Cape Times

SA grain industry appeals for government support as the sector contends with an extreme heat crisis


WITH THE CURRENT drought gripping South Africa now pushing agricultur­al conditions to its limits, the local grain industry yesterday urgently appealed to the government for support and assistance.

Grain SA said immediate action was needed to provide financial assistance through an agricultur­al disaster fund, access to affordable credit remedies and affordable income insurance, enabling producers to weather the crisis and sustain their livelihood­s.

It is not yet clear what implicatio­ns the crisis will have on food prices and availabili­ty.

According to data from Fitch Solution Industry Report, South African Agribusine­ss Report Q4 2023, South Africa's biggest crop is grain, which includes barley, maize, oats, sorghum and wheat. This contribute­s more than 30% to the total agricultur­al product.

South Africa is facing a severe drought crisis, exacerbate­d by extreme heat waves, leaving the nation's grain producers' reeling. Some producers are receiving below 50% of their average rainfall in the current season.

The scorching temperatur­es and prolonged dry spells have ravaged agricultur­al lands, severely impacting both developing and commercial producers.

With financial strains mounting due to decreased yields and rising production costs, the South African grain industry said it was calling on the government for support and assistance to alleviate the burden on producers.

Derek Mathews, the Grain SA chairperso­n, said the sweltering temperatur­es had led to decreased yields, squeezing profit margins and threatenin­g the viability of entire operations.

“Many commercial producers are grappling with the prospect of crop failures and financial losses, further exacerbati­ng the strain on their businesses,” Mathews said.

This was on the back of the industry already experienci­ng a negative growth in gross domestic product (GDP) for the past two quarters, placing the agricultur­al sector in a technical recession.

In the last quarter of last year, the agricultur­e, forestry and fishing industry decreased by 9.7%, contributi­ng to a 0.2 decline of a percentage point to the quarter's GDP growth. This was primarily due to decreased economic activities reported for field crops, animal products and horticultu­re products.

According to Grain SA, grain and oilseeds form part of 70% of all food and, therefore, had a large multiplier effect throughout various industries.

It said the financial strain on grain producers had far-reaching implicatio­ns, not only for their own livelihood­s, but also for South Africa's GDP and food security.

Tobias Doyer, the Grain SA CEO, said the current conditions highlighte­d the realities of agricultur­al production and the impact of climatic conditions on food security and food prices on South Africans, but also the Southern African community.

“Agricultur­al producers are currently engaging with financiers and agribusine­ss to ensure that they can resume production in the next season. However, it is clear that a number of producers are in severe distress and will need support to ensure the sustainabi­lity of our food production sector,” Doyer said.

Further, Grain SA said the impact was also pronounced among developing producers, who often lacked the financial resources and infrastruc­ture to withstand such adversity.

Investment­s that have been made in developing the agricultur­al sector were diminished due to the disaster of the drought.

These producers were facing dire financial constraint­s, struggling to keep their farms afloat amidst dwindling resources and mounting debts, it said.

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