South African agricultural businesses have shown remarkable resilience despite global disruptions caused by the COVID-19 pandemic and other challenges. The HSRC’s Dr Yasser Buchana reveals some of the results of the latest South African Agricultural Business Innovation Survey (2019–2021), which the HSRC conducted on behalf of the Department of Science and Innovation.
Unlike most African countries, South Africa’s agriculture sector is highly formalised, contributes to the economy, employs many people, and plays a significant role in ensuring the country’s food security. However, the sector also grapples with the pervasive shadow of climate change, rising input costs, increased global competition and stringent regulation.
These challenges raise critical questions that require creative, transformative and sustainable solutions. Can innovation, often lauded as a key to business success, be a strategy that addresses the challenges of South Africa’s agricultural sector?
Innovation, at its core, is the act of using science and technology to solve difficult problems creatively, do things differently and better, and improve existing solutions.
According to the OECD, innovation in the context of business is “a new or improved product or process (or combination thereof) that differs significantly from … previous products or processes and that has been made available to potential users (product) or brought into use by the unit (process)”.
In other words, it is the ability to disrupt the status quo with new products and services in the relentless pursuit of improvements.
The HSRC recently released the results of its South African Agricultural Business Innovation Survey (AgriBIS) for 2019–2021. The HSRC’s Centre for Science, Technology and Innovation Indicators conducted the survey on behalf of the Department of Science and Innovation. The results reveal how agribusinesses navigated the challenging innovation landscape through the COVID-19 pandemic. The findings also invite stakeholders to engage with key questions about the role of innovation in shaping a sustainable and prosperous agricultural sector in South Africa.
Resilience and adaptation despite disruption
COVID-19 created unique disruptions and forced many agribusinesses to reevaluate their innovation strategies. The forestry subsector was particularly affected, with numerous projects delayed or abandoned. Despite the challenges, 67.1% of agribusinesses continued to pursue innovation actively, reflecting a sector determined to adapt and thrive, even under difficult circumstances.
Tackling the innovation divide
The survey revealed that medium-sized agribusinesses led the way, with 72.9% engaging in innovative activities. Large businesses closely followed this at 70.8%, while very small entities had the highest proportion of non-innovation-active businesses (42.8%). These findings suggest that while large and medium-sized businesses have the resources to drive innovation, smaller agricultural businesses face major challenges that need addressing.
The stark contrast in innovation activity between small and larger businesses exposes a gap that innovation policies must address. It is not enough to celebrate the successes of medium and large businesses – we must ask how policies can level the playing field across the sector. This is necessary because the equitable distribution of resources and support can unlock latent innovation potential within smaller agribusinesses, which in turn can drive inclusive economic growth.
But what targeted funding mechanisms, training programmes, and technology can help smaller businesses embrace innovation?
Embracing business process innovation
Business process innovation emerged as the most common type of innovation, with 63.6% of agribusinesses implementing it. This was particularly prevalent in the fisheries (71.3%) and agriculture (animal and crop farming) (66.6%) subsectors.
Typically, process innovation is dominant in agriculture because it directly improves efficiency and productivity and can address immediate operational needs. Examples include new irrigation methods to optimise water use, control methods for pests, and using blockchain technologies to improve supply chain transparency and efficiency. However, in this case, forestry businesses focused more on product innovation than process innovation, with examples including the development of engineered wood products offering improved strength and versatility.
There are three possible reasons for this deviation from the norm: first, the challenges of the pandemic left the forestry subsector more affected than others; second, the forestry regulatory environment has become increasingly stringent; and third, market demand for sustainable and versatile materials may have played a role. Forestry businesses facing these challenges might have seen product innovation as a necessary pivot to meet new market demands.
The role of advanced technologies
The survey found that nearly 40% of innovation-active businesses adopted advanced information and communication technology, such as precision agriculture and smart breeding technologies. AgriBIS 2019–2021 data shows that this trend is set to continue, with AI technologies anticipated to grow significantly by 2024.
A challenge lies in making these technologies more accessible to all businesses, regardless of size. Again, this raises critical questions: how can policymakers facilitate access to advanced technologies for agribusinesses that cannot afford them? Can partnerships with technology firms, subsidies, and educational programmes help bridge the gap?
Regional differences in innovation
AgriBIS 2019–2021 highlighted regional disparities in innovation activity, with the Northern Cape, North West, and Western Cape provinces having proportionally more innovation-active businesses. To some extent, this can be attributed to the diverse agricultural activities that dominate different agricultural regions in South Africa. The Western Cape, for example, is widely known for its wine production, which has distinct innovation needs compared to livestock farming, which is dominant in the Northern Cape. Therefore, such regional variations are expected to result in different levels of engagement with innovation for agribusinesses.
However, regional specificity does not diminish the need for combined efforts to improve innovation activities across all provinces. Stakeholders in regions with fewer innovation-active businesses should investigate the strategies employed by provinces with more innovation-active businesses and borrow or adapt these for their local contexts. This could help balance the scales and grow the number of innovation-active businesses in provinces like KwaZulu-Natal, where there are more non-innovation-active businesses than innovation-active businesses.
Overcoming barriers to innovation – a call to action
AgriBIS 2019–2021 showed that South African agriculture is deepening its resilience to external shocks, overcoming challenges, and adapting to market conditions to grow. Despite the positive trends, substantial barriers to innovation remain. These include, for example, access to finance, water, and agro-chemicals, including fertiliser, herbicides, and pesticides. According to the OECD, the value of innovation in addressing these enormous challenges is contingent on collaboration between stakeholders to create an enabling environment where innovation can flourish.
The future of South African agriculture relies on continued collaboration among all stakeholders, including policymakers, industry associations, universities, research councils and agribusinesses, to promote innovation. This collaboration is outlined in the Agriculture and Agro-processing Masterplan, Science Technology and Innovation Decadal Plan 2022–2032, and the 2019 White Paper on Innovation. Together, these efforts aim to create and promote a dynamic and resilient agricultural sector that will be able to withstand future challenges.
About the author
Dr. Yasser Buchana is a senior research specialist in the HSRC’s Centre for Science, Technology and Innovation Indicators (CeSTII). For more insights and detailed findings, refer to the full AgriBIS 2019–2021 Report.
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