Covid-19 Relief Fund

Covid-19 brings with it an economic deep freeze the world over. Economies worldwide are staggering under the devastating effects of the lockdown. 

Johann Els, chief economist at Old Mutual, said the economy could shrink by 2% this year and the country’s budget deficit could rocket to 10%, instead of growth of 0.9% and a budget deficit of 6.8%, which were forecast during the budget in February. To quote Mr Els: “South Africa does not have the sort of fiscal manoeuvring room that countries such as the US do, which means we will have to lend more money in order to make money available for extensive fiscal aid measures”.

South Africa offered its own economic stimulus package which includes tax relief measures, the South African Future Trust (SAFT), Debt Relief Finance Scheme, Industrial Development Corporation (IDC) Covid-19 Essential Supplies Intervention and Training Layoff Scheme.

Impact of COVID-19: Managing essential goods services across agricultural value chains is critical for food security

Over the past few days during the 21-day-Covid-19 lockdown, the complex nature of South Africa’s food supply chains has come under the spotlight. These supply chains are a web of formal and informal interactions between agricultural inputs, logistics, farmers, spazas, bakkie traders, processing plants, shipping, retailing, biosecurity and more. Despite the reference to essential goods and services that need to continue to operate, the announcement by President Ramaphosa of a 21-day lockdown triggered a sharp rise in purchases of food that, according to various retailers, exceeded the volumes that are typically sold over Christmas.

In the first two information sessions on the impact of COVID-19, the Bureau for Food and Agricultural Policy (BFAP) provided an overview of the South African food system and food expenditure patterns by consumers respectively. It sheds light on the complex nature of the food supply chain and the extent of the essential goods and services required for its effective operation.

Download the full report here.

Massive fuel drop helps offset cost pressures for the agriculture sector

Massive fuel drop helps offset cost pressures for the agriculture sector

Comment by Paul Makube, Senior Agricultural economist at FNB Agri-Business

The South African agriculture sector as well as consumer can breathe a sigh of relief following the announcement of a massive fuel price decrease of R1.76/ litre of both the retail price of the 93 ULP and LRP petrol, with the 95 ULP and LRP petrol falling by R1.88/ litre for Gauteng. According to the Central Energy Fund, the wholesale diesel prices of 0.5% sulphur content fell by R1.34/ litre and R1.40/ litre respectively for Gauteng and the coastal areas respectively. The 0.005% sulphur diesel grade fell by R1.35/ litre and R1.41/ litre respectively for Gauteng and the coastal areas.

The country benefited immensely from the crash in international crude oil prices on the back of the Saudi Arabia/ Russia spat regarding the production cuts followed by the demand convulsion due to the outbreak of the coronavirus across the globe. The global crude oil prices recently reached a low of US$22.87/ barrel, which is down by a whopping 67% from the 2020 peak of US$68.91/ bbl. This more than offset the sharp rand depreciation which has also touched its record low of R18.09/ US dollar, which is down by 30% from its best level of R13.96 for 2020.

Fuel costs manifest differently across the various industries from planting, harvesting, distribution and packaging. The lower fuel costs come in at the opportune time as we approach the harvest period for the bumper grain, oilseed crops and the winter crop season, as well as the early stages of the citrus harvest. Bear in mind that the distribution of agricultural produce is dominated by road transport, so the net effect of fuel decreases has improved profit margins for producers as they head into the increased activity for the sector. Logistics companies in the agriculture value chain will also benefit, for example, over 80% of grain is transported by road.

Furthermore, the lower crude oil price is a double whammy due to the direct influence on the fuel price and the indirect influence on oil derivatives such as fertilizer, pesticides and herbicides all of which are inputs in crop farming.

At consumer level, transport costs account for a significant portion of household expenditure for low income households. The consequence of sustained fuel price decreases will further ease pressure on disposable incomes in the wake of the current economic challenges. It is also a welcome relief for businesses in terms of reduced transport, packaging and distribution costs which may eventually benefit the consumer.

Implementing the Covid-19 lockdown regulations

Implementing the Covid-19 lockdown regulations

The recently announced 21 Day COVID-19 Lockdown Regulations has understandably created much anxiety within the agriculture sector. 

Minister Ivan Meyer, assures the farmers and farmworkers that in terms of Regulation No. 398 of the Disaster Management Act, 2002, the sector, being responsible for food security, has been declared as essential.

This declaration reemphasises that the entire food value chain, from farm-related operations, agro-processing and food manufacturing, logistics and related services, wholesale and retail services, and all support functions that ensure efficient delivery of the agro-food system have to be functional to ensure that there is access to sufficient, safe and nutritious food.

“The safety of our farmers and farm workers on and off work is very important to us” he said.

“We have to ensure that critical agricultural production activities such as harvesting continue uninterrupted – this is done under strict prescripts as provided for in Regulation No. 398 of the Disaster Management Act, 2002 and Department of Health COVID-19 hygiene protocol. General hygiene measures must, therefore, be strengthened.”

“National Government will continue to facilitate the export of strategic agricultural commodities to ensure safe and smooth trade during this period.”

“Enough food is available at our food distribution and logistics will ensure food security. There is, therefore, no need for panic buying of food as it only creates distortions and artificial scarcities within the food supply sector.”

“I am thankful for the excellent co-operation I have been receiving from organized agriculture and for their commitment to protect and support farmers and farm workers during this period.”