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Mass culling looms as drought deepens

| Economic factors

Drought conditions affecting much of the country could lead to higher maize prices but lower meat prices as farmers slaughter cattle and sheep that they cannot afford to feed.

National food security is threatened by the probability of a second successive year of drought, said Carl Opperman, the chief executive of Agri Wes-Cape.

Although crops such as wheat in the country’s winter rainfall areas have flourished due to plentiful rains, grain output from drought-stricken land will fall.

Maize shortages and high prices would affect consumers and pig and poultry farmers who are already facing slimmer margins due to the price of grain feed.

As drought reduces the quality of pasture, livestock farmers would be forced to cull their herds of cows and sheep, resulting in a temporary oversupply of red meat and lower prices in shops.

FNB’s agricultural economist, Paul Makube, said the current drought was affecting the whole agricultural sector, although livestock farmers and dry-land grain producers were the worst affected.

”Irrigation farmers are still fine, but if we have more water restrictions, the situation will be catastrophic for the country,” he said.

Although agriculture uses 62 percent of national water resources. the sector has the lowest security of supply, exacerbating the negative effect of the current drought, he said.

Makube added that although domestic shortfalls could be met by imports, these would cost more due to the weaker rand, leading to relatively high medium-term food inflation.

The impact on livestock farmers would be direct and immediate, he said. Persistent drought conditions would force them to reduce their stock levels as the quality of pastures deteriorated.

“This will see a lot of cattle and sheep coming into the slaughter market in short term, which will dampen prices and offer a respite for consumers for the Christmas period.

“Producer margins for the intensively fed livestock such as poultry and pigs are currently under pressure due to higher feed-grain prices, particularly maize which is a major ingredient in feed.”

Clif Johnston, vice-chairman of the South African National Consumer Union, said the effects of drought on consumer prices would be variable. Products such as maize would become scarcer and therefore increase in price, while beef might become cheaper in the short term because of oversupply as farmers reduce the size of their herds.

Johnston said some parts of South Africa, particularly in the winter rainfall area, had received good rains and were expecting large wheat crops.

“In recent months food prices have remained surprisingly steady, and in the short term, prices may well be influenced more by seasonal effects and by wage settlements than by the drought.

“The effects of a drought tend to manifest over the longer term.”

Consumer activist Ina Wilken said the price of bread and cereal had increased by 6.4 percent year-on-year and the price of meat 5 percent year-on-year.

“We already see above-inflation increases on shelves. Consumers are facing tough times and will have no choice but to downscale on their spending patterns.”

Francois Viljoen, manager of VinPro’s viticultural consultation service, representing nearly 3 500 domestic wine producers, said vineyard farmers had improved their irrigation management, continuously monitored soil moisture and measured exactly how much water was needed in order to manage shortages effectively.

CAPE ARGUS

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