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Why farmers matter

Nov 22 2012 07:13 *Geoffrey Chapman

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There was an overwhelming response to the article published on Tuesday about SA farmers looking north, so I thought I would clear up the argument with a few trade statistics.

Firstly (as a disclaimer), the trade data I looked at considered the following categories of agricultural products:

• Live trees, plants, bulbs, roots, cut flowers, etc,
• Edible vegetables and certain roots and tubers,
• Edible fruit, nuts, peel of citrus fruit, melons,
• Coffee, tea, mate and spices,
• Cereals,
• Milling products, malt, starches, inulin, wheat gluten,
• Oil seed, oleagic fruits, grain, seed, fruit, etc not elsewhere specified,
• Lac, gums, resins, vegetable saps and extracts not elsewhere specified, and
• Vegetable plaiting materials, vegetable products not elsewhere specified.



These products are accounted for in Figure 1 (above) which shows South Africa’s exports, imports and trade balance between 2001 and 2011.

Evidently, there is an increasing trade balance seen in the figure as imports average 51.3% of the value generated by exports for the period. In other words, the trade balance is positive and growing because exports annually generate more income than is spent on imports.

The agriculture, forestry and fishing industry has generated more than R100bn in real output since 2008 – despite the effects of the global economic crisis.

Imports, thus, account for no more than 13% of real output and remain substantial, accounting for an average of roughly R11.4bn between 2007 and 2011. As a point of interest, between 2008 and 2011 exports accounted for an average of 22.1% of real output.

So what might a migration of farmers mean for the greater South Africa?

Firstly, I imagine that exports would start to drop as imports start to rise, implying that at some point, the trade balance will start declining. If left unchecked, this may even become negative.

I have previously discussed the negative consequences of South Africa’s trade deficit, so I will leave it at that. Secondly and perhaps most importantly, farmers' departure will diminish South Africa’s food security. Lastly, unemployment will increase.

Food security is currently a global issue and is pillared on food availability and access. Availability is defined as sufficient quantities of food being available on a consistent basis and access is defined as having sufficient resources to obtain appropriate foods for a nutritious diet.

Farmers leaving South Africa threaten these two pillars – and there are only three.

Worsening food security, along with rising unemployment, will lead to public unrest (as if we need more) and rising food prices, which in turn will exacerbate the public unrest.

Rising food prices will also contribute to inflation and higher inflation means higher interest rates. To sum it up, there will be a knock-on effect of negative consequences.

The agricultural sector in South Africa is already battling with many of our competing nations, due to their agricultural sectors being subsidised.

The current climate in South Africa is not conducive to turning this around and something needs to be done to ensure that these farmers remain.

 - Fin24

*Geoffrey Chapman is a guest columnist and trade policy expert at the SABS.
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