The country’s agriculture sector experienced a tumultuous beginning to the year marked by various challenges. Severe drought conditions in certain regions posed a significant threat to crop production and livestock farming.
This was revealed by Agbiz chief economist Wandile Sihlobo during the presentation of the Agbiz/IDC agribusiness confidence index report for the first quarter of the year 2024. According to Sihlobo, the industry remains stagnant amid local challenges farmers face and uncertainty ahead of the national elections.
Drought, crime lead to decline
“Although weather-related risks are a major concern for this year, there remain aspects that policymakers, collaboratively with the private sector, could tackle to unlock the long-term growth potential of South Africa’s agriculture.
“These include addressing the weakening municipalities, deteriorating roads, animal diseases, efficiency in the registration of new agrochemicals and seeds, rising crime, inefficient logistics, and persistent load shedding,” he said.
Sihlobo said with the elections scheduled for May, it is unclear if there would be serious focus on policy matters in the months ahead which might impact the sector.
According to Sihlobo, the Q1 2024 reading was below the neutral 50-point mark, implying that South African agribusinesses remain downbeat about business conditions.
“This pessimism emanates from mostly the same factors as in recent surveys, which are yet to be addressed, and new challenges on the weather front,” he said.
Sihlobo said the rising crime, lingering animal disease challenges, uncertain policy environment ahead of the elections, persistent episodes of load shedding and increased geopolitical uncertainty also remain top-of-mind challenges for agribusinesses.
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He added that the turnover subindex witnessed a significant decline of 14 points, attributed to expectations of poor summer crop harvests and elevated input costs.
“Similarly, the volume of export sentiment fell by seven points, signaling potential declines in export volumes amidst concerns over under-performing ports and railways.
“The general agricultural conditions subindex registered a stark decline of 22 points to 18 in Q1 2024, reflecting the devastating impact of the heatwave and dryness experienced since the start of February. Crop harvest forecasts are expected to be notably lower in the coming months, exacerbating the challenges faced by farmers,” explained Sihlobo.
Farmers are concerned
Phaladi Matsole, a concerned grain farmer from the Free State, emphasised the need for decisive measures to avert catastrophe.
“We are at the edge of catastrophe and this means most farmers will be out of the game, they won’t be able to make it back for the 2024-2025 production season,” Matsole expressed.
Matsole advocates for the declaration of a state of disaster and the recognition of agribusiness as an essential service, highlighting the sector’s fragility and vulnerability to hazards.
Furthermore, Matsole urges the government to consider implementing a national crop and animal insurance scheme, providing much-needed support and relief to farmers grappling with adverse conditions.
“We are calling upon the government to declare a state of disaster and take the agribusiness as an essential service because the sector is so fragile and vulnerable to hazards in both plant and animal production. The other option is for the government to introduce national crop and animal insurance where farmers will be met halfway or subsidised to meet insurance prerequisites,” he said.
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