Improving Agricultural Market Performance:
Creation and Development of Market Institutions
153
intermediate goods and services) came to US$7.6 billion, or about 2.75% of GDP.479480 This last
figure approximates value added in the agricultural sector, which the World Bank estimated at
2.4% of GDP, only slightly more than in Saudi Arabia (2.3%).481 Already the most productive
agricultural sector in Africa, South Africa’s labor productivity in agriculture has grown more
rapidly than in other countries in Africa.
In order to improve agricultural production capacity and encourage rural development and job
opportunities, the Government of South Africa implements a large-scale Land Reform
Programme with the objective to transfer 20% of all commercial agricultural land to black
farmers to increase participating in commercial farming an reduce subsistence farming.482 The
Land Reform Programme concerns restitution of land which has unjustly taken in the past,
land redistribution, and reform of the land tenure system.
Handling and Storage
Some challenges concerning handling and storage remain, even though South Africa’s
agricultural handling and storage technologies and infrastructure are relatively accessible and
well-developed Africa.483 Small-scale horticulture farmers generally lack access to storage and
warehouse infrastructure, which hampers their participation in commercial farming. This is
particularly the case for subtropical fruit, which are cost-intensive. The lack of such
infrastructure, in combination with mechanization of post-harvest handling, has also resulted
in farmers incurring considerable post-harvest losses.
Processing and Packaging
Sugar is one of the key commodities which is further processed.484 A total of 14 sugar mills are
operated by a number of milling companies, mostly located in the cane-growing regions, which
covers about 430,000 hectares. These 14 sugar mills produce and process about 2.5 million
tonnes of sugar, which is primarily consumed within SACU. The processing of sugar generates
employment for about 79,000 people. The dollar-based reference price of sugar beet and cane
sugar increased from US$358 to US$556 per tonne in 2014, which was recommended by the
country’s International Trade Administration Commission.
In addition to sugar, bottled or boxed wine represents an important share of South Africa’s
agricultural processing and packaging. However, the wine sector has been challenged by a
development where UK retailers are increasingly importing wine in bulk and bottle it in the UK
as a result of environmental concerns. 485
479 DAFF (2017), Abstract of Agricultural Statistics, Pretoria: Department of Agriculture, Forestry, and Fisheries.
480 The DAFF 2017 Abstract of Agricultural Statistics indicates that gross farm income in 2015/16 amounted to 5.85% of
GDP, but elsewhere in the same report the contribution of agriculture to GDP is shown as 2.4%.
481 World Bank (2017), World Bank Open Data, available a [Accessed May 2017].
482 WTO (2015), Trade Policy Review: Southern Africa Customs Union, Geneva: World Trade Organization.
483 KPMG (2012), Small Enterprise Development Agency: Research on the Performance of the Agricultural Sector, available
at
[Accessed July 2017].
484 WTO (2015), Trade Policy Review: Southern Africa Customs Union, Geneva: World Trade Organization.
485 Ibid