Another major challenge facing smallholder, small-scale and communal farmers is their lack of access to credit to purchase inputs — because, in most cases, they do not own the land.
Without sorting out land ownership and security of land tenure in the land reform and restitution process, this problem will not be resolved. The government has to tackle this and agribusiness and the government have to ensure that mechanisms are in place to support food growers, large and small.
A similar small-holding farmer development model is being created in Zimbabwe in partnership with the EU. The EU believes this sector could effectively, efficiently and economically provide a platform for sustained and exponential growth with relatively small levels of investment. Zimbabwe is facing the same problems of drought and land ownership as SA.
Banks in SA and southern Africa need to be part of the solution so that farmers can access agrifinance when they need it. The hub farmers in SA will be able to do this because they can prove they are an owner in the hub and a supplier to a large firm such as Spar.
As GG Alcock, author of Kasinomics, points out, the method of determining credit viability based on the traditional "output" documents of financial statements needs to be rethought. Why not proof of invoices, delivery notes and the like, which are "input" documents? These are much easier to produce and probably more effective in determining the viability of the business.
There also needs to be a more equitable basis for loans where the small businesses are not charged such high interest rates to start or grow their businesses.
As O’Brien points out, until economic opportunity and growth is available to all communities, environmental and social concerns will be sidelined. The catch-22 is that it is self-destructive to marginalise these concerns.
Every person and business in SA depend on the environment and the critical ecosystem services it provides, such as water. SA also requires social stability to attract investment so that the economy can grow.
The decentralised hubs tackle all three factors — economic growth, social stability and environmental care.
They are a good start, and, crucially, the motive is based on a business relationship.
This is an example of a company putting its money where its mouth is. We need more and if the rural hubs are well managed, they will be an important pilot for the rest of the country and the region.
• Prof Skae is director of Rhodes Business School.
Rise in production: The agricultural initiative will empower smallholder farmers and communities with no previous access to the formal market. Picture: SUNDAY TIMES