Predictable farming patterns 'drastically' hit by climate change - agriculture expert | Fin24
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Predictable farming patterns 'drastically' hit by climate change - agriculture expert

Jan 29 2020 14:12
Carin Smith

Climate change is one of the key factors affecting the future of SA's farmers, according to John Hudson, Nedbank's head of agriculture.

"The predictable farming of the past has changed drastically," he said at the annual Nedbank Vinpro Information Day in Cape Town on Thursday. "Sustainability, therefore, forms part of our bigger lending view for clients."

Vinpro is a non-profit company which represents 3 500 South African wine producers, cellars and industry stakeholders.

Daneel Rossouw, divisional manager, agriculture, at Nedbank Business Banking, told Fin24 that, it is very important for the agriculture industry to mitigate against the risks brought on by climate change, especially since SA is a water scarce country.

For the wine industry it is, therefore, important to, for instance look at the correct cultivars to match to the correct soil types and correct slopes. He emphasised the importance of soil health and efficient farming practices regarding soil moisture conservation.

"From an economic perspective the local wine industry has been under constant financial pressure. The last number of years we have, however, seen a positive uptick in profitability due to changes in pricing structures," he added.

"This can be ascribed to the drought situations in Europe - Spain, Italy and France - in 2018 and the drought in SA in 2018/19 that resulted in very low supply and stock levels, even in the European market. This meant SA could sell its wine in higher price brackets."

In his view, the SA wine industry should make it a structural move to continue to supply wine to these higher price brackets over the next number of years. In his view this can be done, even though the number of hectares in SA planted with vineyards have decreased over the past decade from 108 000 to 93 000.

Regarding the impact of land reform on the wine industry, he said it is a reality, but that introducing new wine producers into the market also comes with challenges.

"If you look at the profitability of the majority of wine producers, you will see about 30% are still not profitable. For new entrants to be successful we would need a value chain approach where all the role players contribute - from input suppliers, to financiers, co-operatives and those producers supply wine to," explained Rossouw. This can be done by mentorships, for instance, to ensure sustainability and viability of the smaller businesses.

"The big challenge for new entrants is to be commercially viable. It is important in the South African context to ensure their success, because they are subjected to the same type of input costs as big commercial producers," he said.



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