Western Cape agriculture minister Dr Ivan Mayer has praised the industry for its resistance and growth amid the growing socio-economic conditions that are making it unbearable to operate farming entities.
Mayer was responding to Statistics South Africa’s recent announcement of the gross domestic product (GDP) figures of South Africa’s economic performance in the second quarter of 2023 which increased by 0.6%.
According to Statistics South Africa (Stats SA), the agriculture sector increased by 4.2% contributing 0.1% to the GDP.
Western Cape plays a huge role
“While the gross income of agricultural production is reported at the national level, it is still particularly relevant for the province since the Western Cape is a major player in the horticultural sector,” he added.
Mayer said the province was instrumental in the horticulture sector as it was predominantly produced in the Western Cape.
Stats SA confirmed that the top three identified export horticultural products in value terms were citrus fruit, vegetables, deciduous and subtropical fruit.
“The Western Cape agricultural sector is export-oriented and contributes more than 50% on average to South Africa’s national agricultural export to the world.
“It is for this reason that the Western Cape government places such a high premium on good financial governance while our growth for jobs strategy seeks to create an enabling infrastructure which is well connected to global markets,” he said.
Mayer said factors like the Russia-Ukraine war, deteriorating infrastructure, mismanaged municipalities, crime and load shedding were the biggest threats to the growth of the sector.
Meanwhile, a senior agricultural economist at FNB agri-business Paul Makube said profit margins for farming operations were dashed after the recent hefty increase in fuel prices particularly diesel for September.
“The overall agriculture producer price index (PPI) increased by 15% year-on-year in 2022 but has since decelerated sharply in 2023 with the average for the year-to-July at 6%,” Makube said.
Rising fuel costs
“The recently announced increase of R2.84/l and R2.76/l in the price of the two grades of diesel namely, the 0.05% and 0.005% sulphur content respectively, reintroduces cost pressures across the agriculture value chain,” he said.
Makube said for the agricultural sector, it was obviously bad news especially since this comes at the onset of the new summer crop season with preparation for planting in the eastern areas about to begin.
“The grain industry which breathed a sigh of relief with moderation in fertiliser prices now faces higher costs for planting as fuel accounts for about 10% of the grain and oil seed variable costs.
“For the livestock and horticulture sector, fuel is critical for the transportation of produce to markets and recently a huge input in operations and cold storage following the onset of load shedding,” he said.
Load shedding agony
According to Makube, with load-shedding stages escalating, farmers were forced to run generators for an extended period.
“A breakage in the cold chain compromises the quality and safety of perishables such as fruit, vegetables, and meat and may further cause huge financial losses to farmers,” he added.
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