Agriculture industry association, Agri South Africa (SA), says South Africa’s food supply is unlikely to fall short, because of a resilient and diligent farming community.
The association released a statement on Friday, unpacking the tough times that are ahead for the South African economy.
Agri SA will monitor the situation and collaborate with the government and industry leaders to support collective actions that can position agriculture for growth, says Agri SA Centre of Excellence economics and trade head Dr Requier Wait.
Additionally, Agri SA executive director Omri van Zyl has joined a special task team formed by the Agriculture, Land Reform and Rural Development Minister and the department’s director-general, to address industry issues associated with Covid-19.
Agri SA explained that Covid-19’s shorter-term economic consequences may include falling demand for airline and tourism services, disruptions to supply chains and global food systems.
South Africa’s economic challenges include high and rising levels of government debt, electricity supply constraints and high unemployment. Covid-19 can intensify an economic slowdown amid a fragile economic outlook.
A slowdown in economic activity will add additional pressure to the government budget deficit, lower tax revenues and struggling State-owned enterprises. A further economic slowdown will reduce electricity consumption and Eskom’s tariff revenue.
Following the example of recent global experiences, the government’s concerted efforts to contain and mitigate the risks posed by the virus should be welcomed.
“While these measures may have short- to medium-term economic implications, the cost of not acting would have far greater longer-term negative consequences,” noted Agri SA.
The South African Reserve Bank’s decision to cut the repo rate by 100 basis points to 5.25%, effective March 20, will surely help in the short term, it added.
“While inflation expectations were a key consideration, the broader economic environment along with Covid-19, oil prices and the exchange rate had to be considered by the Monetary Policy Committee.
“The repo rate change will channel through to the prime interest rate, providing some support to a struggling economy. However, this alone will not be enough to strengthen the economy. Broader reforms, for example, as outlined in the National Treasury’s Economic Strategy document can add the necessary further support our economy needs,” Agri SA said.
Meanwhile, the impact of Covid-19 could vary and will be different for the various agricultural commodities produced in South Africa.
Export-dependent commodities may face lower demand from markets.
Logistics constraints and the availability of shipping services could also have an impact on export commodities.
On the supply side, the availability of chemicals and other agricultural inputs could be affected by supply disruptions; however, local suppliers are working on alternative supply options.
South Africa is a net exporter of agricultural products and domestic food security is still robust.
“South Africans should stay calm and work together to overcome this pandemic. Consumers should refrain from panic buying as South Africa will remain food secure for the foreseeable future thanks to our farmers,” Agri SA assured consumers.