn led to the collapse of the economies of such towns (e.g. Pearston near Graaff-Reinet).  Where did the employees of such farms land up? They migrated to larger cities (like Port Elizabeth), continued on down the coast to places like Plettenberg Bay and Knysna and ultimately ended up in squatter camps in Cape Town (Khayelitsha, Langa, etc).  Likewise the railways collapsed and are now derelict.  In short an economic catastrophe, the results of which can still be seen on the platteland of South Africa. 

However there are signs of hope.  Huge areas of the country which are, and always have been, unsuitable for intensive agriculture are being converted into game farms – one arena in which South Africa enjoys global comparative advantage. The veld, no longer subjected to heavy gazing pressure, is starting to recover. Streams and rivers are starting to flow again.  Abandoned buildings such as railways stations are being lovingly restored and converted into guest houses and B&B’s.  

It may take some time for markets to reappear in the villages and towns that have survived. That they will reappear is certain -- for the same reason that markets have existed since time immemorial in small towns and villages all over the world. But there is another reason -- the high price of transport fuel, which is unlikely to decrease in the foreseeable future, will ensure that the cost of transporting agricultural produce to the huge markets and centralized processing facilities set up during Apartheid is unaffordable. But it will be a slow process because economic interests created under Apartheid will only surrender their power reluctantly.  For example, farmers must continue to purchase electricity from Eskom – the state-owned electricity giant with a monopoly on electricity generation in South Africa. However its wheels are also starting to fall off (they have requested R350 billion from government to upgrade their facilities -- R10000 for every person in the country -- an unaffordable amount of money. They are out of touch with economic realities -- do they think that money grows on trees?), which will hopefully lead to the recreation of hydro, solar, wind and biomass power electricity generating schemes, as was the case prior to the creation of Eskom (see the Stutterheim Stationary Engine Museum). Alternatively farmers will simply switch to less energy-intensive forms of agriculture or give up farming altogether. 

There is a wonderful Afrikaans expression that captures the sentiments expressed here succinctly: "n mens kan nie met sulke mense n nasie bou nie" (one cannot build a nation with such individuals). Alternatively, as someone once said: "If you think education is expensive, try ignorance instead". The fact is that social engineering doesnt work -- a simple lesson that subsequent generations might do well to bear in mind.  

Incidentally something quite practical emerges from the above discussion. Many attempts have been made to encourage micro-farmers in townships and elsewhere to grow their own fruit and vegetables, with limited success. One reason for such limited success is that farming is hard work and the farmers in question need an incentive -- i.e. they need to be persuaded that hard work will be rewarded by being able to sell their excess production. If towns such as Alexandria, Stutterheim and Graaff-Reinet were to re-establish their markets, such incentives would be created, leading to the creation of employment in the platteland where the need is most pressing. 

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Last update: 2014-02-28 16:08
Author: Alan McIver
Revision: 1.39

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