Do strict conditions for aid leave farmers vulnerable?

While government’s support provisions for farms affected by the coronavirus are much-needed and welcome, strict conditions for eligibility risk leaving some of the most successful farms in the country vulnerable to the impact of the pandemic. 

This is according to farmer and agriculture communist, Mbali Nwoko, a black woman as well as a first-generation commercial farmer. She is the chief executive of Green Terraces, which farms greens for retailers, food processors as well as grocers, and is about to branch into peppers from its recently established farm in Bapsfontein. 

President Cyril Ramaphosa declared the national lockdown in March in a bid to curb the spread of the Covid-19 coronavirus. It was later extended to the end of April. Earlier this week, the president announced a phased approach to reopening the economy.

When the lockdown started, the Department of Agriculture, Land Reform and Rural Development ring-fenced R1.2 billion for assistance to target financially distressed small-scale farmers, with R400 million allocated for farmers within the Proactive Land Acquisition Strategy programme.

The remainder was for farmers in poultry, livestock, feed and medication, vegetables, fertiliser, pesticides, herbicides and soil correction.

Supply chain interruptions

But Nwoko says even though food production and supply are essential services, various points of the agriculture and food production value chain closed during the lockdown, creating a significant challenge for local farmers. “Most of our suppliers, as much as they are essential services, are not able to continue business operations, because their manufacturers and suppliers have been closed.

“Some of my suppliers have closed, meaning that my production is reduced, and employees do not have payment,” said Nwoko.

An oversupply of food can, on one hand, be positive, because South African consumers can support local food production, boosting food security. But, Nwoko added, it also leads to waste because the produce cannot reach consumers.

“With low sales, farms are sitting with abundance of produce which cannot be sold. Crops end up going to waste, especially because borders are closed. The citrus and fruit industry farmers who export to the EU and Asia are receiving huge pressure,” she explained.

The missing middle

Nwoko believes government should be applauded for considering protections towards farmers at the time of the pandemic. But she believes a key challenge with government provisions lies in that they exclude large-scale farmers, or those who are not as indebted as others.

“What about those that are medium sized and supply to the markets? What they could have done, they could consider larger farmers and as an industry we should consider farmers as a whole and not exclude categories,” Nwoko said.

Food security has been flagged as a key concern during the coronavirus pandemic, particularly in Africa. The UN has warned that the continent must act quickly to prevent a looming crisis, as people in lockdown no longer have the same access to public transport systems or informal markets, and farmers are experiencing supply chain interruptions that mean they are struggling to buy seed and fertiliser.

“The closure of major highways and bans on exports could also harm food systems,” Gilbert Houngbo, head of the International Fund for Agricultural Development (IFAD), said.

Meanwhile, South Africa is facing its own additional challenge, with the Land Bank announcing on Friday that it had failed to ward off a default on debt that was due on Thursday. This in turn triggered a cross default on other bonds, with a potential knock-on effect for the agricultural industry.

The agricultural bank’s financial position potentially impacts its ability to extend loans to vulnerable farmers, with a knock-on effect on food security in areas commercial farmers don’t necessarily reach, Fin24 previously reported.  

For farmers unable to access financial assistance – as well as their employees – prospects are limited. Food and Allied Workers Union deputy secretary general Mngomezulu Mayoyo said while employers were not recovering the profits that enable them to pay salaries, they were willing to meet workers halfway and prioritise production costs, including salaries.

“We have been affected dramatically. This is unprecedented because we are fighting something we don’t fully understand. We have been fighting workers on the ability to pay salaries. At least some are able to work. If it were a full lockdown of the sector, there would have been a serious problem,” said Mayoyo.

Mayoyo said if the lockdown economic restrictions persist, it would become more difficult for employers in the food production sector to accommodate its various costs.