The most recent data from the National Crop Estimate Committee painted a troubling picture of the South African sorghum industry. This is a crop that was once seen as key to the development of the biofuel industry in SA and, in turn, job creation in rural areas.
The data show that farmers increased the area planted to almost all grains and oilseeds with the exception of sorghum, which declined 24% year on year to 36,800ha. In fact, looking at the database dating back to 1936, in 2017, SA planted the smallest sorghum crop ever.
In 2014, sorghum was one of the most promising crops in SA’s agriculture, boosted by the hope of the development of the biofuel industry, job creation and a new market for farmers, particularly black smallholder farmers.
Mabele Fuels and the Industrial Development Corporation (IDC) were the first companies to embrace this initiative. Mabele was to build a processing plant in Bothaville, with the potential to create 16,700 jobs and a market for farmers. The IDC was going to create jobs and a much-needed market opportunity for smallholder farmers in the Eastern Cape.
These plants were going to utilise about 500,000 tonnes of sorghum a year, treble the volume SA was producing then. The government was the key player, with the goal of creating jobs, boosting the economy, creating a market for smallholder farmers and reviving the sorghum sector. Unfortunately, the government incentives fell short and the process did not materialise.
In fact, by early 2016, it was clear that the biofuel industry was a lost dream and farmers were opting for other opportunities, such as accessing new export markets. This was a difficult task as SA is not an established sorghum exporter. In fact, SA’s sorghum exports are concentrated in Southern Africa with a key market being Botswana, which accounts for an average of 94% of SA’s total sorghum exports.
Fellow agricultural economist at the Agricultural Business Chamber Tinashe Kapuya and I wrote a research article in early 2015 that aimed to identify new markets for SA’s sorghum industry. We found Cameroon, Sudan, and Ethiopia as the only attractive markets in Africa, having the potential for growth and low import tariffs.
Globally, Japan and Mexico were identified as the large markets, with zero-rated tariffs for South African sorghum exports.
Europe also presented a number of opportunities, with what was then a modest import duty of 1.6% under the Trade and Development Co-operation Agreement.
The key question that emerged from our study was whether SA would be competitive enough in these markets. This was left unanswered and some farmers were still keen to explore the opportunity until progress was disrupted by the 2015-16 drought.
Despite the aforementioned challenges, the biofuel initiative is not a completely lost cause. SA can still revive the biofuel industry, which will stimulate job creation in both manufacturing and farming businesses. This would also present a lucrative opportunity to new black farmers, particularly in the former homelands.
Anyone who has spent time with smallholder farmers would know that one of their key challenges has always been access to markets, so the biofuel industry would have presented a great opportunity.
More importantly, sorghum is an African crop. Ideally, SA should protect and develop its heritage in the way Mexico handles the maize crop. The other way of creating value for sorghum would be to explore its nutritional benefits and perhaps promote it on the food and beverage chain.
SA’s sorghum consumption has been a declining trend for some time — from about 250,000 tonnes in the early 2000s to 159,824 tonnes in the 2015-16 marketing year, according to data from Grain SA.
About 55% of this is consumed in the form of meal, rice and grits, and the rest as pet and livestock feed and malting.
If the sorghum crop is not giving acceptable returns, farmers will switch to other more profitable crops. However, the main losers in this process would be the new entrants who had hoped to make a living out of the biofuel initiatives.
Given the unemployment rate and limited market opportunities for smallholder farmers, if the biofuel initiative is revived, there could be socioeconomic benefits for the country. The development of higher-yielding seed varieties and expansion of export markets could be a way of reviving the industry. Globally, there is a stable demand for sorghum, but for SA to participate, it would need to lift volumes and sell at competitive prices.
• Sihlobo is head of economic and agribusiness research at the Agricultural Business Chamber.
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