As the global food crisis escalates the SA government has been warned to avoid excessive intervention in the agricultural market and told to focus heavily on temporary poverty relief measures.

Instead, both the private sector and economists have argued that governments should assist in boosting food production.

UN secretary-general Ban Ki-moon told the hastily arranged UN food summit in Rome last week that a 50 percent increase in food production was required to feed the world by 2030.

Crucially, the private sector is wary of interventions that push up the costs of agriculture, particularly in the prices of transport and fertilisers, the two biggest input costs for the industry.

Agricultural input costs have risen sharply over the past two years.

Gert van der Linde of the Fertilizer Society of SA says a 135 percent export tax slapped on fertilisers by China. one of the world's biggest exporters, has effectively halted exports and caused an imbalance on world markets. SA imports about 70 percent of the raw materials needed to manufacture fertiliser, with high shipping rates and a weak exchange rate further pushing up prices.

The Agricultural Business Chamber (ABC) cites surging oil prices as the main factor behind the food crisis.

"Certain supply and demand issues caused by distorted agricultural trade and protectionist policies also have a significant impact, but high oil prices lie at the heart of the problem," ABC CEO John Purchase says.

"Unless these issues are addressed effectively on a multilateral basis, the crisis will deepen, because of the extensive influence the oil industry has on fertiliser, herbicide and pesticide prices."

Purchase says a solution to the problem is not "sudden mass or increased food production if it is not profitable and worth the risk to produce" in the face of the high costs of inputs.

Government was mistaken in the idea that the agriculture sector alone could eradicate rural poverty, he says, calling for strong poverty-alleviation measures.

Emergency state assistance

This view is strongly backed by the ANC, which this week called for emergency state assistance for poor people struggling to feed themselves as soaring food prices stretched resources.

In an extensive response to the FM's questions, the party calls for the extension of social relief of distress (SRD) grants to poor households.

Social development minister Zola Skweyiya announced a R124m allocation to the SA Social Security Agency in the form of SRDs last month, aimed at "temporary provision of assistance for persons in such a dire material need that they are unable to meet their families' most basic needs".

The grants may be provided in the form of food parcels or vouchers to buy food, though some provinces award it in cash. They are granted for up to three to six months only.

ANC spokesperson Jessie Duarte also calls on government to "increase the coverage of school feeding schemes".

This week African Development Bank President Donald Kaberuka announced the bank would commit $1bn to the "support of agricultural infrastructure, particularly small-scale farming with a clearly biased policy in favour of women and girls, who account for over half of Africa's farmers".

Kaberuka called for a "smallholder agricultural revolution" as the continent's best option for tackling the food crisis.

Purchase responds: "There is a place for small-scale agriculture, and we have to allocate some resources to this sector to help lift people out of poverty, but small, subsistence-type farmers often simply find themselves in a debt trap.

"Certainly, the food problems Africa and the world are experiencing will not be solved by small-scale agriculture," Purchase says.

"The production of the volumes of food that the world needs depends on the economies of scale and the technology that can only be deployed by large-scale, commercial farmers."

Duarte believes both sectors should be supported. "We should focus on efforts to improve levels of production within SA, including better support for emerging farmers and co-ops, and encourage greater investment in the commercial agriculture sector," she says.

Purchase warns that "Draconian expropriation legislation", referring to SA's land reform plans, being discussed in government was weighing heavily on sentiment in the agriculture sector.

"If government does not drastically revise its policy, a lack of confidence will strongly discourage farmers and entrepreneurs from investing in this critical sector, which will further put food security at risk."

But this view is rejected by Duarte, who says urgent food production should not be allowed to postpone land-reform initiatives. "Government should commit more resources to providing agricultural and commercial support to beneficiaries of land reform," she says.

Financial Mail