Covid-19: Agri will show its worth in third wave

Even as we emerge from the second wave of Covid-19 infections, economist Lucius Phaleng casts a nervous eye forwards to the expected and feared third wave

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Lucius Phaleng (29) works as an agricultural economist at the National Agricultural Marketing Council (NAMC). One of the impressive things about his work is that he advises the Minister of Agriculture, Land Reform and Rural Development on market access opportunities in the international markets.
The second wave of Covid-19 infections appears to be moderating across South Africa, bringing hope for the start of economic recovery. But let’s not get our hopes up too soon, warns Lucius Phaleng, agricultural economist at the National Agricultural Marketing Council. He believes the risk of the third Covid-19 wave will likely delay economic recovery in the country.

It is worth noting that South Africa still continues to struggle through the first and second waves of Covid-19.

Key economic sectors such as tourism, manufacturing and trade were negatively affected as most of the economic activities were put on hold. These sectors previously contributed a great deal to our economic growth. 

The annual average inflation rate was 3.3% in 2020 – the lowest annual average rate since 2014 (1.6%) and the second lowest since 1969 (3%). This simply illustrates the impact of first and second wave of Covid-19 on the development of the economy.

The second wave of infections appears to be moderating, which brings confidence in boosting the economy, with most economic activities now operating. 

Winter approaching

However, there is a risk of the third wave as winter approaches, which will cause a delay to economic recovery. Previously affected sectors will probably be worse off under the third wave.

As South Africa continues to struggle, the agricultural sector was one of the few that contributed positively to South Africa’s GDP and is more likely to improve its value in the expected third wave. 

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Covid-19 regulations identified agriculture as an essential service to ensure that food production continues while following all food safety and public health requirements. This has ensured continued access to fresh produce. 

The most negatively affected agricultural products were those that are typically associated with restaurants and those feeding into manufacturing processes. We also saw a drop in seafood exports during the first and second wave, but many other agricultural industries continued relatively unaffected. 

Boosted by weather conditions

A rise in the production of field crops and horticultural and animal products boosted activity by 18.5% in the third quarter of 2020. Favourable weather conditions and a rise in agricultural exports also contributed positively to the growth in the agricultural sector.

As we move out of the second wave, even while anticipating the third to hit within the next few months, we need to apply the hard lessons the pandemic has taught us thus far. The affected economic sectors such as tourism, manufacturing, trade and agriculture need to be supported with financial relief to ensure that they recover and contribute to our economy.

On the social side, the expansion of healthcare capacity is critical to deal with the third wave. Both the first and second waves showed that the health sector could barely remain standing.

Also, the expansion of social relief to support the most vulnerable parts of society, such as temporarily jobless citizens, are an imperative.

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