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Report reveals extent of drought, weak rand on economy

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While the rains have begun to fall, South Africans will have to remain patient has the agricultural industry begins to recover, a process analysts assert will be a tough road. The agricultural industry’s setbacks have not only been linked to the drought, but to a large extent have been severely challenged by the weakening rand. In a bid to understand what factors have impacted the level of inflation, the Department of Economic Opportunities recently released the annual baseline report produced by the Bureau for Food and Agricultural Policy (BFAP).

Speaking to VOC, Minister of Economic Opportunities Minister, Alan Winde explains that given the fact that agriculture forms a significant part of the South African economy, the report acts as a key component to understanding the future of the South African Agriculture industry.

He says that in light of the fact that the Western Cape produces 50 per cent of the country’s agricultural products; the report will give insight into the impact of the rand/dollar exchange and the compounding drought on the industry.

“Because we see many new job opportunities in the agricultural space, it is a key component. So we invest with this organization so that we can give the industry a future look.”

Winde says that BFAB, which is composed of research conducted by both South African and international universities, will compile what it considers to be the agricultural forecast within South Africa and globally.

“Bearing in mind food inflation; where food has increased by approximately 26-28 per cent and will increase through October, after which it will decrease by about 8 per cent,” Winded added.

The study will also take into consideration other commodities, such as wheat and grain, and where South Africa stands in that regard.

He says that the vast scope of the report will assist businesses in making viable decisions moving forward.

Winde further notes that while the agriculture industry employs approximately 214 000 workers, the number of employees within the industry is season dependent.

He says that South Africa has experienced a four per cent increase in its GDP, which he says is much higher than the average.

“The west coast was hard hit by the drought, but the east coast did not have that problem, so they still managed to have a good season.”

In order to sustain the industry, Winde says that alternate methods value added products in agro-processing needs to be sought after.

“We need to look for new markets. That is why we are doing all the work on the halal market in Africa, we are really looking to grow the economy and find new opportunity for jobs. So I am hoping we are going to find another 100 000 jobs in the next four years in agro-processing alone,” Winde said.

While the rains have started to fall, he says that the process to re-set the agricultural industry will be slow.

He says that farmers have increased the number of young animals during the drought and have significantly depleted the number of older animals, which he asserts has greatly impacted the economy.

“As soon as the rains come, you don’t get feed for the animals immediately. It takes a while for the feed to grow in itself. It takes a year or two to recover from a drought, so we will still see the peak in the food prices right into October,” Winde continued.

VOC


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