Drought Response Feedback Presented by Annelize Crosby Introduction

Drought Response Feedback Presented by Annelize Crosby

Introduction • The turnover of the SA agriculture sector is approximately R 227 billion per annum with a net tax contribution of approximately R 50 billion in primary agriculture alone over the past 10 years. • SA Agriculture represents 2, 5% of the economy –value addition 20 to 25%. • SA Agriculture employs more than 850 000 people in the sector and is ranked first in terms of food secure country in Africa. • The worst drought conditions on record resulted in agricultural production declining by 8. 4% in 2015. • Agri SA has called for emergency assistance from government, in either state guarantees or direct assistance to farmers through the structures of the Land Bank, Agribusinesses or special purpose vehicles.

‘’Coming as it did after an already below-average production season in 2015, the combination of the drought and the weaker exchange rate… impacted severely on agricultural commodity prices in South Africa. ’’ BFAP 2015/16 Policy Brief on the Drought

Impact of Drought on Maize • The Crop Estimates Committee(CEC) published in 25 February 2016 shows that the area for summer crops to be planted decreased by 26, 0%. • The maize area planted decreased by 27, 1% and the decline is more severe in the white maize area. • The second crop estimates revised production slightly downward at 2, 5% for maize, 5, 7% for soya beans and 21, 8% for sorghum. • Sunflower, groundnuts and dry beans crop estimates increased by 10, 5%; 15, 3% and 25, 4% respectively as farmers moved from maize to these crops due to the planting window period being missed and delayed rains.

Impact of Drought on Livestock • The effect of the drought is also clear in grazing conditions and the impact on extensive livestock industries that depend on grazing has been catastrophic. • In terms of livestock, there has been a 15% reduction in the national herd. • There has also been increased slaughtering during the drought and this will continue to impact production for the next three to four years. • Reported impact on livestock states that 246 631 small, medium and large farmers were severely affected.

Impact of Drought on Cash flow • The drought in 2015 placed significant pressure on farm income and affected the cash flow position of farmers negatively. • This deficit had to be transferred to 2016 which was also an even drier year thus far and hence the cash flow position of farmers is expected to deteriorate even further. • Recent increases in the repo rate by the South African Reserve Bank, has impacted negatively on the financial position and debt levels of producers. • Apart from the financial pressures related to decreased production in current drought conditions and the impact on farm income, South African farmers are faced with higher input costs compared to their counterparts in other countries. • South Africa is a net importer of fertilizer and chemicals or key components thereof and the exchange value of the rand has pushed up these costs considerably.

Support required by farmers • Soft loans aimed at herd building. • Emergency measures with regards to water and food relief for farmer and farm worker communities. • Interest rate subsidy on new production credit. • Interest rate subsidy on carryover debt. • Farmworker salary support subsidy. • State guarantee scheme aimed at outstanding debt. • Humanitarian aid in the form of food parcels. • These support measures were communicated on a regular basis to government.

Situation currently • Country experienced extreme drought conditions in 2015/16 still not having dissipated. • 8 provinces or parts therefore are still declared disaster areas. • Grazing deteriorated and bleak picture is still prevalent for winter season. • Summer grain production decreased significantly. • Many commercial and emerging farmers face a serious financial predicament. • There is no clarity on government supported disaster measures. • Agricultural employment at risk and employee specific support required.

Government support requested

Budgetary implications: Winter and Summer Grains and Livestock

Budgetary implications: Sugar Industry

Current dam levels in South Africa

Response from government departments thus far • According to Mr Ken Terry, Head: National Disaster Management Centre, COGTA said the drought is being managed in terms of the Disaster Management Act. • Currently there is a joint drought committee of all relevant departments that has been set up and is monitoring the implementation of drought response and measures throughout the country. • All sectors departments, provinces and state institutions have had to reprioritise their funding to deal with the current drought and about R 1 billion has been made available through reprioritisation. • None of this funding was channeld towards commercial farmers.

Response from Government departments thus far • According to Mr Ken Terry, Head: National Disaster Management Centre, COGTA said the drought is being managed in terms of the Disaster Management Act. • Currently there is a joint drought committee of all relevant departments that has been set up and is monitoring the implementation of drought response and measures throughout the country. • All sectors departments, provinces and state institutions have had to reprioritise their funding to deal with the current drought and about R 1 billion has been made available through reprioritisation. • According to DAFF the number of farmers assisted thus far stands at 42 314 and reported livestock losses are 186 340 in total. In terms of boreholes, 56 are completed, 89 drilled while 29 were drilled but were dry. • Commercial farmers in all drought stricken provinces however reported no or very little drought support from government departments.

Response from Organised Agriculture thus far • Agri SA resolved in September 2015 that a task team be established to focus on the drought and to communicate the impact of the drought to all stakeholders. • Agri SA and Senwes established the Drought Relief Fund in November 2015 and initiated an action plan in January 2016. • Major stakeholders responsible for managing the Drought Relief Fund include Agri SA Head office, Provincial offices and local Farmer associations. • The objectives of the funds were to fund the purchase of fodder for livestock, to fund the transport of fodder for livestock, to fund the purchase and distribution of food hampers to destitute farmworkers, to fund the distribution of water and sinking of boreholes in areas with little or no water. • Agri SA met on several occasions with senior DAFF and DRDLR to discuss greater cooperation between the state and organised agriculture to mitigate the impact of the drought, this has not resulted in any specific collaborative actions.

Assistance provided by Agri SA thus far Commercial farmers assisted Emerging farmers assisted Bales (round and square) distributed Bags of feed pellets distributed Farm workers and rural family members provided with food hampers and botteld water Trucks used 12 921 commercial farmers 4 000 emerging farmers 66 557 bales 36 609 bags of feed pellets 9 057 workers (x 4 members = 36 228 rural family members) 579 trucks Number of donors who donated funding 1 300 donors Tonnes of maize meal and food hampers distributed 236 tonnes Amount of water distributed Number of water tanks donated Number of boreholes sunk 548 000 litres 20 water tanks 3 boreholes

Letter of thanks from grateful communal farmers

In summary • A comprehensive audit must be done on how national and provincial agriculture departments assisted farmers. • Investigations must be launched into how state funding intended for drought relief was spent. • Parliament must instruct state departments to work with organised agriculture to provide drought relief for all farmers in South Africa regardless of them being emerging or commercial farmers. • State support for emerging farmers only is unconstitutional and discriminatory. Commercial farmers are tax payers and employ many workers and should also be assisted by the state. • Crop insurance can act as a safeguard for farmers in the future and must cover some of the losses incurred by droughts. • Government must subsidise crop insurance premiums to some extent.

Thank You