The number of farmers in South Africa is decreasing. This decline is attributed to factors that include produce dumping from overseas, drought, fires and the increasing prices of fertiliser and fuel.
Crime, challenges at Land Bank and the fact that many farmers don’t have insurance or farming subsidies, exacerbate the situation. This is the belief of Christo van der Rheede, executive director of Agri SA.
Van der Rheede spoke to Food For Mzansi following the Competition Commission’s latest of a series of Essential Food Pricing Monitoring reports, which unpacked the impact of the Covid-19 pandemic on food markets in the country.
The Competition Commission is mandated by the Competition Act to investigate, control and evaluate restrictive business practices, abuse of dominant positions and mergers in order to achieve equity and efficiency in the South African economy.
Its latest report says that we are losing farmers in South Africa, with a remarkable drop since the start of the Covid-19 pandemic. And those who remain – especially small-scale farmers – face ongoing challenges.
The report also reveals that dairy farmers alone have declined in number by more than two-thirds in the last 14 years, from 3 899 in January 2007 to 1 053 in January 2021.
Farmers face innumerable challenges
Van der Rheede believes dwindling farmer numbers were brought on by various challenges from which some farmers, especially small and new farmers, can’t protect themselves.
“Farming is a high-risk business. Profit margins are low and every year you are confronted with a range of economic factors, socio-economic factors and political factors that you need to manage.”
He adds that another big challenge lies in imports, especially the dumping of products in South Africa.
“We know that sugar was dumped in 2019, which had a devastating impact on small-scale farmers and even your bigger commercial farmers. We know that poultry products are dumped in South Africa, and it does have a major negative impact on your poultry farmers. Milk is also imported from overseas – and many other products – and that’s the big challenge.
“If you cannot produce something at a cheaper rate than your overseas counterpart, it means you cannot sell that product to the market at a cheaper rate than your overseas counterpart. That then places your financial sustainability under tremendous pressure,” he explains.
The devastation of drought
Van der Rheede believes that droughts have also pushed farmers over the brink.
“We’ve seen that many small-scale farmers have just given up due to drought. In certain areas there have been talks for the past seven to eight years about how they also do not get any assistance from the state or very little assistance from the state when drought hits them.
“If you have 100 sheep and you get two or three packs of fodder or any other form of food aid for your cattle, how long is it going to last before your cattle are in trouble?”
Raging fires in certain areas have furthermore contributed to the country losing farmers and had a negative impact on the financial sustainability of farmers.
Land Bank’s purse is empty
Van der Rheede highlights Land Bank’s financial woes as another worrisome situation.
“The Land Bank’s contribution in terms of production loans to the sector has been declining over the years. In 2017 it was in the region of R37 billion and last year, money that Land Bank has made available in terms of production loans, was only R5 billion.
“This year the Land Bank is very uncertain whether they will have any money available for the sector. And there’s about 4 000 direct clients with Land Bank.”
“If those farmers are not going to be helped by the big banks due to a risky credit record, we are going to see even more farmers leaving the system.
“All that [will be] happening, is that your big farmers who have the capital and who have markets will gobble up those farms too. Because at the end of the day, they produce on a bigger scale and they are also in a position to bring down production costs,” he says.
Fewer dairy farmers, bigger farms
Colin Wellbeloved, chairperson of the Milk Producers’ Organisation (MPO), says factors contributing to the notable decline in dairy farmers in Mzansi include the lack of profitability in the sector. The amount of milk that each farm is producing, on the other hand, is actually increasing.
“What’s happening is that dairy farmers are getting [fewer] but they’re getting bigger. That’s because people are pushing numbers because it’s so unprofitable. In the past, you might have been able to make a living – and a good living – from producing 1 000 litres a day. Now, every business can deliver 10 000 litres a day.”
He explains that the dairy industry of South Africa is by far the biggest in the world and our “farms are quite big”. At this scale, farmers are milking 1 000 cows and the investment for that is probably in the region of R100 million.
Decrease in total milk supply
However, there has been a decrease in the total supply of milk, which he describes as “a bit worrying”.
“I think we’re about 3.9% down for the year, which is a considerable amount. It just shows that we are under pressure.”
“A couple of years ago when our milk price came down, it had quite a lot to do with the drought across the country. But now, to be honest, we actually have been receiving good rainfall for the last 12 months in some parts of the Eastern Cape. Even…in my area it’s been absolutely wonderful; we’ve had way above average rainfall.
“But you know, the price of feed grows much faster than the price of milk,” says Wellbeloved, adding that farmers currently have no incentive to increase production.
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