Here is Sihlobo...

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He says it is still too early to make a definitive assessment, but it can be argued that South Africa’s agricultural sector has been relatively more insulated from the Covid-19 pandemic than the other sectors of the economy that are on complete lock down. The food production value chains are operational, albeit, not at optimal levels as take-aways, ready-made meals, meal deliveries and the informal traders selling cooked food along the sidewalks are still prohibited. 

The sub sectors that are still in complete lock down from a trading perspective are wool and mohair, cotton, tobacco, wine and alcoholic beverages, and floriculture (flowers), among others. The harvesting and storage of primary agricultural produce to prevent wastage are permitted under strict health regulations.  However without trading, the farming businesses that have been adversely affected by lock down restrictions could experience short-term cash flow challenges.

Sihlobo says over the past few weeks, there have been two major policy interventions that helped to ease financial pressures in the agricultural sector. The first, which was not directed specifically at the agriculture sector, is  the South African Reserve Bank which has swiftly cut interest rates by a cumulative 225 basis points year-on-year.  For a sector that has a record debt of R168 billion, the relief that lower interest rates could bring is substantial.  The second contributing factor is assistance to financially distressed small-scale farmers, by the Department of Agriculture, Land Reform and Rural Development of R1.2 billion. This prioritizes the poultry sector, livestock and vegetables, among other agricultural commodities which will be selected on a case-by-case basis. The farmers within the Proactive Land Acquisition Strategy program are also included in this package.

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PRESENTER OUTRO: That was Wandile Sihlobo, chief economist, at the Agricultural Business Chamber of South Africa, Agbiz, only on Before Dawn.