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Food and Neoliberalism in South Africa: Entrenching the Legacy of Apartheid

Statistically, South Africa produces enough food to feed its entire population, and in most years it is even a net exporter of food.1  There is, therefore, not a shortage of food in South Africa.  Yet if you walk through the streets of any township or rural village in the country, you will find hungry people because they can’t afford food.  Sadly, 1.5 million South African children suffer from chronic malnutrition, while 14 million people in the country are vulnerable to food insecurity.2  This dire situation is partly a legacy of apartheid, but it is also due to the fact that over the last two decades the South African state, in the form of the late-apartheid regime and then the ANC government, adopted neo-liberal policies and completely deregulated the agricultural sector along with food prices.  Of course, it has been the rich (who are mainly white due to apartheid) that have benefited from these neo-liberal policies at the expense of the poor.

Prior to the late 1980s, as part of the predominance of Keynesian economic policies globally, food prices within South Africa were controlled by the state.  Various state-controlled agricultural Boards set the prices of agricultural products.  Given that South Africa was a racist state at the time, these price control mechanisms were aimed at mainly favoring the interests of white farmers, producers, and consumers.  The state also had high import tariffs and quotas in place to protect the white domestic agricultural sector from cheap imports and dumping.  The state also provided subsidies to white farmers and promoted the establishment of various white only co-operatives.3  Black farmers, on the other hand, received absolutely no assistance from the apartheid government and were restricted to farming in the overcrowded homelands — which were deliberately made up of mainly unproductive land.  Although specifically initiated to benefit poorer whites, the state did provide state subsidies for basic foodstuffs such as bread and milk, which accidentally benefited all consumers.  This meant that, even under the appalling system of apartheid, there was a mechanism that made basic food items relatively affordable.

Beginning in the late 1980s this system was dismantled.  The changes, however, were not progressive; rather, neo-liberal policies were adopted, aggravating the inequalities of apartheid.  To begin with the late-apartheid state started to gradually phase out the subsidies for basic foodstuffs.  This had a major impact on the poor as food prices increased steadily from the early 1990s onwards.4  With creeping neo-liberalism, the co-operatives that had been established in the storage and processing sectors also changed their status and formally became companies.  With this, many of these companies listed themselves on the stock exchange and began to focus solely on maximizing profits, which has negatively impacted food prices.

In 1995, the South African state, which by then was headed up by the ANC government, became a member of the newly established World Trade Organization.  This meant that it automatically became a signatory to the Agreement on Agriculture (AoA).  As part of meeting its commitments to the AoA, the South African state ended all import quotas for agricultural products.  Linked to this, it reduced its tariffs on imported food items from an average of over 28% to just 7%.5  The result was that South Africa has been flooded by cheap subsidized agricultural products from the European Union and the United States.  This has led to many smaller farmers going out of business.  Large-scale agribusinesses and corporations, who were and are using industrial farming methods, pounced and snapped up most of the land that these smaller farmers were vacating.  The result is that South Africa’s agricultural sector has become concentrated in the hands of fewer and fewer white large-scale agribusinesses.6  Added to this, the flood of imports into South Africa totally undermined emerging black farmers in the post-apartheid period.  The few black farmers who have received arable land in the post-apartheid period have received no assistance from the state and have, therefore, in the main been unable to compete with the established large-scale agribusinesses in South Africa (who built up their wealth through apartheid subsidies) or with the subsidized goods coming from Europe and the United States.  Moreover, the land redistribution process has been so slow that its impact is almost nil — post-apartheid land ownership patterns still mirror those that existed under apartheid as just over 2% of land has been redistributed since 1994.7  This situation, too, is a corollary of the neo-liberal principles — such as the protection of private property and investor rights — that are enshrined in the post-apartheid South African Constitution.

The most important factor affecting food prices in South Africa is the scrapping of the various agricultural Boards in 1996.  As part of this, the South African Futures Exchange (SAFEX) was established.  The prices of agricultural goods are now set through trade on SAFEX by private corporations.  Some of the largest traders on SAFEX include giant multinationals such as Cargill and Seaboard.8  These companies through their trading power, along with the influence of international commodity markets, determine the prices of agricultural products in South Africa.  This deregulation of prices has also led to the rise of speculation on agricultural products.  The result has been massive volatility in food prices — in recent years the price of maize on SAFEX has risen by over 200%.9  Of course, corporations involved in trading on SAFEX have made massive profits while the poor have suffered the consequences of these rising prices.

With growing investment liberalization a number of foreign investors have also entered into the food-processing industry in South Africa.  For instance, Parmalat bought two of South Africa’s largest dairy-processing companies in the mid-1990s.  Initially, Parmalat subsidized these newly acquired ventures through their international operations.  This allowed them to start a price war, which eventually drove many smaller rivals out of business.  Through this, they gained a virtual monopoly over the dairy processing industry in South Africa.10  As if this was not bad enough, a number of retailers and processing companies, including Parmalat and Nestlé, have colluded to raise their profits through price fixing.  Consumers have ended up paying exorbitant prices for foodstuffs at the retail end.11

Such practices, along with increasing food prices, have led to a numerous groups and organizations taking action.  In 2003, a number of progressive religious institutions came together to form the Right to Food Campaign.  Along with mounting regular pickets involving a small number of core activists, the Right to Food Campaign has played a major role in uncovering and taking legal action against corporations that are involved in price fixing in food industries, such as the bread sector.12

In rural areas there have also been a number of organizations, such as the Landless People’s Movement (LPM), that have taken up the issue of land and food security.  Perhaps the most active rural group are small-scale farmers from the Western and Northern Cape that have come together through the assistance of the Surplus People’s Project and LPM and have been campaigning around land and food security.  In May of this year, these farmers mounted a protest of about 1000 people in Cape Town and marched on Parliament to demand access to land to grow food.13  They have followed up this action by staging a sit-in at the Western Cape Department of Land Affairs in August.14  Along with these actions, these farmers have also created links with other small-scale farmers internationally through their affiliation to La Via Campesina.

The largest organization to take up the food price crisis in South Africa has been the Congress of South African Trade Unions (COSATU).  They have done so through strike action along with mounting protests in the country’s main urban centers in July and August, such as the 25,000 people strong march in Johannesburg in July.15  Although these actions are to be commended, COSATU’s positions on the causes of high food prices and tactics to be used in the struggle against them have been marked by inconsistencies.  The General Secretary of COSATU, Zwelinzima Vavi, backtracked in August by stating that COSATU’s protest action was actually mainly around electricity prices rather than food prices.  Vavi went even further by suggesting that food prices could be dealt with through social dialogue in NEDLAC with the ANC government and corporations involved in the food sector, although he did warn that if food prices did not come down protest action could not be ruled out.16  Indeed, already COSATU has been involved in dialogue with the ANC government and big business around food prices through the Food Summit.  The problem, though, is that COSATU largely fails to correctly place the blame for the current food price crisis on the ANC government and its neo-liberal trade and investment policies, which it took up from the late-apartheid regime and imposed on the people.  In effect, the ANC has merely limited itself to promoting a tiny new elite within a neo-liberal framework, so that they could join the old white apartheid elite in the top strata of society.  Falling to fully acknowledge the consequence of this brutal reality, COSATU has even invited its alliance partner, the ANC, to participate in its recent protest actions.  On top of this, COSATU has been a strong supporter of Jacob Zuma, who has clearly indicated that he will continue with neo-liberal policies once he becomes president.17  How COSATU, therefore, proposes to solve the food price crisis through social dialogue with the very entities (in the form of the ANC government and big business) that are responsible for the current dire situation remains a mystery.

If the food crisis is to be solved in South Africa, the power of corporations has to be smashed along with the neo-liberal policies that have been imposed on the people by the ANC government.  It seems that COSATU bureaucrats like Vavi are, however, not willing to take such a drastic step.  It, therefore, appears that the people will have to rely on themselves, individually and through independent movements such as the LPM, to take on big corporations and their neo-liberal ANC allies.  It also seems that the only way people are going to get land to grow food in South Africa is to socialize the land themselves through such actions as land invasions.  Indeed, only the people through their own actions can create a country of true freedom, democracy, dignity, and equality — a country where people don’t starve if they don’t have money.

 

1  Neo Chabane, “An Evaluation of the Influences on Price and Production in the Maize Market following Liberalisation,” Paper Presented at the Trade and Industrial Policy Strategies (TIPS) Annual Forum, 2002.

2  Katja Schmidt, Food Security in South Africa: The Case of Subsistence Fishers, Alternative Information and Development Centre, March 2005.

3  Neo Chabane, “Markets, Efficiency and Public Policy — An Evaluation of Recent Influences on Price in the Maize Market and Government Responses,” Transformation 55 (2004): 55-77.

4  Eric Watkinson and Neva Makgetla, South Africa’s Food Security Crisis, South Africa: National Labour and Economic Development Institute, 2002.

5  Nick Vink and Johann Kirsten, Pricing Behaviour in the Food and Agricultural Sector, Report Commissioned by the National Treasury, 20 June 2002.

6  Neil Newman, Restructuring the SA Dairy Industry: What Impact?, South Africa: ILRIG, 2004.

7  Felicity Carus, “Nobody’s Neighbours: South Africa’s Landless Still Fighting the Legacy of Apartheid,” The Guardian, 9 October 2002.

8  Competition Tribunal of the Republic of South Africa, Report on Afrgri Operations Ltd and Natal Agricultural Co-operatives Ltd., 2004.

9  Neo Chabane, “Markets, Efficiency and Public Policy — An Evaluation of Recent Influences on Price in the Maize Market and Government Responses,” Transformation 55 (2004): 55-77.

10  Neil Newman, Restructuring the SA Dairy Industry: What Impact?, South Africa: ILRIG, 2004.

11  Ann Crotty, “Dairy Firms Face R100m Fine in Price Fixing Probe,” Business Report 8 December 2006.

12  Find more information about the Right to Food campaign at the Web site of Black Sash.

13  Surplus People’s Project, “Opmars na die Parlement vir ground behuising en n better manier van landbou,”  SPP News 8.1: 1-10.

14  Aziz Hartley, “Farming Communities Vent Their Anger,” Cape Times 14 August 2008.

15  Zahira Kharsany and SAPA, “Cosatu Flexes Its Muscles over Rising Prices,” Mail & Guardian23 July 2008.

16  Zwelinzima Vavi, “Vavi on Zero-rating of Foodstuffs Remarks,” Politicsweb 4 August 2008.

17  John Baeyens, “Jacob Zuma New Leader of South Africa’s Ruling ANC Party.” Emerging South 22 December 2007.


Shawn Hattingh is a research and education officer at the International Labour Research and Information Group (ILRIG) in Cape Town.



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