‘SA CROP PRODUCTION ‘UNDER SERIOUS THREAT’

The farmers said in the drought-ravaged regions of the North West, Free State and KwaZulu-Natal, they had been exposed to severe financial losses, which had made it difficult for them to operate their businesses sustainably and to meet their obligations to financial institutions. File picture: Ahmad Masood



 

Johannesburg – Farmers have called for urgent government funding to prevent the collapse of crop production in the agricultural industry as prospects for output dwindle amid the devastating drought in the key productive provinces.

The farmers said in the drought-ravaged regions of the North West, Free State and KwaZulu-Natal, they had been exposed to severe financial losses, which had made it difficult for them to operate their businesses sustainably and to meet their obligations to financial institutions.

Agri SA, a lobby group that represents major farmers in the country, yesterday warned that financial institutions could limit production credit for the coming season, which would hit farmers with severe financial constraints.

But whether the government will be in a position to help is doubtful, given the fact that last week Finance Minister Nhlanhla Nene signalled the Treasury has drawn down a R5 billion contingency reserve – normally set aside for emergencies like droughts – to plug a shortfall in the 2015/16 public sector wage bill.

Urgent interventions

Agri SA president Johannes Möller said the situation was compounded by fears that crop production this year might fall because of the drought, something that would result in the closure of farms, rising food prices and massive job losses in the agricultural industry.

“This is a serious situation and we call for urgent interventions to lend assistance to affected farmers, both established and emerging,” he said.

“While we acknowledge current fiscal constraints, we urge government to prioritise disaster relief to agriculture as a mechanism of enhancing food security and promoting prosperous rural economies.”

Agri SA said it had been forced to review its forecast for output this year to 9.8 million tons, a far cry from the 14 million produced two years ago.

According to the latest survey conducted by the Department of Agriculture, Forestry and Fisheries, commercial farmers were expected to plant 2.551 million hectares of maize in 2016, 3.8 percent down from the 2.653 million planted last season. The survey said figures showed producers intended to plant 1.422 million hectares of white maize, and 1.129 million of yellow maize.

Möller said Agri SA had been monitoring climatic developments and had already begun engaging with financial institutions, agricultural industry representatives, government stakeholders and disaster risk specialists.

The government’s crop estimates committee spokeswoman Marda Scheepers said: “A lack of rain in the most important maize-producing areas and a switch to oilseeds contributed to the decline.”

Grain SA said the total crop production fell by 27 percent year on year from 16.45 million tons in 2014 to 11.9 million tons in 2015.

Grain SA economist Wandile Sihlobo said maize production had decreased by 30 percent year on year, from 14.3 million tons to 9.9 million tons during the period.

“South Africa will be a net importer of maize this year for the first time since 2007/08. From the week of May 1, 2015, to the week of October 23, 2015, South Africa imported 407 366 tons of total maize (of this 16 299 tons is white maize and 391 067 tons is yellow maize),” Sihlobo said.

Input costs

“Grain SA maize imports for the rest of the season (meaning from May 2015 to April 2016) are forecast at 758 000 tons.”

The SA Poultry Association said the impact of the drought was being felt in its input costs.

Chief executive Kevin Lovell said the price of maize, a major ingredient in stock feed, had shot to R1 000 a ton in the past nine months. He said this would have a knock-on effect on prices.

Meanwhile, the SA Weather Service said yesterday that an El Niño weather system, which was already forecast to bring drought conditions for much of the summer, now looked like it would extend into autumn.

Dry conditions last year cut the maize crop by a third and the prospect of another drought pushed prices in July to record highs, raising the prospect of food price inflationary pressure.

“Most models are showing the strengthening of an El Niño episode towards the summer season, with the expectation to continue throughout the autumn season.”

  • Additional reporting by Reuters

BUSINESS REPORT / IOL NEWS

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