No need for panic yet, say farming experts. From Moneyweb.
The farming sector in KwaZulu-Natal (KZN) is growing at a 12% clip thanks to good rains, while the country’s key maize growing areas have delayed plantings due to the unseasonally dry weather.
Dawie Maree, head of information and marketing at FNB Agriculture, says the resurgent KZN farming sector contributes about 4% to the province’s GDP.
A report last week by Agbiz chief economist Wandile Sihlobo says despite late rains, summer crop farmers are still upbeat about the prospects for the coming season, and plantings are expected to be the highest in the last three years.
Expectations are that plantings will be about 7% higher than last year, or roughly 3.9 million hectares, driven in part by better domestic market prices for maize, sunflower seed, soybeans and groundnuts.
Farmers, however, are delaying plantings as a result of low soil moisture and the late arrival of seasonal rains on the Highveld.Read: Farmers raise alarm on drought threat, seek aid
“There are prospects for good rainfall in the first week of November 2019,” says Sihlobo. “In fact, the next three months might bring sufficient moisture in most parts of the summer growing areas of South Africa. The South African Weather Service forecasts above-normal rainfall in the central to eastern regions of South Africa between November 2019 and January 2020. This could help boost soil moisture and thereafter plantings and crop-growing conditions.”
While KZN’s agricultural sector is recovering from a severe drought, growth in the rest of the country is more pedestrian, with single-digit growth in the first half of this year. Maree says good rains have helped sugar crops on the north and south coasts. Dairy and irrigated maize in the Midlands region have likewise been helped by decent rainfalls in the previous production season, boosting cattle and commercial poultry production inland.
Large tracts of land previously under sugar in KZN have been turned over to more profitable macadamia and avocado plantations. According to Macadamia SA, 90% of production is being exported, mainly to China.
Maree says the agricultural potential of the province is still growing, due to the availability of underutilised arable land in tribal areas.
Avocados are selling for between R80 to R140 per 16kg bag, with rising export demand from Europe, the Middle East and the soon-to-be-developed Far East market.
Key risks for farmers:
- Land reform and expropriation without compensation is one of the key risks, and there is little that farmers can do to mitigate this, says Maree. “We consider the new policy on land a risk for agriculture but are not overly concerned at this stage. We do expect more clarity around March next year.”
- Climate change is another risk, and one that farmers are better able to manage. Following the 2016/17 drought, farmers diversified both products and geographical areas. Small-scale farmers are less equipped to diversify geographically, but most have already diversified into new crops to mitigate climate risks.
- Cheap imports of sugar and milk. There is heightened risk of cheap sugar imports from South America and neighbouring countries, while dairy imports are reportedly flooding through KZN ports – particularly long-life milk, which enters the country tariff-free, while milk powder and cheese carry tariffs of roughly R4.50 a kilogram.
- Livestock prices took a knock following the outbreak of foot-and-mouth disease in January this year. The country has excellent poultry farmers, but they are battling dumped products and increasing feed costs.
Assuming late but otherwise normal rain patterns, Agbiz says the increased plantings could result in a good harvest and a drop in commodity prices.
In the case of major crops such as maize, the last time SA planted a large number of hectares close to the 2.5 million hectares intended by farmers this season was in the 2016/17 production season. This was accompanied by a record harvest of 16.8 million tonnes. This does not necessarily mean the coming harvest will match or exceed this prior level, but is an indicator of what could happen.
KZN’s agricultural recovery, despite the headwinds, is still poised for growth and an even greater contribution to the national GDP, says Maree.