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We Have Good Crop This Season, But El Niño Is Still Lurking In The Future

In a normal season, South Africa imports about a half of its annual wheat needs, and lower wheat output means more purchases from overseas producers.

02/05/2017 03:58 SAST | Updated 02/05/2017 15:01 SAST
Amr Dalsh/ Reuters

Wheat farmers in the Western Cape are concerned. After minimal rain over the past several months, soil moisture is low across many fields and to make matters worse, weather models are giving little indication of rainfall within the next two weeks.

The farmers in the region typically start planting their winter wheat crop around mid-April, but this year action in the fields has been limited. During a phone conversation this week one farmer told me: "Soil moisture is low. There hasn't been any meaningful rain."

The El Niño weather pattern, typically associated with hot and dry weather conditions in South Africa may return later this year. In the current uncertain economic climate, any decrease in domestic grain production would negatively affect consumers.

The exchange rate has a strong correlation with wheat prices, which eventually influences prices for products like bread and weetbix. In a normal season, South Africa imports about a half of its annual wheat needs, and lower wheat output means more purchases from overseas producers.

This comes at a time when the rand is weak, which will add a strain to consumers. Every 1 percent weakening in the exchange rate is typically matched with an upward movement in wheat prices of at least 0.5 percent. Moreover, with rural economies still recovering from last season's drought, this could be a devastation. The effect will filter through the agribusinesses in the areas that provide jobs for local residents.

The sentiment among the Western Cape's farmers seems to be different from when I visited earlier this year. In January, Malmesbury, a small agricultural town about 65 kilometres north of Cape Town, was filled with enthusiasm, after local farmers harvested one the largest crops of wheat.

If South Africa is serious about food security and its agricultural sector, it needs to be better prepared for the adverse weather risks.

Having survived the recent El Niño spell that crippled crops across Sub-Saharan Africa, South Africa reaped the benefits of a 2016 early summer season, with wheat production reaching 1.91 million tonnes, which is a 33 percent uptick from the previous season. Malmesbury was no exception, having seen yields of 3.8 tonnes per hectare, up by more than a quarter from 2015/16.

But the lack of precipitation casts a shadow over the next harvest, as does predictions from international forecasters, who put the chance of an El Nino developing later this year at 50 percent. The Western Cape province produces all of South Africa's canola crop and a large proportion of barley along with roughly more than half of the country's wheat but the warm weather conditions are a great cause for concern for the farmers.

Fortunately, about half of South Africa's wheat is under irrigation in the Northern Cape and Free State province, which should cushion potential losses as dam levels in these respective provinces benefited from summer rainfall. The dams in the Northern Cape are almost at capacity. In the Free State province, dam levels were around 86 percent, which is a third higher than the same period last year.

Nevertheless, the recent erratic weather changes suggest that the climate change is a bitter reality and the agricultural sector needs to adapt to and mitigate these changes. Most importantly, climate change calls for increased investment in plant breeding research for better seed varieties that can tolerate extreme conditions. Plant breeding research could be one of the interventions and this should not be exclusive for wheat but it needs to address all staple crops.

If South Africa is serious about food security and its agricultural sector, it needs to be better prepared for the adverse weather risks. Government and private sector must continuously invest in plant breeding and other technological improvements.

This blogpost is an extract from my Business Day column.