I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o rT h e c r i s i s i n r u r a l S o u t h A f r i c a

Agri SA © 2019

November 2019

Willem Symington

I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o r

Agri SA © 2019

The importance of agr icu l ture

•Most food secure

country in Africa.

•Best vehicle to

address poverty and

revive rural

economies.

•% GDP contribution:

2% (10-15%)

•Employment in

agriculture: ± 850 000

I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o r

Agri SA © 2019

Drier condi t ions across Af r ica

• In the Eastern and Southern African region,

more than 35,1 million people (50% were

children) need humanitarian assistance.

• Much of Africa has experienced higher levels of

temperature increases than the global average.

• Prolonged dry spells during the second half of

the 2018/2019 rainy season resulted in reduced

seasonal production, food deficits, price

increases and increased food insecurity in

many parts of southern Africa including

southern Angola, Namibia, southern Zambia,

and parts of Lesotho, Botswana and Zimbabwe.

• Namibia was declared a drought emergency.

Temperature trends in Africa

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Agri SA © 2019

T h e d r o u g h t - a f f e c t e d s e t t l e m e n t s i n S o u t h A f r i c a a s a

S p a t i a l P r e c i p i t a t i o n I n d e x ( S P I ) m a p

I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o r

Agri SA © 2019

Vo l u m e i n d e x o f a g r i c u l t u r a l p r o d u c t i o n i n R S A

I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o r

Agri SA © 2019

F i n a n c i a l C o n s t r a i n t s i n D r o u g h t - A f f e c t e d S e t t l e m e n t s• 37,44% settlements in South Africa are affected by drought.

• Real agricultural output was 9.2% lower in the first half of 2019 than in the corresponding period

of 2018.

• The drought conditions of 2013, 2015, 2016 and 2019 has left many maize producers in the North West

and parts of the Free State in a very challenging environment.

• Financial strain is increasing, carry-over debt is rising and many are looking to alternatives in urban

areas.

• In these years, produces not only suffered substantial yield losses, but several producers could also not

plant their intended maize area.

• Late plantings and patchy rainfall are expected to negatively affect grains, while herds recover following

the outbreak of foot-and-mouth disease.

• In the livestock sector, several factors have combined to strain producer margins in 2019 such as rising

feed prices resulting from the dry planting season, as well as the FMD outbreak in Q1 of 2019.

• With domestic consumer spending under pressure, the diversion of products that might otherwise have

been exported into the domestic market caused prices to decline sharply, despite constrained supply

amid a cycle of herd rebuilding

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Agri SA © 2019

A g r i c u l t u r a l d e b t , f a r m a s s e t s a n d d e b t a s a % o f

a s s e t s

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Agri SA © 2019

C o n d i t i o n s i n t h e N o r t h e r n C a p e h a s r e a c h e d c r i s i s l e v e l

•Since April 2019 to November 2019 the number of farms affected

increased from 10 000 farms to 15 500 covering more than 20 million

hectares This relates to 613 447 LSU’s (livestock units).

•The total area affected by the potential disaster drought in the Province

is 27 million ha with a carrying capacity of more than 1 million

LSU’s (livestock units).

• It is estimated that the value of production during a normal situation in

the affected area, would amount to R 2.53 billion per annum.

•The Northern Cape government has granted R30 million to drought

relief. (Excluded wildlife ranchers from support).

•Agri Northern Cape estimates that current relief required amounts to

R425 – R612 million.

•The province is yet to be declared a disaster area.

•Directly dependent employees: 33 000

•Decline 22,5% year on year

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Agri SA © 2019

D r o u g h t c o n d i t i o n s p e r s i s t i n W e s t e r n C a p e

•This is the third season out of five production

years that did not go well due to climatic

conditions.

•The Western Cape drought has had a big

effect on total production, with export volume

down 25%, on average, comparing the 5

years running from 2008/9 to 2012/13 to the 5

years from 2013/14 to 2017/18.

•Directly dependent employees:

• 215 000

•According to the 3rd crop estimate, wheat

production declined from 1.86 million tonnes

in 2018 to 1.69 million tonnes in 2019.

•Although more hectares were planted in the

Western Cape, year-on-year production

decreased by 208 000 tons.

I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o r

Agri SA © 2019

E a s t e r n C a p e h a s b e e n d e c l a r e d a d i s a s t e r a r e a

•Province with the highest

concentration of poverty, but

also has the highest potential

for agricultural development.

•Underutilised arable land with

its agricultural potential decline

to escalating drought

conditions.

•Directly dependent employees:

• 96 000

Wiehan Victor

I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o r

Agri SA © 2019

H o r t i c u l t u r e

Source: Hortgro

P R O D U C T I O N – T O N S – S T O N E F R U I T –B E A R I N G H E C TA R E S ( 4 Y R S + )

I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o r

Agri SA © 2019

H o r t i c u l t u r e

R a i n f a l l v s P r o d u c t i o n P r o d u c t i o n v s W a t e r A v a i l a b i l i t y

Source: Hortgro

Jannie de Villiers

I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o r

Agri SA © 2019

G r a i n C r o p s

North (Summer crops:, maize, soybeans, sunflower, sorghum, peanuts)

Mpumalanga, KwaZulu Natal, Eastern Cape,

and Eastern Free State

• Not enough rain for large scale plant

West Free State, North West and irrigation

Northern Cape and Limpopo

• Inputs are ready but some farmers could

not get financing

• Too much debt

South (Winter crops: Wheat, Barley and Canola)

Swartland • Dry August and September months

• Quality problems

• Third dry year out of four years

Southern Cape • Dry August and September

• Yield less than average

• Third dry year out of four years

• Experience quality problems

• 40 % of Barley produce won’t meet quality

standard of AB Inbev

• Outstanding debt in Swellendam huge problem

Gerhard Schutte

I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o r

Agri SA © 2019

L i ve s t o c k

2 000 000 2 500 000 3 000 000 3 500 000 4 000 000 4 500 000 5 000 000 5 500 000 6 000 000

Cattle

Sheep

Pigs

Slaughter Numbers, 2013 -2018

2018 2017 2016 2015 2014 2013

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Agri SA © 2019

L i ve s t o c k

I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o r

Agri SA © 2019

L i ve s t o c k

Adri Kitshoff-Botha

I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o r

Agri SA © 2019

W I L D L I F E R A N C H I N G = T H E R E A L I T I E S

• Northern Cape: 80% loss of total game numbers, and growing.

• Eastern Cape (beginning of 2018): 300,000 mortalities, despite

reduced herds

• Game mortalities aren’t as visible livestock in a kraal.

It happens on marginal land in mountains, valleys and plains.

Game farmers SMELL the death and see vultures circling over

wildlife carcasses

• Buyers’ market dropped (lack of feed); Hunters/tourism market

negatively affected.

• Short-term droughts have proved that rain does not bring immediate

change. It will take 3-5 years to start replenishing stocks, etc.

• LIVESTOCK LOSSES destroy livestock farmers;

GAME LOSSES destroy game farmers … We have the same need!

Chris Van Dyk

I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o r

Agri SA © 2019

T h e E f f e c t o f t h e C u r r e n t D r o u g h t S i t u a t i o n o n t h e

S o u t h A f r i c a n D a i r y I n d u s t r y

• The coastal regions (85%), as well as the interior parts (15%) of the country

esp. the Free State and North West, are affected.

• Herd sizes are busy deteriorating, due to the culling of even lactating

cows to a level where it is not economically viable to keep on milking.

• The low availability of roughage (silage), concentrates at excessive

high prices, and the low/no availability of water from rivers, dams, and

boreholes together with the low milk price, are all contributing to a

negative spiral effect in the dairy industry, with more than 60% of dairy

farmers in certain provinces indicating that they need to call it a day.

(66% in the Freestate, 33% in Gauteng, 50% in North West, 42% in the

Western Cape, 20% in Kwazulu-Natal as well as the Eastern Cape).

• More than 35,000 (> 100,000 family included) people are working on

dairy farms. Farmers and secondary industries are downsizing a.r.o.

the drought.

• A flow-on effect is being felt in the local towns that depend on the

farming community for their economy.

I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o r

Agri SA © 2019

T h e E f f e c t o f t h e C u r r e n t D r o u g h t S i t u a t i o n o n t h e

S o u t h A f r i c a n D a i r y I n d u s t r y

• It is clear that South African producers are having a very difficult time to

meet ends.

• In the short to medium term financial support from government needs to be

investigated and implemented to ensure the supply of fodder to both

commercial and emerging dairy farmers.

• The farm gate milk price to the milk producers needs to increase to a level

that can support the high input prices.

• Although most milk farmers are already optimising all aspects around

financial management, production, and reproduction financial inputs from

government and a higher milk price will also contribute to maintaining the

health status of the national dairy herd by maintaining immunisation,

deworming as well as vitamin and mineral supplementation of all dairy

animals.

Christo van der Rheede

I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o r

Agri SA © 2019

S e c t i o n 7 C o m m i t t e e R e c o m m e n d a t i o n s

National Drought Management Commission

The establishment of such a commission should focus on providing the government with an effective

and systematic means of assessing drought conditions.

Disaster Fund

It is proposed to establish drought and disaster fund. Management of such a fund would have to be

decided through an agreement among the sector stakeholders

Public-private partnerships (PPPs)

These partnerships could be geared towards, for example, establishing forums to establish supportive

financing terms, including subsidised interest rates and extensions to the capital repayment periods, etc.

Multiperil agricultural insurance

It could be used to support existing insurance options to which government can contribute in the form of

insurance subsidies which could be used towards lowering the cost of insurance premiums as well as

covering a portion of the excess not covered by insurers.

Early Warning System (EWS) in disaster risk reduction

An EWS is a system where people receive relevant and timely information in a systematic way prior to

disaster in order to make informed decisions and take action for Disaster Risk Reduction (DRR)

elements.

I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o r

Agri SA © 2019

R e c o m m e n d a t i o n s

1. Emergency measures with regards to water and food relief

2. Drought insurance

3. Support towards the retention of farm workers and labour wage bill

4. Interest subsidy on production loans

5. Interest subsidy on production debt

6. Bridging finance for affected farmers to manage down in the repayment of

agriculture debt

7. Interest subsidy on loans for replanting

8. Tax breaks for farmers in need

9. Financial assistance to buy fodder

10.Support to remove invasive species

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Agri SA © 2019

Agr i SA and Depar tme nt o f Agr icu l t u re , Lan d

Reform and R ur a l Deve l opmen t have agr eed t o

co l l abora te on an e f fo r t to mi t iga te drought r isk .

This includes sharing and promoting smart agricultural best

practices, working together on strategies to mitigate the impact of

climate change, working together to ensure the distribution of

drought aid in an effective and efficient way and to establish an

inter-sectoral task team representative of the agriculture value

chain to assist with efforts to help our farmers and farmworkers.

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Agri SA © 2019

Ag r i S A D r o u g h t D i s a s t e r F u n d

I m p a c t o f t h e d r o u g h t o n t h e a g r i c u l t u r a l s e c t o r

Agri SA © 2019

Appeal to Publ ic and Corporate Sector

Agri SA appeals to the public and corporate sector to donate

funding, humanitarian aid, fodder, diesel, water, aid to schools

and hostels via the Agri SA fund and structures.

Sign a debit order of R50 a month to assist our farmers, farm

workers and rural towns to overcome the devastating impact of

the drought. Thank you

ConclusionOmri van Zyl