CAPE TOWN - The agriculture sector in the Western Cape will take an economic knock of more than R5-billion due to the impact of the drought.
This is according to the MEC for Economic Opportunities Alan Winde who cited a recent report by the department of agriculture, in collaboration with the Bureau for Food and Agricultural Policy (BFAP), which estimated that the impact of the prolonged drought on the province’s Gross Value Added (GVA) will be R5.9 billion, representing an average production decline of around 20%.
This impact is higher than what was anticipated.
GVA is a measure of all the goods and services produced by a sector. Modeling conducted in October 2017 indicated that the impact to the province’s GVA was likely to be around R4.9-billion.
However, record losses in wheat production, coupled with the strengthening Rand impacting export prices, drove this figure up.
The estimated number of job losses in the sector remains at 30,000 Winde said in a statement.
“StatsSA jobs data released in February indicated that we had actually gained jobs in the agriculture sector over the last quarter, however, if we compare the past quarter to same time period last year, we see the severe impact that this drought is beginning to have on jobs and livelihoods.”
The agriculture sector has on average had to cut its water use by 60% and some areas have already drawn down their entire water allocation.
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As a result, there has been a significant decline in farm output as farmers prioritise crops with higher profit margins, such as fruit, and abandon vegetables and other crops. There was a reduction of about 1,000 hectares of area planted for both potatoes and onions.
Furthermore, smaller export volumes have resulted in income losses and export prices are being affected because fruit is smaller or sunburned. Exports volumes are expected to decline between 13% and 20% this year.
Agriculture and agri-processing contribute a combined R54-billion to the provincial GVA. Of all the province’s exports, 52% come from the agriculture and agri-processing sectors. As a sector, it represents 10% of the provincial GDP and employs 340,000 people, mostly in rural areas.
Winde further added that “we recognise how difficult this period has been for farmers. These numbers bring home the impact of this drought, not just on our economy, but on our people. We have no choice but to support this vital sector to ensure that it is able to continue production until good rains come”.
“The agriculture industry has taken several knocks aside from the drought. We estimate the economic impact of avian flu on poultry farmers to be around R800-million. Thunderstorms and hail recently destroyed around 200,000 cartons of late-season plums and the strong Rand is taking its toll on exporters,” said Winde.
“We have, however, seen real resilience and innovation from farmers during this period. Conservation agriculture and the exploration of alternative crops are showing good results for farmers who have employed them. Berries, for example, have shown excellent growth as a crop, despite the drought.”