In fact, the figure is lower than in other industries, and a decline in dairy farmers is due to other trends
The extent of market concentration in SA’s agriculture sector is a perennial topic for debate, no doubt because of the complexity of the country’s food system, the dangers of generalisation, and some debilitating data problems.
In this regard, it is first necessary to agree on the components of the agricultural value chains that constitute such an essential part of the larger SA food system. Agriculture, with its upstream and downstream linkages, consists of more than just the input supply industries and the food processing sector.
It might come as a surprise that farming had the lowest concentration level among all sectors, with only 12% of income produced by the 20 largest firms, which include the corporate sugar, poultry meat, and egg producers. The real farm gate price of milk has declined since 2007, while output has increased. As a result, dairy farmers must overcome tightening margins to remain in business. There are many ways of doing this, including increasing productivity by getting bigger, switching from dairy to other commodities, and even moving to other parts of the country that are more conducive to low-cost production.
Thus, as a country develops, resources are pulled away from farms into the industrial and other sectors, which grow faster, leaving agriculture’s share of the economy declining over time even while the sector itself grows.
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