Agriculture needs R12.5bn for drought relief - task team | Fin24

Agriculture needs R12.5bn for drought relief - task team

Feb 23 2016 10:20
Dane McDonald and Jenna Etheridge

Cape Town - The national drought task team has called on government to declare the current drought a national disaster and provide R12.5bn in disaster relief over the next three years.

The drought task team comprises among others AgriSA and the Agricultural Business Chamber.

South Africa is experiencing the worst drought in 100 years due to high temperatures coupled with the El Niño effect, AgriSA president Johannes Möller said at the release of the task team's report on Monday.

AgriSA executive director Omri van Zyl said that in a medium severity case scenario, the industry requires R12.5bn aid from government to keep afloat.

Van Zyl said fodder is needed for a period of six months for farmers currently hard hit by the drought.

Direct cash grant provision is needed for small-scale farmers and "soft loans" for those in severe financial distress, he said.

According to Van Zyl, interest rate subsidies are needed as well as an instrument to retain farm workers by means of wages and cash grants.

He said small-scale farmers are at high risk as they do not have access to credit, because they do not own land they could use as collateral.

"This drought has the ability to wipe out a lot of them... What we’ve done in the past 15 years with land reform could come to very little if we don’t support them."

Consumers still to feel the effect

The agricultural sector's call for assistance comes as Finance Minister Pravin Gordhan prepares to deliver his 2016 budget speech, which analysts have called his "toughest budget ever".

South Africans have not yet felt the full impact of the drought on their pockets, a Grain SA economist told Parliament’s Portfolio Committee on Agriculture, Forestry and Fisheries on Friday.

Wandile Sihlobo said the white maize spot price for last week rose by 80% year-on-year, and that of yellow maize by 45%.

Increases on raw commodity products have not yet fully filtered through to the consumer.

“For now, people have been living in a good way compared to the situation on the raw commodity side. In a month or so, people will start to react,” he said.

Sihlobo disclosed that the country would have to import about 7.3 million tons of grain to April 2017, based on preliminary estimates.

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