South Africa has spent years asking the agricultural sector to do more with less: produce affordable food, create jobs, transform ownership, sustain rural economies, compete with heavily subsidised foreign producers and, increasingly, help drive industrialisation.
That bargain is no longer good enough. The country now needs to move decisively from agricultural support to catalytic investment. This is not an argument for abandoning farmers to the market. Nor is it an argument for permanent protection behind ever-higher tariffs. It is an argument for changing the purpose of government intervention: from keeping sectors alive to making them investable, competitive and capable of generating growth.
The distinction matters. South Africa’s agricultural and agroprocessing master plan approach has already demonstrated what can happen when government, business, labour and financiers work around a common investment agenda. The poultry master plan, for example, has attracted billions of rand into production and infrastructure, while government reported in 2025 that the programme had helped retain almost 53 000 direct jobs.
The next phase should go further. Instead of asking, “How much support does this industry need?”, policymakers should ask: “What intervention will unlock the next rand of private investment?” That should become the central test for agricultural policy. Protection should buy time — not become the business model. Trade policy has a legitimate role in agriculture. South African farmers compete against producers operating in very different policy environments, with varying levels of subsidies, infrastructure, financing costs and economies of scale. But tariffs cannot compensate indefinitely for structural inefficiency.
The objective of protection should therefore be to create a predictable investment runway. In return, industries should make measurable commitments on productivity, capital expenditure, transformation, employment, local procurement, market development and exports. This is where the debate over the Dollar-Based Reference Price (DBRP) becomes important. A DBRP is not inherently good or bad. It is an instrument. The question is what we want that instrument to achieve. At present, the sugar and wheat debates risk becoming arguments over a single number: should the reference price be higher or lower? That is too narrow. The better question is: what should the reference price be designed to accomplish? The DBRP should be an investment anchor.
The basic logic of a DBRP is straightforward. When the landed price of an imported product falls below a predetermined reference point, a variable tariff provides additional protection to domestic producers. In sugar, for example, the current system uses a DBRP of $680 a tonne, with the tariff increasing when import prices fall below the reference level.
The problem is that a reference price can become disconnected from the economic reality it was designed to protect. That is precisely what is now happening in sugar. The South African Sugar Association has argued that the sugar DBRP should rise from $680 to $905 a tonne, saying the existing benchmark dates back to 2018 and no longer reflects the industry’s cost pressures. IOL has reported that sugar imports reached 163 000 tonnes between April and December 2025, substantially above the previous season.
There is a legitimate case for reviewing the benchmark. But simply increasing it to $905 and declaring victory would miss the larger opportunity. A new sugar DBRP should be tied to a transparent competitiveness and investment framework. If producers receive stronger protection, the sector should commit to a measurable programme of reinvestment: cane replanting, irrigation, mill efficiency, diversification, small-grower development, renewable energy, biofuels and new industrial uses for sugar. This is particularly important because the sugar industry is not merely a commodity producer. It is a rural industrial ecosystem. The government has previously recognised the sector’s potential for diversification, including new industrial uses such as bio-jet fuel.
The DBRP should therefore help create the conditions under which investors believe that South African sugar will still be producing and processing competitively 10 or 20 years from now.
Wheat shows the danger of treating the DBRP as the whole policy. The wheat debate illustrates the other side of the argument. In 2026, the International Trade Administration Commission (ITAC) rejected an application by Grain SA and SACOTA to raise the wheat DBRP from $279 to $289 a tonne and rejected the proposed automatic tariff-trigger mechanism. ITAC concluded that the existing reference price provides sufficient support to cover production costs and allow reasonable profitability.
Whether one agrees with that conclusion or not, it highlights an important principle: the DBRP should not become a proxy for every problem facing an industry. Wheat production is affected by yields, input costs, irrigation, land use, logistics, international prices and the competitiveness of alternative crops. Indeed, ITAC noted that changes in production over the past decade were influenced substantially by yield conditions rather than tariff levels. So, the policy response should be broader than simply raising the floor.
Where a strategic commodity has a genuine food-security or productive-capacity rationale, government should combine calibrated tariff protection with investment in the factors that determine competitiveness: research, seed technology, irrigation, storage, rail and port logistics, and access to finance. The DBRP should provide a floor under unfairly low import competition, not a ceiling on the ambition of the domestic industry.
Poultry requires a different instrument. This is also why we should resist the temptation to apply one DBRP formula mechanically to sugar, wheat and poultry. Poultry is structurally different. South Africa’s poultry industry already operates with a complex combination of tariffs, trade remedies and safeguard measures. Some poultry products have tariffs as high as 82%, while the sector has also used anti-dumping and safeguard instruments.
Trying to force poultry into a DBRP framework would therefore risk confusing the instrument with the objective. The objective should be to ensure that South Africa has a competitive, investment-ready poultry value chain — from feed and breeding to growing, processing, cold-chain logistics and exports.
The good news is that the foundations already exist. The poultry master plan explicitly links poultry expansion to increased demand for maize and soya, additional production capacity and investment. More recently, the second phase has placed greater emphasis on producing more chicken domestically, reducing imports and moving towards export-led growth. That is precisely the direction agricultural policy should take. The question should no longer be whether the tariff is high enough to prevent imports. It should be whether the policy package is strong enough to make the next chicken plant, hatchery, feed mill, farm or processing facility economically viable.
A new social compact, protection for performance, is required. South Africa should therefore establish a simple bargain across strategic agricultural industries. Government provides predictable market conditions and catalytic support. Industry provides investment and measurable performance. The bargain could have five elements.
First, predictability. Tariff formulas and DBRPs should be reviewed according to published rules and predictable timelines, rather than becoming periodic political battles. Second, investment conditionality. Significant tariff protection must be supported by credible industry investment plans that include targets for capital expenditure, productivity, transformation, and employment. Third, sunset and review clauses. Protection should be periodically tested against outcomes. An industry that becomes more productive and export competitive should graduate towards lower dependence on protection. Fourth, consumer protection. Policymakers must recognise that tariffs can raise food prices. The answer is not necessarily zero protection, but the interests of producers cannot be considered in isolation from millions of households facing high food costs—finally, competition and transparency. The benefits of protection must not simply become rents captured by dominant companies. Where government creates a protected market, it should simultaneously create pathways for new entrants, black-owned businesses, emerging farmers and smaller processors.
That is what would turn agricultural policy into industrial policy – from subsidies to investment multipliers. There is a deeper reason to make this shift. South Africa does not have unlimited fiscal space. Every rand allocated to agriculture therefore needs to generate more than a short-term survival benefit. The best intervention is one that crowds in private capital. A R1-billion intervention that simply postpones the closure of an inefficient operation is support. A R1-billion intervention that unlocks R5-billion of private investment in irrigation, processing, logistics, technology and productive capacity is catalytic investment. That should be the benchmark.
The state should increasingly use blended finance, guarantees, infrastructure investment, concessional funding and targeted trade policy to reduce risks that private investors cannot reasonably bear alone. The Land Bank, IDC and other development-finance institutions should be judged not simply by how much money they disburse, but by how much productive private investment they unlock. The poultry experience offers evidence of what is possible: the government reported in 2025 that the IDC and Agricultural Industrial Fund had invested R1.2 billion in 14 poultry projects, while major industry players had invested about R2.02 billion in processing and infrastructure. That is the multiplier we should be pursuing.
The real agricultural policy question is that South Africa should stop framing the choice as one between “supporting farmers” and “protecting consumers”. A successful agricultural economy does both. It produces enough food competitively, creates profitable enterprises, attracts capital, supports rural livelihoods, expands exports and continuously raises productivity. The DBRP can form part of that architecture — but it should not become the architecture itself. For sugar, the right response is a rigorous review of the $680 benchmark, accompanied by binding commitments to reinvestment, diversification and transformation. For wheat, the lesson is that a DBRP cannot substitute for a comprehensive competitiveness strategy. The recently confirmed $279 benchmark should be monitored against production, investment and food-security outcomes rather than treated as the end of the debate. For poultry, policymakers should resist creating a DBRP simply for the sake of consistency. The industry needs a coherent combination of calibrated tariffs, trade remedies, cheaper feed, biosecurity, infrastructure, investment and export access.
And across all three industries, there should be a common principle: Protection buys time. Investment creates the future. South Africa’s agricultural policy should therefore evolve from asking how much support an industry needs to asking what investment the country needs — and what targeted intervention will unlock it. That is the shift from agricultural support to catalytic investment. And it may be one of the most important shifts South Africa can make if agriculture is to become not merely a sector that government supports, but an engine of industrial growth, food security, employment and rural prosperity.
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Dr Thulasizwe Mkhabela is a Director and Senior Researcher at Outcome Mapping (thula@outcomemapping.co.za; thulasizwe.mkhabela@gmail.com). He is alsoan Honorary Research Fellow with the African Centre for Food Security at the University of KwaZulu-Natal (MkhabelaT1@ukzn.ac.za) and an independent agricultural researcher and policy analyst with extensive experience in South African and African agricultural & development issues.
