There are currently 11 agricultural industry trusts, which were established during the market deregulation process in the 1990s in South Africa. These trusts inherited over R667 million worth of assets (both monetary and fixed). The mandate provided to the trusts is to keep the assets evergreen through investing in the investment portfolios such as those managed under Allan Gray, Foord, Old Mutual and Coronation, to mention a few. The main purpose is to grow the asset base and finance the industry’s work through the investment proceeds.
The current status quo remains – i.e. that the inherited asset base of R667 million has been increased to over R2 billion. Most of the trusts have performed extremely well in ensuring that the trust assets do not get depleted, and the NAMC applauds the work done thus far by the respective industry trusts.
At the beginning of January 2020, a new global virus (COVID-19) was announced, and later in the year, it was declared a pandemic. This pandemic has changed how business is conducted in various parts of the world, and most countries have introduced a system of lockdowns to manage the spread of the virus.
With the above in mind, it can be argued that the functioning and/or financing of the agricultural sector in South Africa is through trust funds and levies from the agricultural industries, which spend approximately R180 million on transformation activities (enterprise and skills development) alone.
The trust assets were valued at R2.3 billion in 2019, which is down from the R2.4 billion of 2018 (a decline of over R132 million). Individually, in 2019, most of the trusts reported a decline in their asset base/trust investment. The implication could be that in the next status report, the asset base could be worse due to the impact of COVID-19 as the markets are not performing well, and this could affect the funding of certain agricultural sector activities such as student bursaries, research and information, as well as enterprise development initiatives such as investment in transformation projects.
In conclusion, most government funds are now being redirected to fund the acquisition of the COVID-19 vaccines. The wish is that such developments will bring much-needed relief to the agricultural sector and its resilience.
The NAMC, through its Agricultural Industry Trusts Division, is committed to assisting the trusts to do the best they can in keeping the trust assets evergreen and getting enough from investments to fund industry affairs.
Matsobane (BM) Mpyana is an agricultural economist at the National Agricultural Marketing Council (NAMC) and he writes this opinion piece in his own personal capacity. The views expressed here are those of the author and not of or by NAMC.