South African farmers struggle to stay in business

Cash-strapped farmers throughout South Africa are coming under increasing pressure as globalisation, monopolisation by large retailers and the drought combine to make farming a nightmare.

Lourie Bosman has been farming for 40 years but, over the past decade, like many other farmers throughout the country, has battled to survive global competition. Bosman, 65, said most farmers were not doing it for the money but for their lifestyle and even that was difficult to sustain because of input costs that keep rising and declining profit margins.

"It's been a difficult time, especially for grain farmers, and while our profits have been low, elsewhere in the chain people have been making money," Bosman said. The Mpumalanga farmer said 2002 was the last time farmers had made huge profits that enabled many to wipe out their debts, and that was because of the falling currency, which had led to higher interest rates and inflation in the country. "That was a fantastic period for farmers," he said. "With ongoing drought, we are not covering our costs, and many of us have to get the necessary credit to ensure we survive the season."

Carl Opperman, the head of Agri-Western Cape, said the price of maize, the staple diet for millions of South Africans, had taken a battering over the past two years and was decided in Chicago "like shares on the stock exchange. The lower-priced, inferior quality maize being brought into the country is also making our lives a headache," he said, adding that many dairy
farmers had gone out of business over the past two years because bigger companies allegedly manipulated the prices, resulting in farmers not being able to operate profitably. Opperman said wine farmers were also feeling the pinch. "The tip one gives to a waiter in a restaurant is more than the amount the farmer gets for producing the bottle of wine," he said. "Somewhere along the line someone is coining it, but it is not the farmers."

"It's very difficult being a farmer," said Johan van Rensburg, a farmer in the Northern Cape. "We have no support from the government and we have to compete with agricultural nations that have the support of their governments," he said. He said with the exception of the areas where enough water for irrigation is still found, agricultural conditions in the Northern Cape were a matter of grave concern because the present drought.

Farmers throughout South Africa are struggling to stay in business because they are being forced to sell their wares for far less than what they are being sold for on the shop and supermarket shelves, according to John Purse, the general manager of Grain South Africa. "Farmers simply will not produce if it is not profitable, given the risks involved. Grain farming is a lot less profitable than it was a couple of years ago and the risk has increased considerably in the process. Many grain producers have not been able to absorb the extra cost and are forced out of production."

Statistics South Africa revealed three years ago in its last major study on agriculture that the number of farmers had dwindled from 60,000 in the 1990s to around 45,000. In addition, there had been a drop of about 70,000 jobs in farming. Purse said the concentration of power and resulting price-fixing did not bode well for profitable production by farmers and would have a negative impact on their future. He said dairy farming had been particularly hard hit by the strong buying power of monopolies, putting dairy farmers at a disadvantage. This had forced many of them to stop production, resulting in a shortage of dairy products.

IOL