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National Drought Indaba

15-16 Sept 2016

AFASA, AGRISA,

Agriculture sector

© 2015 Agri SA 2

World food security index

© 2015 Agri SA 3

© 2015 Agri SA 4

Number of farming units

0

20000

40000

60000

80000

100000

120000

19

18

19

19

19

20

19

21

19

22

19

23

19

24

19

25

19

26

19

27

19

28

19

29

19

30

19

34

19

35

19

36

19

37

19

38

19

39

19

46

19

47

19

48

19

49

19

50

19

51

19

52

19

53

19

63

19

72

19

76

19

78

19

79

19

80

19

81

19

83

19

85

19

86

19

87

19

88

19

90

19

91

19

92

19

93

19

94

19

95

19

96

20

02

20

07

20

14

*

Num

ber

* Preliminary

NET FARM INCOME 1974/75-2014/15

0.0

20 000.0

40 000.0

60 000.0

80 000.01

97

4/7

5

197

6/7

7

197

8/7

9

198

0/8

1

198

2/8

3

198

4/8

5

198

6/8

7

198

8/8

9

199

0/9

1

199

2/9

3

199

4/9

5

199

6/9

7

199

8/9

9

200

0/0

1

200

2/0

3

200

4/0

5

200

6/0

7

200

8/0

9

201

0/1

1

201

2/1

3

201

4/1

5

Ne

t F

arm

In

co

me (M

illio

n R

an

d)

R77 063 million

(2014/15)

Deregulation and

liberalization of

agric markets in SA

RSA: MAIZE (COMMERCIAL)

AREA PLANTED AND PRODUCTION

1500

2000

2500

3000

3500

4000

4500

5000

0

2000

4000

6000

8000

10000

12000

14000

16000

19

90

/91

19

91

/92

19

92

/93

19

93

/94

19

94

/95

19

95

/96

19

96

/97

1997/9

8

19

98

/99

19

99

/00

20

00

/01

20

01

/02

20

02

/03

20

03

/04

20

04

/05

20

05

/06

20

06

/07

2007/0

8

20

08

/09

20

09

/10

20

10

/11

20

11

/12

20

12

/13

20

13

/14

20

14

/15

20

15

/16

Maize (Ha) Maize(Ton)

‘000 Ton ‘000 Ha

Source: Crop Estimates Committee

South African Agricultural exports and imports,

1990-2014

Source: DAFF

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

50 000

55 000

60 000

65 000

70 000

75 000

80 000

85 00019

90

19

91

19

92

19

93

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

Agricultural exports

Agricultural imports

Agricultural trade balance

© 2015 Agri SA 9

The turnover of the agriculture sector is approximately

R227 billion per annum with a net tax contributor of

approximately R50 billion in primary agriculture alone

over the past 10 years. We represent 2,5% of the

economy – value addition 20-25%.

We employ more than 850 000 people in the sector and

we are the only food secure country in Sub Saharan

Africa “how do you protect this asset in times of dire

need? You help them”

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. © 2015 Agri SA 10

National assessment

© 2015 Agri SA 11

Drought – Impact on farmers and economy

Geographic

depiction

NW

24 Jul

2015

N Cape

29 Jan 2016

Extention 18 Mar-

17 Apr 2016

E Cape

• 4 Dec 2015/22 Jan

2016

• 4 Mar 2016 -

Extension – Joe

Gqabi

• Declaration 22 April

GP

LMP

13 Nov

2015

FS

4 Sep 2015

Extension 4 Mar

2016

W Cape

Local

Disaster

Extension

(Central

Karoo) 22 Jul

2016

MP

4 Dec

2015

© 2015 Agri SA 13

© 2015 Agri SA 14

© 2015 Agri SA 15

Drought impact

Commodity Severe Moderate Minimal effect

Maize

Wheat

Oil seeds

- Sunflower

- Soybeans

- Groundnuts

Beef/Sheep/Goats

Poultry

Pork

Game

Ostrich

Wool and mohair

Cotton

Dairy

Other Fruit

Subtropical fruit

Citrus

Table grapes

Wine

Vegetables

Potato

Sugar

Forestry

Tobacco

Agri SA’s efforts

© 2015 Agri SA 16

Media exposure

© 2015 Agri SA 17

Partnerships

© 2015 Agri SA 18

© 2015 Agri SA 19

We must survive

© 2015 Agri SA 20

© 2015 Agri SA 21

© 2015 Agri SA 22

New requirement

© 2015 Agri SA 23

Problem statement

• 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

• Some 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

Results of qualitative Analysis done by Agri SA

• 88% of respondents indicated drought conditions worse than normal.

• 94% of respondents reported worse than normal production of commodities.

• 73% pointed out “bad” grazing conditions.

• 56% referred to the limited/bad availability of fodder.

• 50% reported significant rainfall during the last couple of months.

• 86% is expecting worse than normal grazing conditions during winter.

Proposal / Solutions (commercial and emerging sectors)

1.State guarantee scheme aimed at outstanding debt

2.Interest rate subsidy on carryover debt

3.Farmworker support subsidy

4.Interest rate subsidy on new production credit

5.Soft loans aimed at herd rebuilding

6.Emergency measures with regards to water and food relief

Budgetary implications: Summary overall

#

Item

Budgetary implication

for state (Rand)

1 Summer and winter grain and livestock

industries R298 241 007

2 Sugar industry

R214 961 638

3 State guarantee for farmers

( R1 billion )

TOTAL CASH REQUIRED (Y1 – 4)

R 513 202 645

Budgetary implications: Summer grain, Winter grain & Livestock industry

Budgetary

implication for

state (Rand)

1 Subsidizing feed, fodder and water Verification needed

2 Support towards retention of

farmworkers

120,000,000

3 Interest subsidy on production

credit

88,182,207

4 Interest subsidy on carry-over debt

18,763,800

5 Interest subsidy on unpayable term

and bond debt

26,295,000

6 Interest on loans for herd rebuilding

45,000,000

TOTAL

298,241,007.00

Budgetary

implication

for state

(Rand)

1 Support to towards retention of

farmworkers

124,350,000.00

2 Interest subsidy on production debt

21,631,500.00

3 Interest subsidy on production

loans

4,509,574.00

4 Interest subsidy on loans for

replanting

64,470,564.00

Total

214,961,638.00

Sugar industry

© 2015 Agri SA 29

Actions and Accountability

•Responsible institutions

• GOVERNMENT

− Disaster Management Centre's

− Department of Agriculture, Forestry and Fisheries & Treasury

• FINANCIAL INSTITUTIONS

− Commercial banks, IDC, Land Bank, Agricultural businesses

• SURVEYS AND INFORMATION

− All with the support of Agbiz and Agri SA

Actions and Accountability

Accountability

– DAFF provides funding to the Landbank ASAP

– Landbank coordinates relief efforts

– State guarantees via Treasury to commercial banks

Amount received from

Government for support

© 2015 Agri SA 32

© 2015 Agri SA 33

South African Airlines has been sustained by

state guarantees of ±R14.4 billion with an

additional R5 billion from Treasury that was just

approved.

Eskom with state guarantees amounting to R466

billion has reached its "prudency" limit in this

regard.

Lessons learnt

© 2015 Agri SA 34

1. The government is unable to help in case of a natural disaster – we’re

on our own

2. Food security and the production base is not a strategic priority

3. Talk is cheap ….

4. We have to form strategic partnerships with government

5. We need to elevate agriculture to the top of our SA agenda

Lessons

© 2015 Agri SA 35