Episode Transcript
The Finance Ghost: Welcome to episode 212 of Magic Markets. It's going to be a super interesting one.
We are talking about agriculture today and I think part of what's going to make this so incredibly interesting is the quality of our guest on the show who's been with us, I think, once before, and that is Wandile Sihlobo. He's an agricultural economist, he's an author, he's an advisor to all the people that matter. He's a columnist. He's done a lot of stuff. If you want to learn about agriculture in South Africa, Wandile is your guy. Highly recommend that you follow him on X.
We face a slight challenge today in that he is in, I think, Joburg where it is raining like mad. And so we have this mildly hilarious situation where we have some background noise which we can hopefully edit out, which is heavy, heavy rain while talking to Wandile about agriculture. So, the powers that be had a sense of humour today with us planning to do this podcast. It really comes at a time where South African agriculture is just in the crosshairs on social media. There's so much to talk about. There's so much geopolitical stuff going on, Moe, that's obviously your world. I must say it's a bit more fun when we get to talk about geopolitics happening elsewhere rather than me going online and seeing South Africans basically at each other's throats and the American powers fighting with everyone. It's not great, I'll be honest. But we're going to unpack some of that stuff today. It's going to be interesting. So, Mo, let me say hello to you and then we can welcome Wandile from what sounds like torrential rain. I'm terrified he's going to wash away halfway through this podcast.
Mohammed Nalla: Indeed, Ghost. It sounds like Wandile is sitting under an irrigation sprinkler. You know, I'm picturing one day - I know he loves to go out in the field and I'm picturing him sitting out in a field and an irrigation sprinkler that's just shooting at him. That's a nice image to have. I know Wandile is not actually sitting there, he’s sitting in his office and just buckets of rain coming down there.
Wandile, I think what Ghost also failed to mention is you are the author of two books. I think it's two right now. I stand corrected. I'm still waiting for my copy to make its way to me here in Canada. You'd promised to send it to me and like we said, that was probably around two years ago. That was probably book number one. So I'm still going to hold you to that because I haven't managed to pin you down when I come down to South Africa. You're a very busy man. We know you're advising the president.
The Finance Ghost: Wandile, don't take his rubbish. Just tell him to buy it on Amazon. How’s this cheapskate – Moe, buy the book!
Mohammed Nalla: I want a signed copy. I can't get that on Amazon. What I was saying, though, is advising the president is probably a good thing right now simply because South Africa has found itself in the crosshairs of the Trump administration. Now we're in good company, right? I sit up here in Canada and Trump has taken front and centre aim at Canada, taken aim at Mexico, taken aim at pretty much a lot of countries that are out there.
Why it's interesting in South Africa is that a lot of the basis for what he's putting out there - he's now offered refugee status to Afrikaner South Africans specifically. I find this to be incredibly divisive. South Africans usually get along pretty well. I know. I lived there. I'm still South African as well. That kind of rhetoric is quite damaging to the social narrative. But maybe there's some basis there, certainly based on what I've seen on social media, some people are keen to take him up on that.
Now this has a very direct bearing on issues in the agri space that we're going to be speaking to you about. Because the simple reality is, yes, I know there are a lot of black farmers. We're not trivialising the contribution of black farmers to South African agriculture. But we also can't ignore the fact that the Afrikaner people have been front and centre to the South African agricultural industry for a very, very long time.
So where I want to lead with this is let's touch on a couple of things. Let's touch on this expropriation without compensation issue because that's getting all of the headlines and you've been all over social media saying, this is nonsense and you've kind of justified that. I want to unpack that. But the fact of the matter is that it hits confidence - when it hits headlines, it hits confidence, that hits investor sentiment and that filters through into what we speak about on the show, which are financial markets and investments.
So Wandile with that very long intro, welcome to Magic Markets!
Wandile Sihlobo: Thanks for having me on, folks. It's been over two years, as we like to say in agriculture in South Africa, rain brings grain. So when it rains like this, we are sitting in a fairly good year. We’re coming from a drought year, so we're very happy with this rain.
Moe, Ghost, thanks again for having me on here. I think you are right in how you are framing this discussion because we are a sector that is export oriented. On an annual basis, South African agriculture exports just over US$13 billion of agricultural products. And of course, over half of our production goes to export markets. So whenever you have these difficulties with regards to international trade, it always begins to be a worry.
But I do think that it's important that we frame as to where exactly we are sending all of these products, because at a very high level, you will appreciate that about 40% of South Africa's agricultural products are exported to Africa. And then you have the EU at about what, 19%, the UK 7%. The Middle East and Asia, a growingly important region, the second biggest region of South Africa's agricultural export at about 25%. So, the US is not necessarily a big market. It accounts for about 4% of South Africa's agricultural exports. But to Moe's point, their confidence, the sentiment that is related to that conversation, begins to matter a lot. And which is why if you talk to any farmer, I think over the past two weeks, the issues of trade have dominated the conversation in a big way in South African agriculture.
The Finance Ghost: Having sampled what can best be described as some traditional English cuisine in my life, I can only imagine that they import beans. I cannot imagine what else they are buying from South African farmers because I'm pretty sure we don't sell them fish and we definitely don't sell them whatever that thing was they put in the pie that I once had in London. But anyway, moving swiftly along from the UK's food choices, I think the point here is that we do export to a whole bunch of places, Wandile. You've actually been really positive on X, I would imagine on other social media platforms, I don't put myself through the pain of having LinkedIn so if you have been positive there, I wouldn't know about it, but you've definitely been positive on X at a time when there's been a lot of negativity, which is quite a brave thing to do. I've been on the receiving end of the mob more than once on X. And if you've ever experienced that, it's not such a great experience.
You still have this positive view on South Africa. Obviously some of that is coming from maybe how widely spread our export base is or whatever the case may be. But if you could kind of give the elevator pitch about why you still feel positive about the agri sector in South Africa - because I think people fixate on negative news. They really do. They don't like to hear the good news story or they like to hear it, but they don't trust it or they ignore it. I don't know what the reason is. So let's give the good news story a couple of minutes of airtime. What is it in a nutshell?
Wandile Sihlobo: I think the South African good news story in agriculture can be framed in two ways. The first one is the fact that because we have been talking a lot about the Expropriation Act, people have somewhat gotten into this level of thinking that the South African agricultural sector is failing, which is particularly not the case. Ghost, you think back to 1994, if you look at how South Africa's agriculture has performed 1994 to today, it has actually more than doubled in value and in volume terms. There's been two catalysts behind that progress.
The first catalyst is the amount of investment that the South African farming sector has actually put in research in ensuring that we have great seed cultivars, great genetics, and we are pushing through and improving their productivity at a farm level. The second aspect of it is around the export part - that demand pull has assisted the South African agricultural sector.
So if you talk to the folks and you look at what, how we farm and what we produce - a farm in the Free State, if you're walking there, it's no different to where Moe is in Canada or to a farmer in Ohio or wherever in Omaha. We are right there insofar as the technology and the capability. But what's more even positive for me is the fact that when you talk to the farmers who are doing the activities, stepping away from people are advocating on X, you realise that the farmers as puzzled about some of the views that are shared on social media that they are running away, they must leave the country.
They are committed to farming and they see growth prospects in this sector. And I draw much of my optimism from there.
Mohammed Nalla: Wandile, I think that's great. Where I am in Canada, lots of deciduous fruit, a little bit of dairy - Canadian dairy is very protected, that's quite a contentious issue up here – but what I see on my shelves from South Africa is we get South African grapes which are fantastic. I get South African citrus. Every time we see South Africa - I get South African peaches, which are delicious. And that's surprising because like I say, we produce the citrus fruit up here in my region of Canada. When we get South African peaches or nectarines, my daughters are like, this is from South Africa, we’ve got to buy it - and it's delicious. So that's just in terms of the types of markets that South Africa is reaching, even if North America represents such a small portion of South Africa's overall exports.
It's also encouraging that you say that the farmers are puzzled by some of the narrative that's out there that “they're leaving” because farmers are intrinsically tied to the land. There's this very strong bond between farmers and the land. This gets emotive and I want to go back to the whole expropriation without compensation issue because I want to understand it better myself. Looking at this from afar, I'm certainly not as plugged in as I was when I was in South Africa. Expropriation in any sense is a bit of a swear word to those of us that like market dynamics - property rights, those kind of things are very important to economic growth. Now you've said that this is overblown, but the fact of the matter is when you have this axe hanging over your head that there’s a prospect of expropriation with or without compensation, it creates perceptions of displacement, it creates perceptions of insecurity which you can't afford in the agricultural sector because your lead times from planting to harvesting are so long. It's a strategically important sector from a food security perspective. Can you unpack why you don't think the expropriation issue is as much of an issue as it's being made in the media. Unpack the reasons why? Because that's not inherently clear to a casual observer sitting on the other side of the world and I would assume even for the casual South African sitting in a city that's not as well plugged into the farming market and the agricultural market as you are.
Wandile Sihlobo: I think what we are dealing with here is people perhaps may be conflating two things. Now, if people can think back into 2017, this was a year where the African National Congress, governing political party and having the majority, leading solo at the time in South Africa, they go to their annual conference in December 2017. They emerge from that conference with this resolution where they say, look, we need to think about “how do we accelerate land reform?” and perhaps there must be an option through which we can expropriate land without compensation.
South Africa is a democratic country, so you cannot necessarily shut down any ideas. There was a robust conversation about that consultation went for about a year and a half or two years. I can't remember the time frame. Certainly myself, Tembeka Ngcukaitobi, Bulelwa Mabasa, Dan Kriek, Nick Serfontein and many others, we were called in this panel of about 10 people or so to advise the president on thinking about the land reform and the expropriation topic.
What we all arrived at and what the South African lawmakers also arrived on in Parliament was that we don't need to change Section 25 to enable expropriation of land without compensation. And that meant then that the status quo remains in South Africa where property rights are protected, Section 25 of the Constitution is intact as it is, and there's no amendment that is made. And then that Ghost is in line with what Moe has just alluded to now, that certainty and the protection of property rights is key for investments.
Where we are now is far from that discussion. We are talking about an Expropriation Act which is different from Section 25 of the Constitution. And I think people tend perhaps maybe to make a mistake within those two things.
On the Expropriation Act, it's not unique to South Africa. The majority of countries across the world do have it. The US i think they call it the EMIT act or whatever - they have their own one on that…
Mohammed Nalla: …Eminent domain. That's what it's called. It's called eminent domain.
Wandile Sihlobo: Eminent domain, yeah. Thank you. Thank you. They have that. And what this enables is a range of things for making sure when you want to build a school, you want to build railway line and all of those things. But I think in South Africa, what we called it and also remembering the recent conversations that we have had has caused some of those frustration.
I think what's more fundamental is that the ANC did not introduce this or any other political party in recent history. It actually comes from 1975 and was put in place by the National Party. What has happened right now is only to say this Act is there, we may need to utilise it in certain instances, but it needs to comply with the current constitution of the democratic South Africa.
The adjustment and the edits and the updates happened. There is one provision that actually came in which said there may be a possibility of expropriation with nil compensation. But that determination doesn't lie on any elected public official. That lies to the judges and the courts to decide. But they have to make sure in whatever they do, that whatever rules and formulation they follow, this must be just and equitable. And if they arrive on nil, then they arrive at it under those principles.
The most fundamental thing here is that the Expropriation Act is not a land reform policy in South Africa and may be used in rare circumstances as it was in the past. Land reform in South Africa - and I can even now Moe and Ghost, wear my hat as one of the advisors to the president to say formally, land reform remains on a three basis in South Africa, which is on a market principle: land redistribution, restitution and tenure. Nothing has changed.
The South African government has bought about 2.5 million hectares of land that will be distributed with title deeds to new beneficiaries. Quick last point here. If you think about the 2.5 million hectares of South Africa, it is so big because what we grow in all of our grains and all seeds in the country today is on about 4.5 million hectares. So consider 2.5 million hectares that is not now in full production. When it has come in, it means that we may see +30% in gross value added of the sector, nearly a million jobs in the primary as well as the value chain sector. I think some of that optimism is based on the possibilities of the sector in terms of growth and jobs.
The Finance Ghost: I mean, it's fascinating. So, what's really happened here is you've got these emotive words and then obviously special interest groups have really latched onto them, right? They can use them to drive a specific agenda. Then you have a president in the US who is an expert in taking emotive words and making them even more emotive and then acting very quickly on executive orders and everything else. It's been quite hard to follow, actually, what's really happened. But I don't necessarily think that the special interest groups who were trying to get the attention of Trump were hoping for this executive order of like, oh, you know, just come and live here in the armpit of Kentucky and we'll give you some land. It'll be great.
I'm convinced they watched that Dricus fight where Eben Etzebeth walked down with him and they were like, how do we get more okes like that? We want more like that in our gene pool. 500ft tall, 900kgs, runs damn fast and all of its muscle.
Anyway, all jokes aside, and thankfully in South Africa we can still make these jokes because despite what you read on X, I still think that the average South African still loves the things that make South Africa what it is - diversity, etc. There are these fringe groups, all of them on X in every direction, and fringe people who just go mad. But I think the average South African's heart remains in the right place.
Having said all of that, there is this issue around land. Clearly. It's a very emotive thing. You have a situation where for all the historical reasons that we definitely don't need to go into, you have land ownership concentrated in certain demographic groups, and for the sake of the country, over time, that needs to change. Free market forces achieve some of that, policy achieves another piece, and you kind of hope that over time the free market takes over and policy falls away, because enough has been done that everything just becomes free markets.
I mean, that's the dream. In your view, the rate of transformation in the agri sector in South Africa, is it happening quickly enough, in your opinion? Is there more that needs to be done? What is standing in the way of that? I imagine the challenge, from the outside looking in with farming, it's a highly skilled thing. If you speak to a farmer, which you do all the time, it always sounds like the hardest career in the world. And then on top of that, it requires a lot of capital.
Experience and capital are a horrible mix to achieve accelerated transformation because experience comes with time, capital comes with - also time and just access to funding, etc. So just your thoughts around the rate of transformation in agri in South Africa?
Wandile Sihlobo: You are so right, Ghost, in a sense that, even just by looking at rough metrics at farm debt in South Africa, over time, you see that the farm debt in South Africa is growing at what, 6%, 7% somewhere around that rate. We now have a sector that has a farm debt that is just over R200 billion in South Africa. Much of that debt is not because farmers are unable to pay it back. They are reinvesting it and putting all technologies and capabilities to continue to grow. That speaks to your latter point about the needs for capital.
On the sector skills aspect, we are sitting as a country in a far better position than other countries in the continent in the sense that we have commodity organisations. Either it's a Fruit SA, South Africa Wine, Red Meat Industry Services, Grain SA, you name it. These bodies are of the farmers that can be able to impact the skills and are impacting the skills in terms of the new entrant black farmers that are coming into the commercialisation of the sector.
But what has happened in a public conversation in South Africa, you have fringe groups. And these fringe groups are not just on one side of the racial dynamics. You have people that are black folks in South Africa that are exaggerating the slow pace of land reform. And you have another group of white South Africans that also exaggerate the fears of what's going on with land reform. I think both of these are unhelpful because what we are seeing, at least in our work at Stellenbosch University, is that the pace of land reform - the ANC had said that in 1994, they want to reach a 30% in about four or five years after they came to government. And they pushed that figure now over the years. It's now aiming at what, 2030? Our research says that figure now is at 25%. But you will hear constantly people talking about 8%, 9%, 10%, which is just incorrect.
What has happened though, which is again to your point, if you look at how much on average black farmers contribute to commercial agricultural output in South Africa, in our calculation they make up on average about 10% of the commercial output. Then you may ask the question and say, if you say land reform is at 25%, but commercial output by black farmers is at 10%, what causes that difference? What causes that difference is basically that the South African government has bought some of the land and they never transferred it to black farmers with title deeds. They sat on it. But then this sitting on the land also feeds on these narratives that people have of saying, oh, everything land reform is failing. You have all of these farms that are failing in South Africa, nothing happens. Nothing happens because the farms require capital and skills. And if you're not transferring them with title deeds and pairing them with commodity associations, it will lead to failures that we do see and further feeds the narrative.
So, the government carries as much blame as the history of this country. And I think that only collective partnerships will help ensuring that we resolve this challenge that we sit with today.
Mohammed Nalla: I'm so glad you jumped in on that, because my next question was actually on that exact point. Government is sitting on a whole bunch of land - land that they've maybe acquired, other land that they've as a legacy held on government's books, effectively. If I go through South Africa and I look at the amount of under- or unutilised land versus other developed economies, where you see the agricultural sectors are really well developed. I remember traveling to Spain a while ago and every hillside was covered with olive groves. It was just so amazing to see. You can see this from the air.
South Africa is different, right? South Africa has a lot of unutilised space. My question is twofold. One is, we mentioned partnerships, right? Because this, as you correctly say, it's an issue of the land, it's an issue of the capital, and it's an issue of the skill. And you've clearly articulated how the various parties can come together, plug them into agricultural associations and so forth. What role - since governments failed predominantly at doing this, well, they've just done it poorly, not entirely failed, maybe - but what role can the private sector play in accelerating that process? To try and just make sure all of these things align, we plug everyone in as they need to be plugged in and just get that land productive. That's the first part of the question.
The second part of the question is that not all land is created equal. Some land might be good for some crops, some land might not be good for crops at all - it might be for grazing or pasture land. What does that stock look like in terms of the sectoral or the potential output? Which products are we talking about? Which parts of the agricultural sector can we grow? Because that then inherently plugs into that export market which is so important to the overall growth and sustainability of the South African agricultural sector.
Wandile Sihlobo: Moe, you so right in the sense that we are a big country. When you look at South Africa, we are about 122 million hectares. That's the size of the Republic of South Africa. The agricultural land today is at about 76, 78 million hectares. Of that 122 million hectares, it has declined since 1994, where we were farming on 86 million hectares. Part of it is residential development and the other aspects of that. But unfortunately we are also a semi-arid country. Of the 70 something million hectares of land, you will realize that in that 76 million hectares of land, only about 15% can actually be utilised for crop farming and all of that stuff. Much of it has to lie on livestock, which is why you see these disparities when you look at South Africa relative to the other countries.
But still the point you make stands because in the 2.5 million hectares that I was talking about, all of that can be utilized for productive agricultural land - a million hectares for livestock, but the rest of it for a range of fruits and vegetables and crops that can be used. But also a lot of land stock that still remains in the former homelands that we will need to unlock the potential that speaks to that broader aspect of saying how do we begin to grow?
For me, what's more heartwarming - I make the point of the government failures, but if you talk to the current leadership now, the Director General at the Department of Agriculture and as well as the Department of Land Reform, Mooketa Ramasodi, as well as the president himself and the ministers of both departments, they agree that the land, 2.5 million hectares of land, must be transferred with title deeds to black farmers. We have actually worked on the plan as to how to execute that. Now the department is working and finalizing some of those things.
So my sense again, to Ghost’s earlier point and your point Moe of where do you draw this optimism when there's so many people firing shots on X - I draw it from realising that, look, on the ground, farmers are positive on the ground, the government officials are working tirelessly on the land plan, but also private sector is working on collaboration on what we call the Agriculture and Agroprocessing Master plan, which Minister John Steenhuisen has endorsed and is continuing with it and he traced it back from Minister Didiza.
While the conversation is polarised, there's a lot more actual work fundamentally that will move South Africa forward. I think this is very important because although we are urbanising as a country, we still have many South Africans in rural areas that need these jobs and the economic activity. I think there's a lot more that can be gained from agriculture in this country.
The Finance Ghost: Yeah, absolutely. And this is why we love having you on the show Wandile and why we wanted you to come on at this time because I think it's so important for South Africa to get these balanced views. I really appreciate how many balanced views you give in this process because it's quite difficult sometimes on X to actually achieve a decent respectful discourse.
I've said it before on X and I still stand by this view: there are many elements of B-BBEE that I 100% agree with. As a system, I think there are a lot of pieces of it that make sense. The way it gets implemented sometimes leaves a lot to be desired and I get very irritated with how the Competition Commission sometimes wakes up in the morning and decides they need to single handedly come up with arbitrary B-BBEE type stuff that needs to happen.
It's possible to hold all those views at the same time and if people just give you a chance to explain them - but unfortunately they don't, they just go, oh, you know, are you an idiot as a white guy? How can you support B-BBEE, what's wrong with you? And then you lose the fringe right, now they're gone. You get no points from the left for having that view, but my gosh, you must dare put something on X about how South Africa's in an economically weak space to negotiate with America and we have too many people on welfare, then suddenly you're a monster on that side too. Basically, you just upset everyone by having views on X. I've just come to terms with this because I've realised that most of the comments etc. are actually either just bots or people who are basically operating at the same level as bots, in which case they're of no consequence to me.
I really enjoy these kind of conversations with you, so I'm going to ask you the question about where we really stand if things go wrong with the US. It looks like they're going to, I don't know, will AGOA survive? I don't know. I'm almost at the point where I actually don't care and I would love to sever ties and go off and do our own thing because every time I see writing from the Americans involved here it just irritates me more and more and more as a South African, it really does. So, where are we with this? If AGOA falls over etc. what does it mean for South African agriculture? How quickly can we replace those exports with other markets? Because it seems like the Europeans are on a charm offensive at the moment. Cute little pictures of the German ambassador climbing Table Mountain. It's all very lovely, right? Geopolitical stuff is very fluid. It's all about who you're friends with at any point in time, isn't it?
Wandile Sihlobo: I mean, you know, again, and I don't mean here to try to talk bad about the people, but I do think that there's an issue of information here that is not clear because some South Africans believe, or I think they believe, that when we are out of AGOA, that means no access to the American market, which is incorrect. What AGOA does, it offers South African products competitive pricing in the US. When you are outside AGOA, you probably face the most favoured nation's tariffs of on average around 3%, which then is not so much an issue of access to the American market, but how competitively priced your product will be once it gets to the American market.
So being out of AGOA, sure it may have then those pricing issues for some South African agricultural products, but I think we will still be able to remain and have access to that market. The AGOA products in terms of the exports in South Africa, they are around about $488 million. That's about 4% of our agricultural products that go there. What of course is in that basket is largely citrus, and then you'll find that it's wine, it's nuts, it's grapes and fruit juices. If we are outside of AGOA, then I think that tariff issue becomes a challenge, that 3%.
But our desire or our fear at the same time is that if you were to be hit by the actual tariffs, like what we saw with Moe and the others in Canada, then that begins to be a challenge for South African agricultural products. But we are not there yet.
My thinking is that South Africa should almost follow what we saw happening with Kenya, where we begin thinking about a more bilateral agreement. What we have now is unilateral and let's be honest, it carries a lot of risks. This is not the first time we are having this - Moe will remember he and I, he was in South Africa at the time working for one of the investment banks, we used to talk about AGOA in 2014. At the time, they were trying to renew, they were pushing for poultry, pork and all kinds of products in South Africa and also insisting that we were an upper middle income country so we didn't have to qualify to get in there. We talk our way in as South Africans do, and we got in!
But a few years later, you had the issue of the intellectual property bill stuff and we're threatened again about this issue. And of course the politics of the Middle East comes into play, the BRICS situation comes into play. But if you are constantly going to have this, it means that you are going to have unpredictability. Moe makes the point at the start of this segment where he says, look, we need certainty for markets to operate.
There is not going to be certainty if it's a unilateral agreement. We need to find out a way of getting into a bilateral agreement. I think we should then find time to buy space for us to get there. Any agreement, looking into history, it usually takes five to eight years to argue. I think that in that time then we could remain at AGOA. But we do need to have something solid to put on the American table. While it may look like it is good for them, it also takes away this uncertainty and the cloud of uncertainty that is hovering over South Africa today.
But, Ghost, the key point is that, and this is not to underestimate the pain that may be in other sectors, but I think the, the AGOA argument have been overly exaggerated that there will be a collapse of a sector if it's not there.
If it's not there and they aren't extra tariffs, we will just have a competitive pricing issue, but not the access in the American market.
Mohammed Nalla: Yeah, Wandile, just to try and wrap up in the interest of time, I think some very important points. Yes, it's a 3% headwind unless you face punitive tariffs over and above that. But that does move the needle. Certainly when you're in the North American market, I think the geographical distance to South Africa becomes a limiting factor because here you're competing against the South Americans that in terms of proximity are much closer. They would have a bit of an edge from a pricing perspective. But even if North America or the US specifically goes away, I think you've painted a fairly decent picture in terms of demand coming out of the EU, demand coming out of the Middle East, coming out of Asia. To be able to replace 4% of your export exposure just through organic growth in those other markets is not a tall ask.
Where I want to go with my very last question is you've obviously painted a picture of optimism in the agricultural space and as market professionals, the show being Magic Markets, of course, which avenues can investors - South Africans, global investors - look at when we're looking at listed companies? Or is this stuff that falls exclusively in the unlisted space in many respects. I know, for example, feedlots, cattle feedlots were so popular a little while ago with all of the section 12J stuff, and now they've hit a little bit of a rough patch and a lot of people losing money in that space.
How do investors get access to this high potential opportunity set that you certainly believe exists in the South African agri space? And in fact, Ghost, I think, threw this out there when we were offline - he wanted to use this pun, I'm going to steal it. He's like, what is the bull case? And the pun fully intended there?
Wandile Sihlobo: I would put the bull case still back in the livestock industry. I mean, look the reality is this. Let me tie this point up with one of the points that Ghost made earlier to say where are the growth areas for exports? We still believe that within the BRICS community, the agricultural exports could grow. I think people don't really emphasise enough the idea that the expanded BRICS grouping now accounts for over half of global agricultural production and trade.
You want to be in the room in those countries. Right now, it is a political grouping and our desire is for it to have some agricultural trade agreement that could lower tariffs and fighter sanitary barriers and then we can enhance trade in that.
The South African story or countries that we target a lot that we find interesting - we are very interested in widening our access at duty free in China, in India, in Saudi Arabia, in Egypt. Those are the key countries. Of course then encompassing everybody else that is in the BRICS community, that's for us the growth area. But at the same time, while we are retaining the access that we have in the EU and the others and hopefully even in the American market with all of the aspects that we discussed, we continue to access that market because the point you make earlier about their competitors that may access that market at fairly better pricing than us, that's the major threat that we sit with.
But I would say the opportunity broadly, they probably still lie in the unlisted space. And I would say the livestock as well as the entire fruit business in South Africa remains one of those important areas. And of course, anything that is in the value chain on trade and logistics of the food sector remains an interesting space that people can look at. Thanks.
The Finance Ghost: Wandile, thanks, it's been so lovely to have you. I think we need to bring it to a close there. Thank you for making time. You're a busy man and you're doing a lot. We really appreciate you coming onto the show to just have a conversation of this calibre. There's really not a lot of people we can do it with - I can't think of anyone else actually who we could talk about agri like this. Thank you for your time.
To our listeners, I would hugely recommend you follow Wandile on X. You can watch him sometimes attract the ire of the mob as well, but most of all, you can just read his insights and just see these great balanced views. You can see an occasional picture of him at a farm, which is always fun. Wandile, thank you for your time. Keep fighting the good fight. Just carry on - carry on carrying on. That's what we want to see, for the sake of South Africa.
Mohammed Nalla: Wandile, we hope you find your way out from under the sprinkler that you're sitting on right now. To our listeners, we hope you've enjoyed this. Hit us up on social media. It's at @MagicMarketsPod, @Finance Ghost and @MohammedNalla. There's also a full transcript of this podcast and we'll have a link to Wandile’s socials there as well. We hope you've enjoyed it. Until next week, same time, same place. Thanks and cheers.
The Finance Ghost: Ciao.
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