Drought’s consequences mushrooming
Welcome rain fell over large parts of drought-stricken South Africa during the past weeks and brought immediate relief for agricultural producers in particular. Researchers at the North-West University (NWU) are of the opinion that valuable lessons have been learnt and that the agricultural, commercial and even the consumer sectors will feel the pinch for a long time to come.
Dr David Spies, an agricultural economist at the School of Economics at the NWU, says the below-average rainfall the past two to three seasons has undoubtedly been the biggest cause of the drought but that other factors have also played a role. “Poor rainfall, combined with the season’s sporadic rainfall pattern, has certainly hurt the most. Another factor that is probably underemphasised, is the lack of proper grazing management – especially in communal farming practices where partitioned camps are a rare phenomenon.” He says it leads to grazing that is overgrazed and ultimately depleted very quickly.
“The ripple effect leads to farmers having to get rid of animals, markets being influenced by an oversupply of livestock, and unit prices for producers being pulled down substantially. Smaller producers who cannot absorb this onslaught, are forced to leave the market,” says Spies. On the other hand, the drought also has a major negative effect on calving percentages. This gives rise to a decline in herd numbers because livestock are exposed to higher levels of stress in such times. This trend can cause a shortage of animals over the longer term which will lead to an increase in prices up to consumer level.
Research has shown that, following a drought, natural grazing needs approximately two growing seasons to recover. “Follow-up rains are crucially important to support growth – particularly during high day temperatures and strong winds that increase the evaporation processes significantly, as we are currently experiencing.” He says because the drought brings a shortened period of growth for grasses in particular, the nutritional value of the pasture is also affected negatively. The tendency then is that livestock consume the new green grass even quicker. “Reserve fodder is used earlier and this forces the producer to purchase additional fodder to supplement the lack of winter grazing. Combined with lower livestock prices in the short term, and high feed prices (driven by the escalating maize price), a barren picture is being painted.”
The ratio of debt to assets of agricultural producers in South Africa is currently the highest ever, after it has recently reached nearly 50%. As compared to the USA's 11%, this puts unbelievable pressure on local financial institutions because in many instances producers cannot obtain deferment on the repayment of their production loans.
According to Spies the producers who can buffer two consecutive weak harvest years are but a few. “Unfortunately drought, coupled with current increases in input costs, brings considerably lower outputs and profits and causes a climate that pushes many producers from the market – even permanently.”