Goverment restrictions hamper farming sector
Restrictive measures implemented by the government in the small stock sector have had a negative impact on value addition and economic growth, the president of the Namibia Agricultural Union has said.
The government's intervention in the value chain is limiting the development of the agricultural sector, while its restrictive measures implemented in the small stock sector have had a negative impact on value addition and economic growth.
Speaking at the annual congress of the Namibia Agricultural Union, NAU president Ryno van der Merwe said the government has a supportive role to play.
According to him, the much debated Small Stock Marketing Scheme is a classic example where restrictive measures implemented by government, instead of supportive measures, have had contradictory effect on the objectives of value addition and economic growth.
He said the result of these restrictive measures was evident in the declining numbers of sheep in the country, where producers must look at alternative measures to survive. This has already resulted in the closure of two small-stock abattoirs.
“The question is whether supportive mechanism instead of restrictive measures would not be a better option to achieve the goals of economic development in the Fifth National Development Plan (NDP5) and the Harambee Prosperity Plan,” said Van der Merwe.
He added that agriculture is an important and strategic sector in the Namibian economy and with the necessary support can unlock more value to make a bigger contribution towards the GDP.
Van der Merwe said investment in agriculture is an essential prerequisite to promoting agricultural growth, reducing poverty, hunger and promoting environmental sustainability.
“The existence or absence of a conducive investment climate depends on markets and governments.”
According to him, in the absence of an enabling environment and adequate market incentives, farmers will not invest adequately in agriculture and their investment may not yield optimal results.
According to him governments, in their quest to alleviate poverty, generate growth and employment, sometimes tend to become a much larger participant in the economy, specifically engaging in the private sector activities.
“However, due care should however be taken to find the optimal balance since the key requirements to be a competitive government do not equate to the key competencies to be a successful private sector business. This is one of the reasons why SOEs all over the world generate material losses.”
According to Van der Merwe, in the agricultural sector the establishment of AMTA is one such example.
He said although the government acknowledged the role of the private sector as the vehicle for economic growth, its intervention in the value chain limits the development of the full potential of such growth.
Van der Merwe said Namibia is exposed to the international market, economic and political sentiment and tendencies which bring competition.
To add sustainable value, each business in the value chain's success or profitability will depend on how effective it can compete on the international market.
“We cannot allow that costs as a result of ineffectiveness and poor performance shift because of the primary product to the producer.”
According to Van der Merwe, agriculture has become more complex and producers are faced with bigger challenges to produce sustainably and be more profitable. He said last year was a good example of where coincidences of numerous factors caused insecurity and put pressure on the profitability of agriculture. Most of the factors such as drought, emergency sales, strict export regulations and the decrease in prices of weaners were out of the control of producers and had already negatively influenced the profitability of producers since 2012.
“The big challenge is now to come into full production, improve rangeland and financial viability.”
He said there are currently numerous challenges facing Namibia which have to be addressed. The decrease in economic growth has a negative impact on the national treasury and puts pressure on government's budget and ability to meet their obligations and to invest in national capital projects.
Van der Merwe said another challenge facing Namibia is socio-economic welfare and economic differences and inequalities must be addressed.
“The challenge is how to engage the majority of Namibians in the economy on a sustainable basis to create wealth and alleviate poverty.”
He said this should be done without restricting investors in taking risk, making new investments and utilising their competencies to the best advantage of the country.
ELLANIE SMIT
Speaking at the annual congress of the Namibia Agricultural Union, NAU president Ryno van der Merwe said the government has a supportive role to play.
According to him, the much debated Small Stock Marketing Scheme is a classic example where restrictive measures implemented by government, instead of supportive measures, have had contradictory effect on the objectives of value addition and economic growth.
He said the result of these restrictive measures was evident in the declining numbers of sheep in the country, where producers must look at alternative measures to survive. This has already resulted in the closure of two small-stock abattoirs.
“The question is whether supportive mechanism instead of restrictive measures would not be a better option to achieve the goals of economic development in the Fifth National Development Plan (NDP5) and the Harambee Prosperity Plan,” said Van der Merwe.
He added that agriculture is an important and strategic sector in the Namibian economy and with the necessary support can unlock more value to make a bigger contribution towards the GDP.
Van der Merwe said investment in agriculture is an essential prerequisite to promoting agricultural growth, reducing poverty, hunger and promoting environmental sustainability.
“The existence or absence of a conducive investment climate depends on markets and governments.”
According to him, in the absence of an enabling environment and adequate market incentives, farmers will not invest adequately in agriculture and their investment may not yield optimal results.
According to him governments, in their quest to alleviate poverty, generate growth and employment, sometimes tend to become a much larger participant in the economy, specifically engaging in the private sector activities.
“However, due care should however be taken to find the optimal balance since the key requirements to be a competitive government do not equate to the key competencies to be a successful private sector business. This is one of the reasons why SOEs all over the world generate material losses.”
According to Van der Merwe, in the agricultural sector the establishment of AMTA is one such example.
He said although the government acknowledged the role of the private sector as the vehicle for economic growth, its intervention in the value chain limits the development of the full potential of such growth.
Van der Merwe said Namibia is exposed to the international market, economic and political sentiment and tendencies which bring competition.
To add sustainable value, each business in the value chain's success or profitability will depend on how effective it can compete on the international market.
“We cannot allow that costs as a result of ineffectiveness and poor performance shift because of the primary product to the producer.”
According to Van der Merwe, agriculture has become more complex and producers are faced with bigger challenges to produce sustainably and be more profitable. He said last year was a good example of where coincidences of numerous factors caused insecurity and put pressure on the profitability of agriculture. Most of the factors such as drought, emergency sales, strict export regulations and the decrease in prices of weaners were out of the control of producers and had already negatively influenced the profitability of producers since 2012.
“The big challenge is now to come into full production, improve rangeland and financial viability.”
He said there are currently numerous challenges facing Namibia which have to be addressed. The decrease in economic growth has a negative impact on the national treasury and puts pressure on government's budget and ability to meet their obligations and to invest in national capital projects.
Van der Merwe said another challenge facing Namibia is socio-economic welfare and economic differences and inequalities must be addressed.
“The challenge is how to engage the majority of Namibians in the economy on a sustainable basis to create wealth and alleviate poverty.”
He said this should be done without restricting investors in taking risk, making new investments and utilising their competencies to the best advantage of the country.
ELLANIE SMIT
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