18 May 2017

South Africa: If Drought Continues, More Farmers Will Close Shop - Free State Agriculture CEO

If the drought continues unabated, it could see more farmers close shop, CEO of Free State Agriculture, Henk Vermeulen, said on Wednesday.

Speaking at the Free State Agriculture stand at the Nampo Harvest Day festival in Bothaville, Vermeulen said the drought had had a severe impact on the farming community, especially in the Free State.

"We are very glad for the rain that has come, and the current situation. But as a result of the drought, the position of farmers has deteriorated in terms of their financial position, especially if you look at the amount of cattle that has had to be sold as a result of the drought.

"Now there is a shortage of cattle and sheep, to such an extent that the person who is buying meat is going to pay the price now."

Vermeulen said he also believed that government's assistance had come a little too late.

"It did not come quick enough, and this is the exactly the result. People on the streets are paying the price for all the cattle and the sheep that has been slaughtered because there was no grazing for them."

He said the province had also seen a shortage of maize.

"As a result of that, a lot of people that were feeding chickens could not pay the price of the high maize price that was instituted because of the shortage."

He said what further perpetuated the situation was "the dumping of chickens in South Africa from Europe".

"It was so difficult that a lot of people had to close down. Those are the effects of the drought."

'Input costs are rising, but prices are down'

He said, when one looked at the input costs of a farmer, the debt carried over to next year.

"It will cost him about R4m to R5m on a small farm just to get the input costs, and if you do not get any rain you have got nothing, you are stuck with a debt of R3m, so there are a lot of people whose financial position is in dire straits.

"Some farmers could arrange to carry on this year. It looks good, but the prices are down... The drought is an extremely difficult thing for the farmers.

"It will take, for certain veld, four to five years to restore. It looks good from the road, the grass is high, but when you go close to look at what type of grass it is, you will find that it is not quality grass."

Vermeulen said the country needed to analyse the drought situation.

"We need to look at the warning systems, we are not in an African country where there is a lot of water. This is extremely difficult, but you know that farmers are extremely hopeful beings, we carry on in hope that everything will be fine. We know that the Western Cape is in a difficult position, similar to that which we were in last year, so we are happy to be in a better position, right now."

If the drought continued, Vermeulen said more farmers would leave the industry.

"Farming will not be profitable anymore, it in itself is not really profitable... The input costs are rising, but the prices are down. A lot of people do not understand the mechanics of farming, it is not always good times, there are also bad times."

' If the farmers close down, then the towns close down'

Vermeulen said many farmers had to stop farming because they could not take the financial burden anymore.

"Insurance companies refused to ensure certain crops in certain areas because it was too risky."

He said many emerging farmers went out of business because they also could not handle the effects of the drought.

"Their cattle died and there was no grazing and there was no assistance. We are a little bit scared for this coming year because it will take the farmers about four to five years, good years, to restore, otherwise a few more others will move out."

Vermeulen said this had a negative effect on food security.

"South Africa is perhaps the only country that has a farming community that is not being subsidised by the government. All the other governments around the world are protecting their farmers and their crops, making sure that they are on their farms."

He said South Africa needed to consider subsidising farmers.

"On the one side, we need new entrants, but do not bring in a new entrant if they are not going to survive. On the other hand, if there are guys that are doing well, keep them there, in terms of food security."

He said the drought did not only affect the farmers, but the neighbouring rural communities and towns that depended on farmers.

"If the farmers close down, then the towns close down," said Vermeulen.

News24

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