Wandile Sihlobo: SA's agricultural economy is in recession. Here's how we must adapt | Fin24
 
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Wandile Sihlobo: SA's agricultural economy is in recession. Here's how we must adapt

Dec 10 2019 06:00
Wandile Sihlobo

The third quarter 2019 GDP data released by Statistics South Africa this week illuminated what many in South Africa’s farming towns and villages have been experiencing throughout the year, which is that the farming economy is in recession.

Indeed, production in South Africa’s agricultural sector contracted by 3.6% quarter-on-quarter seasonally adjusted, which marks the third consecutive quarterly of contraction.

Agricultural commodities that have been most challenged in the form of lower output include maize, soybeans and sunflower seeds. Discouragingly, harvests for these commodities declined by double-digit levels in the 2018/19 production year.

Changing patterns

In addition, the livestock sector didn’t fare well either, as biosecurity challenges in cattle, wool and pig industries limited trade for the greater part of this year. These have weighed on farmers’ incomes.

A few years back, the drought would typically be succeeded by a rainy season, which would lead to a quick recovery in farming fortunes. However, in the recent past things have changed somewhat. There are now more frequent occurrences of drought conditions, which has been resulting in relatively longer recovery periods in farming fortunes relative to what we have observed in the past.

In the current production season (2019/20), whose harvest will bear in the 2020/21 marketing year, there is a high probability of yet another drier year. The South African Weather Service and global weather observers such as Group on Earth Observations Global Agricultural Monitoring Initiative (GEOGLAM) indicate a high probability of below-normal rainfall in most parts of the country between December 2019 and February 2020.

This makes one doubt whether there will be a meaningful recovery from the current negative slump in 2020. If there is any recovery, it would be driven by base effects, not a major improvement, all else being equal.

Rising risk

For now, it is not easy to make a strong call about agricultural economic condition in 2020.

It is only at the end of January 2020 where one will have a better sense of weather conditions as well as their impact thereafter. By then, the Crop Estimates Committee would have released an update on the size of area planted in the 2019/20 production season, as well as crop conditions. This should enable us to estimate the farming economy’s performance for 2020.

What we learn from these erratic weather conditions is that the levels of risk in farming have risen, making this sector more complex, and more expensive to insure against. The response in the near-term would-be a call to action for technology developers, specifically crop breeders and remote monitoring solutions, to explore research on shorter-season varieties and the optimisation of agronomical practices, so that farming can still thrive in a climate where rainfall patterns have shifted.

Efforts to improve South Africa’s water harvesting infrastructure and water harvesting agronomic practices, to improve water use efficiency are possible adaptations to this ever-challenging farming environment. Such adaptations will be crucial to reduce the time that agriculture takes to recover from climatic shocks and keeping agricultural GDP in the murky state.

*Wandile Sihlobo is an agricultural economist. He is on Twitter at @WandileSihlobo

wandile sihlobo  |  drought  |  agribusiness  |  agriculture
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