We are about to enter the second half of 2018, and it might just be time to reflect on the past six months and to strategise on how we are going to tackle the remainder of the year.
I am sure readers’ accounts of what they have experienced over the past six months differ substantially, depending on factors such as their life stage, the type of agricultural business they are involved in, and how the weather influenced their business. Some role-players involved in the industry, however, have very similar accounts, based on factors that created either joy or fear.
Personally, I can share what is probably the most positive story I have encountered in the last three years. Yes, there were incidents and announcements that created fear and might have impacted on my future, but it feels as though, for the first time in many years, there is more light than darkness.
But this is my story, and after talking to a close relative (who is also involved in agriculture), I have come to realise that my view is not necessarily shared by others. His vision of South Africa’s current situation and what can be expected in future is extremely negative, as if only bad experiences and hopelessness will prevail.
In this article, though, I will share some good news with you, banish all the monsters, and try to persuade you to be positive and to keep your agricultural business instead of selling off everything you own to start a new life in Canada or Australia. To offer a balanced picture of both the positive and negative elements currently shaping the agricultural industry and that may influence our future, this article focuses on the facts.
Any good conversation usually starts with the weather. For the past three years, these conversations entailed the drought, the very good rain received in 2017 in the major maize production areas, and the resultant record crop.
The drought in the Western Cape and some parts of the Northern and Eastern Cape continues. The first few months of 2018 once again brought some relief for many of the crop farmers in the summer rainfall areas, and although a bit late, most of the remaining summer rainfall areas also received good rain. The prospects for winter rain seem good – Cape Town might even receive enough rain to adjust the current water restrictions to a lower level.
Some people have asked me if I think the drought is at an end? The short answer is “I do not know”. We must remember that the amount of rain received in many areas was close to, or even higher than, the normal average. This creates a positive outlook, and although we do not know what the future holds, I believe we are moving closer to a normal rainfall pattern.
The basic economic indicators regulated by the Monetary Policy Committee (MPC) are the inflation rate (consumer price index or CPI), economic growth (gross domestic product or GDP) and the value of the rand. The interest rate (repo rate), which determines the prime lending rate of the commercial banks, is the measure mainly employed to control these indicators.
Since the beginning of 2015, the MPC has been in a catch 22 situation with the increase in CPI, a drop in the GDP (Figure 1), and a weakening rand measured against the major currencies. The MPC intended to surpass economic growth and to accomplish this, they should have decreased interest rates. At the same time, inflation had to be kept within the target range and the rand protected – measures that necessitated an increase in the interest rates.
The decision was made to rather keep inflation under control and to protect the rand. Interest rates were subsequently increased, harming economic growth even further.
The country’s economic outlook is improving, with lower inflation rates and a stronger rand. The MPC has thus started to decrease the interest rates once more, which will boost economic growth. The economic picture is therefore looking positive, as we are, for the first time in over two years, at a point where the economic indicators are falling in line and where interest rates can be successfully applied to steer these indicators.
The political environment
Most South Africans, whether involved in agriculture or not, gave a sigh of relief when Cyril Ramaphosa was elected president of the ANC. The sigh was even louder when former president Jacob Zuma resigned and Ramaphosa was appointed as new president of the country. President Ramaphosa’s SONA address increased our hope even further when he announced that it will not be the colour of your skin that will shape your future, but your dedication to hard work. All very positive.
But then, the acceptance of the motion by parliament to investigate the expropriation of land without compensation. All the hopes and dreams of a better South Africa instantly evaporated and were replaced by the same negativity previously felt by so many agricultural producers.
The fact that the government may in future take possession of your land without proper compensation is undoubtedly a fearful thought, one even I am uncomfortable with. We should not, however, be blinded by this fact, since it has been made clear that, in order to proceed, the inquiry into the issue must prove that expropriation without compensation can take place without harming the economy and food security.
The fact that an investigation is finally underway is a positive indication, although I cannot see how it will measure up against the listed conditions or that it will be easy to change the constitution without harming our international relations. As a result, the outcome of this investigation might finally put this matter to bed and provide some clarity for the future.
At farm level
When producers experience a good year in terms of the weather and produce, prices are usually low (and vice versa). Issues at farm level, however, do not only concern prices and production, but also farm attacks and murders. This is certainly a very serious topic, involving a lot of mixed emotions.
The sheer number of farm attacks taking place serve as a stark reminder that this remains a problem – a problem neither government nor the SAPS have found a solution for. This means it is a problem that agricultural producers will have to face themselves. Yes, the situation is seemingly getting worse. And yes, it should not be necessary to live in fear on your own farm and in your own home. But to argue that someone else must find solutions will lead us nowhere.
If you, as a South African agricultural producer, can see a future for yourself in this country, you will need to ensure your own safety by implementing all available precautions. A farm that looks like a prison is perhaps not ideal, but it is still better than a farm without a farmer.
Food for thought
When looking at agriculture in South Africa, it is easy to fall victim to negativity. Even a positive person can become negative after a conversation with someone who is already negative. I understand that it is difficult to remain positive, but maybe it is time to shift our focus. Among all the negative elements are factors that provide hope for the future, and if you steer your core business in the direction of these elements and focus on a positive outcome, the other obstacles might become less intimidating. – Dr Frikkie Maré
For more information, contact Dr Frikkie Maré at MareFA@ufs.ac.za