The agricultural sector was considering the adoption of smart disaster aid after sections of the industry were brought to their knees by the prolonged drought, Agri SA executive director Omri van Zyl said on Monday. "By 'smart' we mean that we take small bites at it to help ourselves over the next few years," Van Zyl said.
The plan would also include favourable financing repayment periods through state-backed development banks. Such discussions were ongoing, he said.
Another leg to the plan was to create a bail-out fund over the long term to combat future droughts as the commercial farming sector is not a direct beneficiary of the government's disaster relief. Van Zyl cited the sector's maturity and the willingness of banks to assist farmers as factors that could help the plan off the ground.
"We cannot have a year like we've had last year. We didn't have the mechanisms to support the farmers through the period," Van Zyl said.
Among the worst-hit was the sugar industry but it is expected to recover following high rainfall. Sectors that depend on maize and soya beans for stockfeed, such as the poultry and pork industries, saw margins shrink because of higher feed prices and greater imports, especially from Europe.
He said the industry would have to find ways to protect pricing, especially in cases where farmers are net price takers, to incentivise growth. "We need to look at how we can look at optimising profitability for the whole value chain," Van Zyl said.
The drought forced red meat producers to cull stock because of the lack of feed. But the rains had improved the situation. "There were quite a few farmers teetering on the brink of going beyond their credit limits where they would have been called up by the bank for repayment," Van Zyl said. "The rains have definitely made a difference in that regard. I think we will definitely see a decline in the number of farmers that are in financial difficulty and that have cash flow issues."
Wessel Lemmer, agricultural economist at Absa, expected improvements in food price inflation from May and possibly in the balance of payments because the country would need to import less. But there was still a maize deficit, which meant imports of at least 1.1-million tonnes.
In addition, he said: "It's very important that we see follow-up rainfall, especially in February." Water restrictions continued in winter rainfall regions in the Western Cape, where for the past eight to nine months the average rainfall was lower than the previous three to four years.
Bransby Bulo, SA Weather Service forecaster, said that up to 60% rain was forecast for the central parts of the country, including the Northern Cape, Eastern Cape and Free State.
"This week there are signs that we are going to get more rain," he said, but it was not expected to be as intense as the past weekend, when the Northern Cape, Gauteng and Limpopo received more than 100mm.
The west of the country would not receive much rain.Source: Business Day