Mzansi’s financial year is off to a rocky start with an expected inflation hike. While the inflation outlook remains at 3.5%, FNB-Agribusiness says things could most likely change.
The 2020 supplementary budget review anticipated that South Africa’s real GDP growth of was expected to plummet by 7.2%. This due to restricted economic activity to contain the spread of Covid-19. Now, there is a looming inflation hike for April onwards of 50 basis points says, the Reserve Bank.
But what does this mean for the agri sector?
Agricultural economist at Stellenbosch University, Lunathi Hlakanyane, says that this may have significant impact on the cost of borrowing and the average price of the food basket.
“Inflation refers to a sustained increase in the cost of living as prices rise,” explains Hlakanyane. “The most common metric to measure inflation is the consumer price index (CPI). This measures the average price changes over time that consumers pay for every basket of goods.”
According to Hlakanyane the most immediate impact on agriculture is that the cost of finance of farm operations may likely rise.
“This will compromise optimal productivity and, by definition, gross farm profitability,” he says. “Secondly, we will also likely see a wide scale deflection of investment in farm machinery, equipment, buildings, dams, and so forth.”
This will place enormous pressure on the primary link of the agricultural value chain, which may in turn may offset further food price inflation down the line.
“A further rise in food prices will most certainly nudge a lot of households into the brink of food insecurity,” Hlakanyane warns.
Other podcast highlights:
Besides the podcast interview with economist Lunathi Hlakanyane, this week’s Farmer’s Inside Track also has other highlights for the agricultural sector:
- In this week’s episode of Farmer’s Inside Track: the 12 principles of permaculture! Permaculture might be the future of agriculture. In some ways this farming technique can apply to our communities and our farming practices.
Journalist Dona van Eeden chats to Andrew Ardington, founder of the Regenerative Agriculture Association of South Africa. He sees permaculture as falling under the broader concept of regenerative agriculture. Listen to Farmer’s Inside Track to find out why! - When Manisha Gupta and her husband acquired a piece of land in the hope to grow clean food and harvest fresh water, they did not know that their lives would change forever.
They established Aanandaa Permaculture Farm as an example of working with nature to create a self-sustaining and regenerative ecosystem.
In this Farmer’s Inside Track episode she unpacks how they’ve managed to work with nature to create a self-sustaining and regenerative ecosystem on their farm. - Farmer’s tip of the week: Delwyn Pillay, full-time volunteer and activist for Greenpeace Africa, shares a few quick tips for new permaculture farmers.
Listen to this week’s Farmer’s Inside Track podcast to find out what they are.
ALSO READ: Permaculture: 12 principles to farm like Mother Nature - Book of the week: Our book of the week is ‘The leader who had no title’ by Robin Sharma. If you are into self-mastery and leadership then this book is a must read!
Our Sinelizwi citizen journalist, Lunga Jakuja, reviews this book for our listeners. - App of the week: If you’re a cane grower in KwaZulu-Natal or Mpumalanga, then listen up! PurEst™ is an innovative mobile app for cane growers offered by the South African Sugarcane Institute. Created by Ludwe Majiza, an Eastern Cape–born permaculturalist, the app provides growers with helpful ripening recommendations based on Brix readings.
- Soil Sistas: Our brand-new campaign celebrating female farmers across South Africa is back with Tsholo Penyenye. She runs a mixed farming operation producing cattle, feed and crops in the North West.
Powered by Corteva Agriscience, Soil Sistas will highlight some of the extraordinary women who are participating in the Corteva Women Agripreneur Programme 2021, a year-long blended development programme at the Gordon Institute of Business Science (GIBS) Entrepreneurship Development Academy (EDA). - Mzansi Flavour: Christmas is great and all, but if you ask us, the best holiday feast of them all is Easter lunch. Johannesburg food stylist and cookbook author, Dianne Bibby, shares her secret to preparing a traditional dish for Easter.
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