Agri sec­tor prom­ises green shoots

GDP to get a boost from drought re­cov­ery, a record maize har­vest and in­creased con­fi­dence

The Star Early Edition - - NEWS - Joseph Booysen

ALTHOUGH South Africa’s na­tional gross do­mes­tic prod­uct (GDP) has de­clined, agri­cul­tural pro­duc­tion is ex­pected to make a pos­i­tive con­tri­bu­tion mov­ing for­ward.

This is ac­cord­ing to Karabo Takadi, an agri­cul­tural econ­o­mist at AgriBusi­ness and Absa re­tail and busi­ness bank.

Takadi said agri­cul­tural pro­duc­tion in­creased, fol­low­ing the drought re­cov­ery, which led to ex­pec­ta­tions of a record maize har­vest and saw con­fi­dence lev­els im­prove in the agri sec­tor. She said in­di­ca­tions of a re­ces­sion, how­ever, might lead to un­favourable unem­ploy­ment lev­els due to de­clines in ac­tiv­ity across the econ­omy.

She said maize prices were now much lower. Takadi added that the wa­ter short­age in the Western Cape might neg­a­tively im­pact on the GDP.

She said the wa­ter short­age might lead to re­duc­tion in wheat yields, re­sult­ing in in­creased im­ports.

“The drought may also have an im­pact on fruit next year should it per­sist. Weather fore­casts, how­ever, in­di­cate that the month of June is ex­pected to have the high­est prob­a­bil­ity for rain­fall over the Western Cape, es­pe­cially the western and south western parts, which will bring some much an­tic­i­pated re­lief.”

Agri SA said as a re­sult of the re­ces­sion, busi­nesses would not be able to make profit and con­se­quently the gov­ern­ment would re­ceive lower cor­po­rate tax, while fall­ing in­come lev­els will lead to gov­ern­ment col­lect­ing less in­come tax.

Agri SA said as a fed­er­a­tion of agri­cul­tural or­gan­i­sa­tions com­mit­ted to the de­vel­op­ment of agri­cul­ture in South Africa, it was pleased with the pos­i­tive per­for­mance of the sec­tor.

“The sit­u­a­tion could have been far worse had it not been for the agri­cul­tural sec­tor’s con­tri­bu­tion to GDP and a year-on-year growth rate of 22 per­cent up­wards.

“This speaks vol­ume of the im­por­tance of the sec­tor in the econ­omy and there­fore as Agri SA we con­tinue in our en­deav­ours to reach out to gov­ern­ment to make agri­cul­ture de­vel­op­ment a na­tional pri­or­ity. Most im­por­tantly we ap­peal for clear pol­icy cer­tainty with re­gards to land own­er­ship as we are con­cerned that with­out se­cu­rity of ten­ure the South African econ­omy and food se­cu­rity will be com­pro­mised fur­ther.”

How­ever, Dawie Barnard, the chief ex­ec­u­tive of Rad­dix, which spe­cialises in agri­cul­tural in­surance, said although the drought in most of the coun­try had been bro­ken, the coun­try’s farm­ers are still un­der im­mense pres­sure.

“Last year there were more than 11 000 agri­cul­tural prop­er­ties on the mar­ket. That is the high­est num­ber we had for sale in the his­tory of our coun­try.”

Barnard said this was in­dica­tive of how un­cer­tain farm­ers were about the fu­ture and that cli­mate change, po­lit­i­cal risks and com­pe­ti­tion from the min­ing sec­tor for land were some is­sues farm­ers had to deal with.

He added that fol­low­ing four years of drought, farm­ers’ debt lev­els had in­creased sig­nif­i­cantly as they con­tinue to fund their cap­i­tal re­quire­ments, but with the good rains this year and the bumper crop be­ing pro­duced, the price of white maize has now fallen from more than R5 000 a ton to un­der R2 000 a ton. He said farm­ers had no choice but to sell grain at low prices to re­duce their debt.

PHOTO: REUTERS

A farm worker car­ries fire­wood on her head as she walks be­tween rows of veg­eta­bles at a farm in Eiken­hof, south of Jo­han­nes­burg. The agri­cul­tural sec­tor is ex­pected to make a sig­nif­i­cant con­tri­bu­tion to South Africa’s GDP.

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