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Drought impact on W Cape economy worse than anticipated - minister

Mar 01 2018 21:00
Carin Smith

Cape Town - Compared to the previous season, aggregate income after costs in the agriculture sector in the Western Cape is estimated to have declined by up to R5.9bn. This is due to the lower output as a result of the drought.

The impact of the drought on the Western Cape economy cannot be sugar coated and is actually higher than previously anticipated, Western Cape minister of economic opportunities Alan Winde said at a media briefing on Thursday.

"We need the drought to be declared a national disaster and an allocation from the new Cabinet for infrastructure investment in our dams - like Brandvlei and Clanwilliam," said Winde.

"We will continue to invest in smart agriculture. Research is very important. A whole new water economy will come out of this [crisis] and we need to use lots of innovation in agriculture to ensure that the crisis enables us to remain competitive. You cannot compete if you have no products to compete with."

Agriculture and agri-processing contribute a combined R54bn to the provincial gross value added - a measure of all the goods and services produced by a sector. Of all the province’s exports, 52% comes from the agriculture and agri-processing sectors. 

Research indicates that about 30 000 jobs will be lost in the province due to the drought. According to Louw Pienaar, an agricultural economist at the Western Cape Department of Agriculture, about 22% of rural jobs in the province relate to agriculture. Many of these jobs are for unskilled or semi-skilled workers. This means these workers will not easily be absorbed by the rest of the economy if they lose their jobs in agriculture.

Pienaar estimates that it will take between eight to ten years for agriculture in the province to recover from the impact of the drought.

Production decline

A report by the Department of Agriculture in collaboration with the Bureau for Food and Agricultural Policy estimates that the impact of the drought equates to an average production decline of about 20%.

The agriculture sector in the province has on average had to cut its water use by 60%, and some areas have already drawn down their entire water allocation. This has resulted in a significant drop in output as farmers prioritise crops with higher profit margins such as fruit, and abandon vegetables and other crops.

The impact of the drought is already evident in record wheat production losses. There was also a reduction of about 1 000 hectares of area planted for both potatoes and onions.

Export volumes of agricultural products from the province are expected to decline between 13% and 20% this year. Apart from the impact of the stronger rand, export prices are affected because fruit is smaller or sunburned.

Pienaar also foresees that a lot of fruit which would normally have been exported, will now go into the local market.

As if the drought in itself was not enough, Winde pointed out that the impact of avian flu on poultry farmers in the province has been about R800m. Furthermore, thunderstorms and hail recently destroyed around 200 000 cartons of late-season plums.

At the same time, Winde commended the resilience and innovation by farmers during this trying period.

He pointed out that 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.

The provincial government is trying to minimise the job loss impact through skills development programmes.

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