SA’s agricultural sector, which has remained relatively unscathed during the Covid-induced lockdown, is set to emerge as one of the few bright spots in the overall depressed economic outlook for the country.
This is despite some challenges, including uncertainty around land reform and the recent move by the government to revoke a decision to consider drought a national disaster. The latter recently left many farmer organisations fuming.
In July, Agri Western Cape CEO Jannie Strydom said the drought in large parts of the Western Cape was far from broken and the government's revocation of the classification of drought as a national disaster came as a shock.
“Although widespread and good rains have fallen in large parts of the province in recent weeks, the worst drought-stricken areas have had little to no rain.”
Strydom said revoking the drought as a national disaster indicates that the government has “little empathy” with the agricultural sector.
“Agri Western Cape understands the need caused by Covid-19, but the need caused by the drought can’t be overlooked. The ability of many producers to survive has been under pressure for years, and we are now looking at the inevitable reality that producers no longer have the financial endurance to cope.”
The sector contributes about 3% to GDP and is responsible for close to 900,000 jobs.
Notwithstanding the challenges the sector faces, it does seem productivity will largely be uninterrupted by the health crisis, which has devastated many sectors of the SA’s economy such as tourism, hospitality and the liquor industry.
Wandile Sihlobo, head of agribusiness research at the Agricultural Business Chamber (Agbiz), notes in a market update published on Monday that SA’s agricultural sector could have a strong start to the planting season. Despite the rising number of Covid-19 infections, only a limited workforce is required for grain-planting activities, specifically in large commercial farming operations.
“Nevertheless, there is a risk in smallholder farming operations if the virus infections rise notably around October. Apart from this, the 2020/2021 season promises to be another good year from an agricultural output perspective and also input costs perspective for farmers,” Sihlobo says.
He highlights that the SA agricultural sector has thus far successfully harvested summer crops and horticulture with minimal interruptions from the pandemic. Farmers and agribusinesses had to, however, adjust their usual work processes to comply with health regulations and limit the spread of the virus.
“In about a month, the focus will shift to planting activity of 2020/2021 summer grains, oilseeds and various horticulture products. This is at a time when the Covid-19 infection numbers are on the rise, with the Western Cape, Gauteng, Eastern Cape and KwaZulu-Natal currently being the hotspots of the virus in SA. These provinces also account for 60% of SA’s agricultural output, which raises questions about whether the surge in infections could negatively impact the planting season,” says Sihlobo.
According to him it is very unlikely that Covid-19 would affect the planting season.
“We doubt that this will be the case. A large part of SA’s commercial agricultural sector is highly mechanised, which means the sector could operate with a limited number of people during planting. The periods that typically require increased labour are the harvest period, which for summer grains is currently at completion stage with minimal interruptions from the pandemic.”
He adds: “Nonetheless, the seasonal workforce, which would have increased somewhat in a year of bumper grains, oilseeds and horticulture harvest as in 2020, might not have seen that opportunity this year given the need for social distancing.
“What we suspect happened on the farms is perhaps an increase in hours worked with a limited workforce.”
On August 11, Stats SA will release the quarterly labour force survey data for the second quarter of 2020, which should provide some clarity on the effects of the pandemic on employment in the sector.
Sihlobo says the wine and tobacco industries could see a decline in employment because of cash flow constraints not caused by the virus per se but by the stringent regulations on domestic sales. This, however, will appear in the official data only in the third quarter of 2020.
“The segment of the farming sector which is not highly mechanised and where operations might be negatively affected if the pandemic continues to spread widely in the coming months is smallholder farmers. In the context of SA, the smallholder farmers’ output does not affect the country’s national food security, although it plays an important role in supporting household food security.
“These farmers, who are mainly in the former homeland provinces of KwaZulu-Natal, Eastern Cape and Limpopo, are also critical from a transformation and inclusivity perspective for the sector.
In the case of KwaZulu-Natal and the Eastern Cape, the infection numbers are already relatively higher than most provinces. The next couple of months, ahead of October when plantings are supposed to start, will be crucial to observe if there will be some flattening of infections or a continuous rise, specifically across rural communities,” says Sihlobo.
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