by Bronwyn Grant


Sustainable integrated opportunities in agriculture

Switching Africa to green.jpg

Small, micro, and medium enterprises (SMMEs) are economic contributors to many countries. Through the creation of employment opportunities for the poor, in particular women, SMMEs promote inclusive growth (Wohlmuth, et al, 2009). SMMEs in South Africa account for about 91% of the formal business entities, contribute to about 51% of GDP, and provide almost 60% of employment. The Government of South Africa sees the advancement of SMMEs as the catalyst to achieving economic growth, development, job creation, mitigation of poverty, and as a means for economic empowerment for previously disadvantaged people (Masarira and Msweli, 2013).

However, despite these high growth rates, SMMEs are also facing a number of challenges. The greatest problems affecting SMMEs in South Africa include lack of management skills, finance, access to bank credit, access to markets, and skills shortage (Masarira and Msweli, 2013). There is a general perception in the financial sector that lending or provision of capital to SMMEs is too risky due to the high failure rates of SMMEs businesses, questionable management capabilities and skills, poorly prepared business proposals, vague historical records of the operations of the SMMEs and the lack of reliable collateral or collateral mismatch between type of assets held by SMMEss and type of assets required by banks for collateral (Frimpong, 2013).

These challenges are apparent in the agricultural sector in South Africa. Many individuals lack the necessary agricultural entrepreneurial and management skills and abilities, which hinders their access to enterprising opportunities. Strengthening competitiveness and promotion ofSMMEss and cooperatives will form the foundation for the growth of the economy and the creation of decent work opportunities.

Despite its relatively small share of the total GDP, primary agriculture is an important sector in the South African economy. Agriculture is an important regional driver of rural development, job creation and poverty alleviation, and remains a major earner of foreign exchange. Farming practices must therefore not only protect the long-term productivity of the land, but also ensure profitable yields and the well-being of farmers and their employees. Sustainable development has three principal dimensions: economic growth, social equity and protection of the environment. Underlying the economic dimension is the principle that society’s wellbeing would have to be maximized and poverty eradicated through the optimal and efficient use of natural resources.

The opportunity for SMMEs to be established in the agricultural domain addresses immediate relief around food security, job creation, local economic development and poverty alleviation. Further, the opportunity exists for emerging SMMEs in agriculture to address environmental issues as part of socio-economic development and food security and long term business success, by doing more with less. Specifically, water, energy and food systems which are intricately interconnected. Water and energy are needed to produce food; water is needed for almost all forms of power generation; and energy is required to treat and transport water. The relationships and trade-offs within this triangle of resources are known collectively as the water-energy-food nexus.

The ‘nexus’ between water, energy and food (WEF) has gained increasing attention globally in research, business and policy spheres. Even more so due to the September 2015 meeting between Heads of State at the United Nations General Assembly to announce the end of the term of "Millennium Development Goals" (MDGs) in place of a new commitment to the Sustainable Development Goals (SDGs). Goals 2, 6, and 7 related to food water and energy resources with a corresponding target for each. SMMEs in the agricultural sector must take note of nexus thinking for long term business sustainability.

To support these efforts the European Union (EU) has designed and developed "SWITCH Africa Green", a pilot initiative to encourage a green economy transformation and promote a shift toward Sustainable Consumption and Production (SCP) practices and patterns in six African countries. The pilot countries are Burkina Faso, Ghana, Kenya, Mauritius, South Africa and Uganda. The EU funded programme is implemented by United Nations Environmental Programme (UNEP) in collaboration with United Nations Development Programme (UNDP) and United Nations Office for Project Services (UNOPS).

The projects in South Africa under the SWITCH Africa Green banner have stemmed to address three key sectors identified to have good opportunities for advancing green business and SCP practices in SMMEs and eco-entrepreneurs who are interested in new start-ups: agriculture, integrated waste management and manufacturing. In addition to the selected priority sectors for each country, the projects also address cross-cutting themes that were identified as critical: Energy efficiency, Labelling and standards, Water efficiency, Eco-innovation, Sustainable trade.

REEEP (Renewable Energy and Energy Efficiency Partnership) and SANEDI (South African National Energy Development Institute) have been in the process of carrying out a project that addressed the water-energy-food nexus by focusing on Sustainable Energy Consumption and Production (SECP) in agriculture. This project seeks to lay the groundwork for South African SMMEs and eco-entrepreneurs as they begin and manage this transition towards a green economy. The project started in November 2015 and will run until January 2018, and equips SMMEs to seize green business opportunities while providing an opportunity for Resource Efficient and Cleaner Production implementation.

The target group and final beneficiaries of the program are SMMEs in the Agriculture and Integrated Waste Management sectors in South Africa, for whom a stakeholder platform has been established and a series of capacity building and training workshops provided. A number of training workshops have been held across South Africa to introduce farmers and eco-entrepreneurs to the opportunities in renewable energy and energy efficiency technology applications and how these could improve energy use and savings potential in agriculture and waste.

There are many opportunities for the implementation of energy efficiency and renewable energy applications in agricultural value chains, opportunities to adapt to the negative impact of climate change on the agriculture sector, such as drought, and minimizing the vulnerability to energy price hikes, leading to more sustainable business practice and ultimately supporting and growing SMMEs.

Renewable energy technology application is increasing in popularity in South Africa as farmers look for new ways to save money, address energy supply and security and improve the environment. Sustainable equipment and tools have been decreasing in price as demand is increasing and many farmers throughout the country are moving towards using more energy efficient agricultural processes.

Such processes include a number of behaviour changes and energy efficient technology applications, as the low hanging and affordable fruit, such as switching off equipment, time of use and replacing old motors and lighting which can offer an environmentally pleasing alternative to old technologies.

Choice of lighting technologies are relative cheap to replace which can provide a farm with light for seeding crops and looking after livestock without compromising yield, safety and comfort. Motors and pumps are also being replaced with newer technologies, such as variable speed drives, to reduce the power exerted from old, oversized vehicles and significantly reducing fuel consumption.

A motivating factor for farmers and emerging SMMEs in South Africa to switch to or adopt sustainable farming practices is because it is cost effective and supports long-term business success. Electricity and water bills could be reduced considerably by changing to less energy intensive processes, for example, carrying out farming work during periods where electricity isn’t charged at a premium (usually during the evening).

 Workshops with farmers and agriculturally based SMMEs have identified local case studies and practical solutions in addressing energy issues in agriculture that also include the important links to water and food production. Importantly, understanding what the entire agricultural value chain looks like and how to address energy and water issues, how to reuse outputs as inputs and how to create more efficient processes.

The Energy in Agriculture Platform, hosted at SANEDI was launched in Johannesburg on 11th November 2016, and was established under SWITCH Africa Green as a means to further develop collaboration in SECP in agriculture and support MSMEs. This platform brought together a number of energy, water, agriculture and other stakeholders and academia to discuss key issues in the food energy water nexus with a focus on the importance of sustainable energy in agricultural value chains and capacity needs to implement change.

The continuation of the Energy Agriculture Platform will see up to three platform events hosted per annum. The Platform is a legacy of the SWITCH Africa Green programme and will assist agriculturally based SMMEss by connecting them to public and private stakeholder groups across finance, business, technology, academia and others.

Bronwyn Grant, REEEP Project Officer, Clean Energy

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