The persistence and the severity of the extended drought in many parts of the country prompted AgriSA to conduct a survey to get a realistic assessment of how the drought has affected, and continues to affect, the sector, job creation and the general economy. The drought survey was conducted in December.
The survey considered the financial status of farmers, the mental health of the farming community, local area water maintenance status, job creation and job losses in the area.
Job losses, and declining finances, in the agricultural sector during the last year have been an enormous concern. “Since January 2018, the sector has shed 31 000 jobs in those provinces severely affected by the drought. Added to this, it is estimated that the sector has lost approximately R7 billion due to the drought,” said Christo van der Rheede, deputy executive director of AgriSA.
Other key findings of the survey included:
- 70% of respondents indicated that they struggle financially and that they are in a weak financial position.
- Water availability for domestic, municipal and industrial use seems moderately to severely impacted.
- More than 80% of respondents reported that the current drought had a negative effect on local recreation or tourism-based revenue activities.
- Fodder availability is very limited in seven out of nine provinces.
- Respondents said the level of support from financial institutions was average to non-existent.
- More than 50% of respondents said they had to retrench farm workers because of the extended
- Severe to critical levels of groundwater and surface water was reported by about 65% of respondents.
- The general condition of the veld was worse than expected which increases the risk of veld fires.
- More than 50% of the respondents said they experienced some depression and anxiety.
- The lack of maintenance of water infrastructure was identified as a major concern. In towns that rely on boreholes for their water supply, there was no proactive planning to deal with the drought.
The survey indicated that 173, or 62%, of South Africa’s municipalities are affected by the current drought. “Only three municipalities in South Africa, Swellendam Local Municipality (WC), Theewaterskloof Local Municipality (WC) and Mkhondo Local Municipality (Mpumalanga) have excess fodder available to donate,” said Van der Rheede.
“The economic impact is severe, but we need to think of the human cost as well – people are losing their jobs and farms are closing down at a time when we need to strengthen food security and create more employment.”
Impact on the grain industry
At this time of the year questions focus on the number of successfully planted hectares and the expected summer grain crop.
Jannie de Villiers, CEO of Grain SA, said the picture would be clearer by the end of January. “The indication is that farmers in the eastern parts of the country planted most of what they planned to, although they had a difficult start to the season.”
The problem is greater in the western regions of the country. “In this area between 60% and 70% of the crop has been planted but only about 20% of this was planted early. These plants are doing well and will most likely show average crop yields if they get rain now. Late plantings are struggling and even if those areas get rain now, the crop will be below average.”
De Villiers said that under these circumstances we could expect there would be just enough maize for the country’s needs, or perhaps just too little. “The price of maize already reflects this concern. White maize prices have increased by about 60% and yellow maize prices by about 40%. This is, of course, good news for the producer, but of little help to him if he has no maize to sell.” De Villiers said the maize price increase would trickle down the value chain and have an impact on the red meat, poultry and dairy sectors. “It is likely that the trickle-down effect will reach the consumer’s plate soon enough, and we have to remember that the consumer is also under pressure.”
The biggest problem is the fact that the grain sector is not in a good position to withstand the drought, as it might have been in 2016, de Villiers explained. “We have had three very difficult years now and there are many producers who are struggling financially and who might not make it through another season.”
The impact of inflation
“Think of the consumer food basket,” said de Villiers. “The grain products, meat, poultry and dairy make up 75% of the food basket. If the grain contribution, as the base of most of the other contributions to this basket, sees a price increase of about 50%, the whole food basket will, of course, become more expensive and food inflation will rise.” De Villiers said that rapidly inflating food prices would have a disastrous effect on the entire economy. “The moment food inflation becomes too high, it starts pushing interest rates. This leads to a GDP growth drop and then unemployment rates will soar. This is the last thing we need now; we need to grow our economy.”
The drought has had a negative impact on most of the country’s agricultural industries and it continues to exert this influence in the sector, de Villiers said. The ripple effect is at work and other sectors are equally affected which deepens the impact.
A colossal crisis
There is a general awareness that the drought is serious, but exactly how serious it is may not be so widely known. Action and high levels of support are needed in many areas of South Africa. Respondents in the drought survey identified financial and fodder support as the highest priorities by far with boreholes and emotional support next on the list.
“The drought is a colossal crisis. South Africans, who are enjoying the affordable food and drink produced by our farmers, need to wake up and realise that food security and affordable food are at risk,” said Omri van Zyl, executive director of AgriSA, in a statement. “Since the end of 2015 AgriSA’s Drought Disaster Fund has spent more than R18 million to help our farmers, farm workers and communities. We call on the public, once more, to help.”
Van der Rheede said that urgent discussions have been scheduled with government, financial institutions and agri-businesses to determine how best to assist farmers and farmworkers in drought-stricken areas. “Meetings have also been planned with the Department of Cooperative Governance and Traditional Affairs, the Department of Water and Sanitation and National Disaster Management to discuss the looming water crisis in specific areas due to lack of forward planning and general maintenance of water infrastructure.”
To sustain long-term viability the agricultural sector needs:
- Financial assistance
- Extended production loan terms
- Extended credit
- Provision of bridging capital
- Fodder distribution
- Distribution of humanitarian aid and other forms of assistance.
“We do not know if government has the money, but our calculations tell us that roughly R3 billion is needed in government assistance during the next financial year, to ensure the future viability of the agricultural sector. We will communicate with national treasury, regional disaster management centres and all relevant departments on this matter and hold people to their responsibilities,” said Van der Rheede. – Marike Brits, AgriOrbit