COMMODITIES: Foot and mouth scare returns to haunt SA’s economy

Foot and mouth outbreak in South Africa

Foot and mouth outbreak in South Africa.

JOHANNESBURG, (CAJ News) THE latest outbreak of foot and mouth disease can trigger an import ban of South African livestock products and deal a major blow to the already fragile economy.

Recently, the Department of Agriculture, Land Reform and Rural Development reported clinical signs of the ailment in a herd of cattle on a farm in the Molemole District of the northernmost Limpopo.

The department has cautioned farmers in the entire country to observe bio-security measures.

The Agricultural Business Chamber (Agbiz) noted that recent bans had far-reaching ripple effects, extending to sectors such as wool, which, on average, contributes US$308 million to the South African economy in exports revenue.

The last Foot and Mouth Disease outbreak in February triggered China, which imports 71 percent of South Africa’s wool, had a multi-month ban in place.

“Without intervention, the current outbreak can have significant implications,” Agbiz chief economist, Wandile Sihlobo, and Gracelin Baskaran, a development economist, jointly stated.

South Africa’s beef sector currently contributes about $140 million in the export revenues.

At the time of writing, only neighbouring Zimbabwe had implemented a ban on South African livestock products. It is the second time this year that Zimbabwe has imposed a ban.

“The suspension of imports from South Africa is a precautionary measure designed to prevent the spread of the infection into Zimbabwe,” the Zimbabwean agriculture ministry stated.

Zimbabwe, which has its own episodes of foot and mouth, is a relatively small export destination.

“However, if the ban is extended by other countries (Soutern African Development Community ‘SADC region’, it would have a heavy impact on trade balances, which have hardly recovered from an outbreak earlier this year,” Basakaran and Sihlobo stated.

“Given the scale of potential adverse economic effects, it is in the best interest of the government and private sector to step up veterinary extension services to ensure that the outbreak does not grow,” the economists added.

Experts believe in the medium term, improving the traceability of livestock and revival of the dipping system in affected areas would create stronger preventative mechanisms.

“Similarly, intervention is needed to support climate-resilient agriculture infrastructure and technology,” Baskaran and Sihlobo said.

This follows the South African Weather Service currently forecasting lower than average rainfall between November 2019 and January 2020 in South Africa’s eastern regions, specifically parts of KwaZulu-Natal, Limpopo and Mpumalanga provinces.

Temperatures also set to be higher than normal during the period.

Economists noted this had already contributed to reduced farming activity, due to delayed planting by many farmers in affected regions.

“While it is difficult to quantify the exact impact these climatic changes will have on production and food prices, it is likely that the 2019/20 summer crop production will be lower than initially forecasted 7 percent year on year (y/y) growth,” Basakaran and Sihlobo stated.

This comes on the back of lower than expected production during the 2018/19 season, also due to droughts.

During the period, maize, sunflower seed and soybeans production declined by 11 percent, 21 percent and 24 percent y/y, respectively.

High maize production during the 2017/208 season buffered South Africa, enabling it to remain a net exporter.

“However, with consecutively weak production seasons, the buffer will be minimised in the 2020/21 marketing year,” the economists stated.

– CAJ News

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