Farming economy in recession, KZN farmers holding their own

Midlands Chronical

9 December 2019

By Garth Johnstone

In a recent tweet, chief economist of the Agricultural Business Chamber of South Africa (Agbiz) and media columnist, Wandile Sihlobo, highlighted the pressure farmers in SA are under, writing in an article on his website that the SA farming economy is in recession, and asking whether there is a silver lining for the sector. He referenced third quarter 2019 GDP data released by Stats SA.

Sihlobo wrote: “Agricultural commodities that have been most challenged in the form of lower output include maize, soybeans and sunflower seeds. Discouragingly, harvests for these commodities declined by double-digit levels in the 2018/19 production year. In addition, the livestock sector didn’t fare well either, as biosecurity challenges in cattle, wool and pig industries limited trade for the greater part of this year. These have weighed on farmers’ incomes.”

Sandy la Marque, CEO of the KZN Agricultural Union (Kwanalu), responding to The Meander Chronicle’s queries, conceded that some farmers in the province are struggling, but that generally the province was better off than other parts of the country, and KZN farmers had also helped out their fellow farmers in need.

Feeling economic pressure

“While farmers in KZN are certainly feeling economic pressure on their agri/ farming businesses, what is always encouraging is to see how farmers unite and assist fellow farmers in need,” said La Marque. “It’s well known that many farmers elsewhere in SA are under extreme pressure from the drought;  KZN farmers have been willing to dig into their own pockets or take extra feed etc off farm and donate it to farmers elsewhere.”

Sihlobo wrote, “In the olden days, years of drought would typically be succeeded by a rainy season, which would lead to a quick recovery in farming fortunes. However, in the recent past things have changed somewhat. We are now experiencing more frequent occurrences of drought conditions, which has been resulting in relatively longer recovery periods in farming fortunes relative to what we have observed in the past.”

A recent survey among Kwanalu members, 81 farmers’ associations and commodity affiliates in the province, the results of which were collated this week, indicate that if the drought is compared to “normal conditions at this time of the year”, 35-40% of farmers feel the situation is worse than normal for this time of year, with almost 60% reporting the situation as “bad”.

“The results indicate that 75% of farmers had not experienced significant rainfalls, with 25% reporting they had experienced good levels of rain (recently only),” the KZN agricultural union said in a statement.

Sihlobo said it was not easy to make a strong call about agricultural economic conditions in 2020. It was only at the end of January 2020 where one will have a better sense of weather conditions as well as their impact thereafter.

Erratic weather

He said if there was anything to learn from the erratic weather conditions currently being experienced in SA, it is that the levels of risk in farming has risen, making sector output more complex to predict. “The response in the near term would be to encourage technology developers, particularly crop breeders, to explore research on shorter-seed growing varieties so that farming can still thrive in a climate where rainfall spans have shortened.”

While parts of this province have been insulated from the devastating drought that has ravaged parts of the Karoo, Eastern and Northern Cape and Free State, there is concern in parts of the province.

According to a report by AgriSA, 37.4% of rural communities in SA have been affected by the drought.

In some reports, livestock owners have told of their heartache at seeing their animals suffer without water and feed.

La Marque noted the concern around foot and mouth disease. “A significant challenge currently is the foot and mouth impact following the serious outbreak in Limpopo. The impact of strict movement control etc is negatively affecting many livestock farmers.”

Another challenge for the farming sector, she said, was the high levels of uncertainty caused by the ongoing debate about expropriation of land without compensation and the amending of Section 25 of the constitution. “This is leading, in many instances, to lower investment and high levels of uncertainty.

“At this time, we really need the government to hear the voice of the sector, to engage directly with the sector and to focus its energies on bringing stability to the policy and economic environment.”

** Wandile Sihlobo is Chief Economist of the Agricultural Business Chamber of South Africa (Agbiz) and a commissioner at the International Trade Administration Commission of South Africa (ITAC). He is a columnist for Business Day and Farmers Weekly magazine. Sihlobo is a member of the South African Agricultural Economics Association.

More info on the Kwanalu website