Drought causing concern

Drought conditions in the central and western parts of South Africa will have a negative impact on livestock and crop farmers this year. It is becoming more likely by the day that maize crops in large areas will be significantly lower than long term averages. A number of farmers are facing total crop losses as rain stays away and the season draws to a close.

Veld grazing is in a poor condition with some stock farmers already having used their winter grazing reserves in many districts of the summer rainfall area. With winter approaching, the price of maize – a key component in livestock feeds and licks – has risen significantly with further increases likely. The cost of roughage such as lucerne (alfalfa) is also rising as farmers buy in stocks for the winter months.

The fact that many livestock farmers are selling off breeding stock to reduce pressure on scarce grazing, has depressed livestock prices, resulting in a financial pincer of rising input costs and depressed livestock prices. These depressed producer prices have not been passed on to the consumer at retail level. It remains to be seen if the consumer will see the benefit of lower producer prices.

The challenging farming conditions come at a time of record fuel prices in South Africa, officially attributed to rising crude oil prices worldwide as well as a weakening Rand. The ANC government has recently announced even more taxes and levies on the fuel price, a major element contributing to fuel prices higher than South Africa’s neighbouring countries who buy the bulk of their fuel from South Africa.

Combined with irresponsibly high energy costs forced on consumers by an ailing Eskom (the para-statal electricity corporation) irrigation farmers are being especially hard hit, with marginal producers switching to cheaper alternatives. These higher costs and reduced production are contributing to increasing commodity prices on a number of levels.

Farmers in the summer rainfall areas of South Africa have a long haul ahead of them before the start of the 2013/’14 rain season in around October/November this year.

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