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Cash-strapped South Africans can look forward to relief from La Nina

| Economic factors

The transition of the El Nino weather pattern into La Nina should moderate food inflation, First National Bank says.

"There is a high probability of above-normal rainfall early in summer, which would lead to a good coming crop season," the bank’s senior agricultural economist, Paul Makube, said in a note on Monday.

"Should weather forecasts remain on course, we can expect agricultural production to bounce back by mid-2017 resulting in significant moderation in food prices, particularly grains. Fruit and vegetable prices could also ease towards the end of the year as conditions improve," the note said.

The country will be a net importer of maize this year due to the past season’s drought.

SA experienced a shortage of both yellow maize, commonly used for livestock feed, and white maize, a staple food.

This, coupled with a weak rand, led to an excessive increase in food price inflation, hurting lower-income households across the country.

Although the effect of La Nina will not be felt immediately, it will bring long-term relief to struggling consumers that are finding it difficult to make ends meet.

Favourable changes in weather patterns could result in SA producing enough maize during the 2016-17 season as production depends on rainfall during the growing season, which is normally between October and April.

A good rainfall season will lead to lower grain prices and improved grazing conditions for livestock farmers, who would be entering a herd-rebuilding phase.

This would directly result in a moderation of meat pork, poultry and dairy prices.

In the case of beef, however, prices are expected to remain elevated due to supply tightness as herd rebuilding takes a bit longer.

SA would also be in a good position to recoup its losses and grow its export revenue for next year.

Moreover, small-scale farmers who are also finding it difficult to produce enough food to feed their families would also breathe a sigh of relief.

On a positive note, dam levels in the Western Cape have shown a slight recovery in recent weeks. The medium- to longer-term rainfall outlook for the province is relatively good, with light showers expected that will benefit the winter crop. It will also replenish dam levels and possibly help ease water restrictions for the region.

However, the situation for the rest of the country is expected to remain unchanged until La Nina-induced rainfall arrives in spring or early summer.

Despite the benefits of La Nina, it will take commercial farmers about two years to fully recoup financial losses incurred due to the drought.

The agricultural sector also shed about 37,000 jobs in the fourth quarter last year.

The report also urges farmers to explore new farming technology and strategies to ensure sustainability of agriculture and food security, as climate change creates increasing uncertainty over weather patterns.



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