There is consensus that investments in agricultural research & development (R&D) enables firms in the sector to improve their productivity and competitiveness and subsequently boost the entire economy. Spending on SA agricultural R&D has deteriorated over the past two decades due to a low budget allocation to state institutions such as the Agricultural Research Council.
For example, a study by the Centre for Research and Evaluation of Science and Technology at Stellenbosch University showed that public spending on agricultural R&D has been on the decline, as real spending growth averaged 5.1% a year between 1911 and 1950, then rose to an annual average of 7% from 1950 to 1971. Thereafter real spending in agricultural R&D ceased to grow.
Stagnant public spending in agricultural R&D over the past 25 years coincided with structural changes that seek to attain an inclusive agricultural sector.
Dwindling public spending on agricultural R&D has resulted in a steady increase in privately funded research, where private firms try to keep up with the latest technology and innovations in a bid to modernise operations and keep up with the rest of world. However, the risk of privately funded R&D lies in limited access to research outputs and innovations due to private intellectual property rights. In the absence of effective public research activities, privately driven R&D can perpetuate inequality between large and small farmers in the sector, particularly previously disadvantaged farmers who are unable to fund their own private research.
Stagnant public spending in agricultural R&D over the past 25 years coincided with structural changes that seek to attain an inclusive agricultural sector. This partly contributes to the slow progress achieved in tackling the inequality over the past two decades. Weaker R&D spending also raises concerns over SA’s ability to transform, innovate and modernise its food systems to a level that it resolves food insecurity and unemployment issues in the country.
Recently released statistics on the unemployment rate in the country should serve as a wake-up call to all and sundry, thus spurring policymakers to seek interventions that will stem the tide by creating much-needed employment opportunities. While it is not sufficient, investment in agricultural R&D is a necessary condition to creating employment in the agricultural sector and downstream tertiary economic activities. It should be noted that agriculture has both downward and upward linkages in the economy that transcend the officially measured contribution to GDP.
Emerging research is providing empirical evidence of the detrimental effects of neglecting public spending on agricultural R&D. Neglecting, or at least not sufficiently supporting, agriculture through activities such as agricultural R&D funding is tantamount to killing the proverbial goose that lays the golden egg.
Agriculture, despite its limited contribution to GDP, has been the saving grace of the SA economy in the recent past, averting a technical recession due to stellar performance despite unfavourable climatic conditions. It would thus be foolhardy to continue underfunding activities that support a prosperous and competitive agricultural sector.
The advent of the fourth industrial revolution (4IR) has ushered in a business environment characterised by constantly changing technology. The agricultural sector is no exception as it is also affected by 4IR and thus requires sufficient investment in R&D and technology innovations to remain sustainable and competitive in a dynamic global environment.
According to the department of science & technology the country’s gross expenditure on R&D was about R32.3bn in 2017, with the public purse contributing 44.6%, the private sector 38.9% and the rest coming from foreign sources. Of this spending, the agricultural sector accounted for just 8%, which is considered low for a country facing developmental issues such as low crop yields, increasing incidences of pests and disease outbreaks, and a growing inequality gap.
The fact that SA is faced with a high unemployment rate, now measured above 29%, cannot be overemphasised. Due to low investments in agricultural R&D the country lost the opportunity to create 43,662 jobs above the baseline between 2011 and 2017. If the current R&D spending is maintained, the country could forfeit a further 36,202 job opportunities relative to the baseline in the next five years. It must be emphasised that job opportunities are not only lost in the agricultural sector but to other sectors that are indirectly hit by low investments in agricultural R&D.
Given the overwhelming evidence, SA should seriously consider increasing expenditure on agricultural R&D and adequately funding institutions such as the Agricultural Research Council if the country is to get out of the unemployment quagmire and confront the triple challenge of unemployment, inequality and poverty head on.
• Dr Mkhabela, an agricultural economist, is group executive: impact and partnerships at the Agricultural Research Council.
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