Western Cape drought impact: Hard, long-term, and requiring tough intervention

The Western Cape Agriculture sector – a key contributor to the provincial economy – has seen extensive losses and damage over the past year, prompting a call for interventions by local and national government to mitigate the impact on livestock breeding and support employees who have lost their jobs.

In January and October 2017, scenario reports were given outlining the possible economic impact of the drought in the Western Cape. Now, the analysis has been updated with actual impacts, the Bureau for Food and Agricultural Policy said on Wednesday.

Reporting back to the Standing Committee on Economic Opportunities, Tourism and Agriculture, Deputy Director General: Agricultural Development and Support Services, Darryl Jacobs, said government had consulted various industry organisations, farmers, researchers and exporters to understand the major drivers of the drought impact.

Based on the assessment, the Western Cape Department of Agriculture has called for fodder support funding through the Provincial Treasury and the National Disaster Management Fund, as well as a plan to protect the livestock genetic pool, which experts have warned is at risk through loss of livestock. They also recommended amending agriculture water restrictions during recovery, depending on the amount of rain received during the rainy season.

The provincial DoA has also recommended support of unemployed farm workers, in partnership with the Department of Labour and the Department of Social Development, with a Social Distress Grant and Expanded Public Works Programme.

The damage

Overall, there had been a 20.4% drop in production between 2016/17 and 2017/18 in wine grapes, table grapes, pome and stone fruit, citrus, alternative fruit, major vegetables and grapes, Jacobs said. Across the same categories, there had been employment losses totalling 30,230.

The total economic impact had been a “R5.9-billion shock to the gross value add (GVA)”, he added, which was a “conservative estimate”.

“Export sectors will have additional loses due to fruit quality and size, and the exchange rate making a bleak situation worse,” he said.

Longer-term impacts were expected to continue for 8-10 years.

“Clear, decisive action” was needed to support the sector, particularly in view of job losses.

Hugh Campbell, General Manager: Hortgro Science, said that the impact of losing livestock or prioritising orchards would be far-reaching, since the lifespan of one sheep provided 6-8 years of wool and three months of meat, while the lifespan of one fruit tree provided for 15-30 years. Removing one hectare, meanwhile, resulted in a proportional loss of labour.

The 2017/18 reduction in seasonal exports had resulted in a R1.4-billion loss and a reduction in 11,705 seasonal jobs, he said. Based on a typical Groenland farm, the scenario assessment allowed for a production decrease ranging from 30-50%, and an extrapolated R328,185,623.43 decrease in revenue and a R464,389,422 potential export revenue decrease. No recovery was projected heading towards 2025/26.

Vinpro, for their part, spoke of a R5.9-billion loss in GVA and a substantial loss of jobs as key risks.

With 95,775 hectares of vineyard providing 4.1% of the world’s production and 4% of the world’s exports (R8-billion), the South African wine industry employs 290,000 people – 25,000 on farm level. There is a R36-billion contribution to the country’s GDP, Vinpro said.

Vinpro’s Paiter Botha told the committee that the 2017/18 season had been one of the most challenging in living memory, not only due to the drought, but because of a decline in SA vineyards, as well as frost, hail and sunburn damage. This had had a significant impact on production.

In order to use water more effectively, wine producers had had to uproot, cut off or abandon old or unprofitable vineyards or other crops, plant fewer vegetables, and schedule irrigation with soil water monitoring equipment. Other measures had been taken too, including weed control and the cleaning of canals and dams to stop leakages in irrigation lines and pumps.

“Drought has significant financial impact on an already strained financial position. There is approximately R700-million less farm gate income, and this effect is multiplied (3x) in the value chain,” Botha said.

Support for emerging farmers

Emerging farmers were in particular need of support, as they were hit hardest by the drought, said Jacobs.

This was echoed by the African Farmers’ Association of South Africa, who underlined the impact of water shortages on black and emerging farmers.

Black farmers were particularly resource-poor in the Western Cape, Afasa said, without “old money” or support for boreholes or extra water allocations, land, or funding.

It was particularly important to understand that drought was not a barrier to transformation of the agricultural sector in the Western Cape, they emphasised. Rather, it should be viewed as “an opportunity for change”.

Beyond Cape Town, beyond crop production

Afasa, represented by Ismail Motala, also underlined that the drought’s impact reached far beyond Cape Town.

This was reiterated by Jacobs, whose presentation identified some of the worst-affected agricultural areas. Among the areas facing shortages of vegetation for livestock, the West Coast was worst affected, with 18 districts named as extremely critical and six districts named as critical. In the Cape Winelands and Eden each, four districts were extremely critical, while the Central Karoo had one extremely critical district and 15 critical districts. In total, Jacobs said, 90% of the livestock farming areas across the Western Cape were either extremely critical or critical, and the natural veld was completely degraded, requiring at least three years to recover provided there was good rainfall.

Farmers were selling off livestock, a threat to the genetic pool, and drought fodder support would be required into the 2019 winter.

A resounding message from all quarters was, firstly, that recovery would be slow, even with good rainfall. The impact of lost livestock on breeders in the future would be considerable, while the loss of active, producing orchards or vineyards would similarly leave a lasting mark.

Second, there was a widespread call for support. Botha called for “direct support to communities” as well as action on irrigation dam projects, and continued communication and cooperation.

Afasa called for a challenge to water rights in the Western Cape, saying black and emerging farmers were disproportionately disadvantaged in a time of drought. They further said more emphasis had to be placed on the direct and indirect impacts of agriculture on drought across the Western Cape in order to help farmers recover.

The Western Cape Department of Agriculture recommended several key actions, including the above-mentioned support of unemployed farmworkers in partnership with the dept of labour and social development. They also called for fodder support funding through Provincial Treasury and the National Disaster Management Centre, and recommended a plan be developed to protect the livestock genetic pool.

At the end of March, Western Cape Minister of Economic Opportunities Alan Winde said it would be impossible to speak of the budget for the Western Cape Department of Agriculture without considering the drought.

He allocated R834.34-million to the Western Cape DoA in his proposed budget for the 2018/19 financial year, saying agriculture played an important role in the provincial economy.

Of this budget, sustainable resource management would get R91.134-million, farmer support and development would receive R278.5-million, and rural development would receive R24.13-million.

According to a Fin24 report released at the time, agriculture contributes R54-billion to the province’s GVA, and 52% of all provincial exports come from the agriculture and agri-processing sectors. DM