Sat, Aug 27, 2016
For us to overcome this self-inflicted failure, there must be positive feedback between the media and the actions of parties involved.
The negativity bias, also known as the negativity effect, refers to the notion that, even when of equal intensity, things of a more negative nature (for example, a negative business outcome, unpleasant work or social experiences) have a greater effect on one's psychological state and processes than do neutral or positive things.
When describing the state and/or outlook of an industry, it is important to be cognizant of the negativity bias in order to remain objective. The benefits of being in the particular industry and its strong points should not be downplayed, not to suggest that one should turn a blind eye to its weaknesses. This particularly rings true to the agricultural industry in South Africa which has to contend with business as well as climatic risk factors. Of late, there has been a drive to attract investments and youth to the sector. In fact, in the government’s “Nine-Point-Plan,” revitalization of agriculture and agro-processing value chains is featured as the second strongest point that can boost South Africa’s economic growth and bring much-needed jobs.
However, the discussions surrounding the sector have been mostly negative in the recent past, not the least of reasons being the current drought. The media has shown great interest in the prospects of the sector for the next season, and there has been much negativity bias from warnings that a sizable number of farmers might not be able to get back to the fields in the next season due to financial constraints following the 2015/16 drought season.
Although it is the responsibility of the sector’s players to provide early-warnings to the nation about the possible difficulties in the coming season, possible higher food prices and jobs losses, it needs to be reported in an objective and balanced manner. Many areas received scattered rainfall which to some extent helped some farmers to harvest, even though it only provided below average yields. Moreover, higher commodities prices also compensated for the yield losses in certain regions.
The Agbiz/IDC Agribusiness Confidence Index gauging the perception of South Africa’s agribusiness decision markers about the sector in the second quarter of 2016, ticked up by 4 index points to 47. This shows that conditions are improving, albeit slightly, even though not yet at desired levels. More specifically, the sub-index measuring the “debtor provision for bad debt” confidence improved by 8 points to 75 in the second quarter of 2016. This improvement suggests that agribusinesses believe that some farmers might be in a better position to meet their debt obligations.
Against this background, it is important to not only focus on the negative side of the sector but also highlight and promote the positive one. In behavioral economics, there is a concept called “self-fulfilling prophecy” – a prediction that causes itself to become true. For us to overcome this self-inflicted failure, there must be positive feedback between the media and the actions of parties involved.
In the case of South Africa’s agriculture, if society consistently leans on the negative short term challenges of the sector, such as drought and financial constraints, some potential investors and youth might stay away and focus on more “safe” and predictable job-environments. Moreover, even some financial institutions might be more reluctant to extend their books on the sector if they keep hearing more pessimist views that suggest higher risk. This is a situation that would then lead to financial constraints for farmers, subsequent jobs losses and higher food prices. While in essence, this would not have occurred if society had not been victims of the negativity bias.
While important to acknowledge the challenges of the day, it is commendable to highlight the long term growth strategies and plans that will grow the sector. It is high time for the South African government, organised agriculture and society at large to highlight the positive stories of the sector that could potentially ignite interest in many people. Of course, not ignoring some of the real challenges that could negatively affect the industry participants.
If agriculture is to yield the potential growth promised by government policies, adopting an objective approach and attitude will be indispensable.
Image Credit: http://www.junkmail.co.za/
Sihlobo is Head of Economic and Agribusiness Intelligence at the Agricultural Business Chamber (Agbiz) in South Africa.