Staying afloat amid the cost-price squeeze

John Hudson, head of agriculture at Nedbank Commercial Banking, spoke to Glenneis Kriel about the importance of environmental and social sustainability for a prosperous agriculture sector.

- Glenneis Kriel

Consumer pressure in developed countries is forcing farmers to adopt more sustainable production practices. What is happening in South Africa?

The focus on sustainability in South Africa has increased in response to the growing awareness of the impact of agricultural production on the environment, the need to produce more food with fewer resources, stricter regulations for exports to the EU and UK, and climate change, which farmers contribute to and are affected by.

How do you think farmers feel about the pressure to become more sustainable?

Many South Africa farms have been in families for multiple generations. To me, this shows that local farmers are aware of the importance of and are motivated to look after our natural resources.

A big concern for many farmers centres on compliance: who will create the standards, what will they be, how they will be enforced, what costs will they bring, and what value will they add to their businesses? A lot of work needs to be done to improve the business case.

What are the biggest obstacles to sustainable production?

Environmental issues and challenges cannot be viewed in isolation; they form part of a bigger ecosystem of risks that farmers are facing.

Aside from soil degradation, water pollution, and adverse weather conditions, farmers around the world must juggle rising input costs, market pressures, subdued economic growth, and geopolitical tensions. On top of this, South African farmers must deal with a deterioration in infrastructure and logistical challenges that are further driving costs up. The cost-price squeeze created by these factors has resulted in many farmers being stuck in debt traps. They simply cannot afford to move onto production practices that are more environmentally friendly.