Planning our post-COVID-19 recovery requires a collaborative, market-driven approach: Lessons from the Dutch, the agricultural powerhouse.
The Netherlands is a global leader of agricultural exports. It has 17 million inhabitants and is one of the most densely populated countries in Europe. Its agricultural exports are second only to the USA, a country 270 times its landmass. At the end of 2019, their exports reached ~$95bn (10% of GDP) –ranging from hi-tech machinery and sophisticated processed goods to unprocessed commodities. For example, they are the largest exporters of potatoes and onions (about 20% of global produce) and the second-largest exporter of tomatoes behind Mexico, but ahead of Spain and France. This is remarkable as they do not have the natural climate for it.
Interestingly, larger multinational food producers are not at the core of this epic feat. In a country deprived of the vast tracts of land deemed essential for large-scale agriculture, predominantly small and medium-sized family-owned farms have driven this revolution. A revolution fuelled by a relentless focus on innovation to produce higher yields with fewer inputs.
To understand how this came about, and its relevance to a post-COVID-19 South Africa, one needs to look back to the Dutch response to a rapidly industrialising Europe.
Their journey to becoming an agricultural powerhouse is marked by a unique, purposeful journey
Barry Eichengreen, in his book entitled ‘The European Economy Since 1945: Coordinated Capitalism and Beyond’, highlights that the post-WWII wave of growth across Europe “…was facilitated by solidaristic trade unions, cohesive employers associations, and growth-minded governments working together to mobilize savings, finance investment, and stabilize wages…”. It further emphasises, that it “…required a set of norms and conventions, some informal, others embodied in law, to coordinate the actions of the social partners and solve a set of problems that decentralized markets could not…” – hence ‘coordinated capitalism’.
After this phase of rapid growth, when their European peers moved away from agriculture, Dutch farmers demanded that their source of income remain unchanged. Underpinned by ‘coordinated capitalism’ – with targeted agriculture subsidies, long-standing international trade links, the largest seaport in Europe, highly integrated road infrastructure and large amounts of capital – the country responded to the farmers’ demand by making a national commitment to resource optimisation in a structured, market-driven, collaboration between thought leaders, the private sector and government.
Much of this national drive to resource optimisation stems from their world-renown research-driven hub of agricultural knowledge – the Wageningen University & Research. What is unique is that the university is funded by both government and the private sector, which forces targeted research relevant for businesses. This has led to not only technologies to improve productivity but also to an environment that encourages and nurtures successful entrepreneurs.
The impact of this collaboration is evident in, among other things, their production superiority – examples of which are potatoes, where Dutch farmers produce over 20 tons per acre vs. the global average of roughly 9 tons, and tomatoes, where Dutch farmers can produce a kg of tomatoes with 4 litres of water vs. the global average of 214 litres.
Bearing in mind that Dutch and South African development, infrastructure and cultures are not comparable in most areas, our post-COVID-19 response can learn two fundamental lessons. Firstly, all the actors (public, private, researchers and investors) agreed to a long-term market-driven vision to transform the sector to ensure its economic survival while optimising the use of very scarce resources. And secondly, based on this vision, they invested heavily in research, technological innovation and nurturing the development of new businesses.
So how should these lessons inform our collective sectoral response?
We believe that our post-COVID-19 growth story should focus on a stronger, market-driven, collaboration between the government, researchers and private sector actors. Furthermore, given that only about 5% of companies in the agriculture sector are black-owned, we think that this should be targeted almost entirely at growing new black businesses that ‘grows the pie’, not that redistributes what we already have.
Building on the (albeit imperfect) collaboration which currently exists during the COVID-19 crisis, we think the sector-specific alliance we suggest should focus on:
- Developing a market-driven vision that focuses on agricultural exports – In a separate article entitled ‘Harnessing the potential of brand South Africa’, we highlight the need for creating new agribusinesses that focuses on exporting products where South Africa has a competitive advantage.
- Supporting the government with:
- The delivery and quality of state-provided services like access to infrastructure, inputs e.g. water rights, and improve the ease-of-doing-business across relevant government departments.
- Trade policy – by supporting the expansion of existing trade agreements and creating greater access to growing consumer markets in the Middle East and Asia.
- Providing incentives to investors that support the emergence of black commercial farmers.
- Shaping the proposed post-COVID19 infrastructure investment to support regions with the greatest potential for agricultural growth (e.g. Limpopo, EC, KZN).
- Developing incubation models for aspiring commercial farmers with patient support and significant investment from public and private sector actors.
We believe in the power of the agribusiness sector to grow the economy, create meaningful careers and lasting impact that is conscious of our past
At Beyond-Soil, our consulting model addresses these directly. Firstly, our ‘Agri-Business Builder’ model incubates and partners with emerging black-agri-entrepreneurs for the long term – through their commercialisation to becoming internationally competitive. Secondly, our strategy consulting services can help shape government and private sector support models for greater impact.
We want to change the image of agriculture – making it attractive to talent and targeting talent development in rural areas. Agriculture employs around 10% of the working population in the Netherlands of which 20% are farming jobs. What this means is that careers for ambitious and talented young people are not only possible but necessary to grow the sector.
Jobs of the future will be in agribusiness and it will need the best minds and most capable artisans and engineers.
Sources: BeyondSoil analysis; Government of NL Statistics; World Exports; Trade Map; National Geographic; European Commission, The European Economy since 1945 by Barry Eichengreen Copyright © 2006 by Princeton University Press, OECD (2015), Innovation, Agricultural Productivity and Sustainability in the Netherlands, OECD Food and Agricultural Reviews, OECD Publishing, Paris.