Drought impact bigger than expected

Fields of harvested wheat in the Western Cape
Picture: Reuters/Mike Hutchings

Research conducted into the economic impact of the drought on agriculture has revealed that the sector will take a higher than anticipated economic knock‚ Western Cape Economic Opportunities Minister Alan Winde said.

A report compiled by the Department of Agriculture‚ in collaboration with the Bureau for Food and Agricultural Policy (BFAP)‚ estimates that the impact of the drought on the province’s gross value added (GVA) will be R5.9-billion‚ representing an average production decline of about 20%.

GVA is a measure of all the goods and services produced by a sector.

Modelling conducted in October indicated that the impact to the province’s GVA was likely to be about R4.9-billion.

However‚ record losses in wheat production‚ coupled with the strengthening rand affecting export prices‚ drove this figure up.

The estimated number of job losses in the sector remains at 30 000.

“StatsSA jobs data released in February indicated that we had actually gained jobs in the agriculture sector over the last quarter,” Winde said.

“But if we compare the past quarter to the same time period last year‚ we see the severe impact that this drought is beginning to have on jobs and livelihoods.”

The agriculture sector has, on average, had to cut its water use by 60% and some areas have already drawn down their entire water allocation.

As a result‚ there has been a significant decline in farm output as farmers prioritise crops with higher profit margins.

There was a reduction of about 1 000ha of area planted for potatoes and onions.

Smaller export volumes have resulted in income losses. In addition‚ export prices are being affected because fruit is smaller or sunburnt.

Export volumes are expected to decline between 13% and 20% this year.

Agriculture and agri-processing contribute a combined R54-billion to the provincial GVA.

Winde said: “We recognise how difficult this period has been for farmers.

“These numbers bring home the impact of this drought‚ not just on our economy‚ but on our people.

“We have no choice but to support this vital sector to ensure that it is able to continue production until good rains come.

“The agriculture industry has taken several knocks aside from the drought.

“We estimate the economic impact of avian flu on poultry farmers to be around R800-million.

“Thunderstorms and hail recently destroyed around 200 000 cartons of late season plums and the strong rand is taking its toll on exporters.

“We have‚ however‚ seen real resilience and innovation from farmers.

“Conservation agriculture and the exploration of alternative crops are showing good results for farmers.

“Berries for example‚ have shown excellent growth as a crop‚ despite the drought.”

Early on in the drought‚ the Western Cape Department of Agriculture used its own funds to support emerging farmers and farmworkers‚ particularly in the grain sector‚ with a drought aid package which would allow them to remain in operation.

“This aid was dispensed to farmers who we had already invested in‚ to ensure that they were given the best possible chance of making it through this difficult time,” Winde said.

“We have to work with farmers now to find out how best we can support them to stay on-farm and support the industry.”

Going forward‚ he said the priority would be for the drought to be declared a national disaster‚ so that resources could be unlocked to protect food security and the livelihoods of workers.

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