/ 14 January 2016

Drought’s devastating ripple effect

Harsh reality: The Southern African Development Community is dependent on South Africa for 40% of its maize
Harsh reality: The Southern African Development Community is dependent on South Africa for 40% of its maize

The El Niño-induced drought is not just a South African problem but also a regional one that stretches from the Cape to Ethiopia, where 10% of the population is facing famine.

A drought crisis, particularly in neighbouring countries, is bound to affect South Africa negatively, with problems ranging from food security to overloading at ports and even mass migration.

On December 31, the Central Bank of Swaziland announced it would donate the equivalent of R1-million to help victims of the drought. The World Food Programme reports that a third of Lesotho’s population faces hunger as a result of the drought. An estimated $37?million is required for relief efforts, but the government has only $9.6?million to allocate.

Botswana, a water-scarce country to begin with, is facing severe water shortages. The Gaborone Dam has dried up and the water supply from a South African dam has been cut.

In Mozambique the effects of the drought saw about 100 head of cattle dying of thirst in the second half of 2015. A cattle-farming region in Namibia has also lost hundreds of livestock because of the drought. In Zimbabwe about 7 000 head of cattle were lost in recent months.

Some parts of Angola have also been severely hit, prompting last week’s move by the government to supply food parcels to about 750 000 people affected by the drought.

In Ethiopia, where many households depend on subsistence farming, the national disaster prevention and preparedness committee said 10-million people will need food aid in 2016.

Zambia, Tanzania and Zimbabwe have seen the drought disrupt the hydropower supplies on which their electricity systems are reliant.

South Africa is also feeling the effects of the drought as maize harvests are expected to be significantly lower and abattoirs are full because of farmers sending animals, which they will soon struggle to feed, for slaughter.

Grain SA economist Wandile Sihlobo said that, of the maize consumed in the Southern African Development Community, 40% is produced in South Africa and so lower local production will have a significant impact on the region.

South Africa will need to import an estimated five million tonnes of maize between May this year and April 2017, which will weigh heavily on the trade deficit. Import estimates are based on the fact that farmers have planted 1.3-million hectares of maize this season, half of the usual 2.6-million hectares. But hopes for a successful harvest are higher following some promising rains in the eastern part of the country recently.

“The whole region is in a challenging situation. Food inflation out of South Africa will spread outward. Farmers in South Africa, Namibia, and all around, all are feeling the impact,” Sihlobo said.

South Africa alone needs about 10-million tonnes of maize a year, and Botswana, Namibia, Lesotho and Swaziland cumulatively “normally” buy about 630 000 tonnes a year from South Africa, Sihlobo said.

The Zimbabwean agriculture minister said the country will need 700 000 tonnes of maize in 2016.

South Africa is a free market and agricultural products such as maize are traded on Safex (the equity derivatives market) on the JSE. “If Botswana has money and is willing to buy South African maize off the market at market price, that’s allowed,” Sihlobo said.

Agri SA’s executive director, Omri van Zyl, said the association met this week with the Southern African Confederation of Agricultural Unions – a regional farmers’ organisation representing 17 unions from 12 Southern African nations – and resolved to undertake a study on the impact of the drought.

More than 90% of the global trade in maize is of the yellow variety and there is a surplus. The demand for white maize comes largely from South Africa, other African nations and Mexico, where it is a staple food. As such, the supply is limited.

In South Africa the areas worst affected by the drought are the white maize areas, Van Zyl said. “As a rule of thumb, you take the N1 [which runs diagonally from the Beitbridge border post to Cape Town] and it cuts the country in two,” said Van Zyl. “On the west side, it is more white maize and on the eastern side, it is more yellow maize.”

The western side has been more severely hit by the drought. “It would be better to have yellow maize hit, because it can be imported fairly freely from around the world,” he said.

It was hoped that Zambia could come to the rescue, especially after it announced last year that it had 800 000 tonnes of white maize available for export. The country’s National Food Reserve Agency monitors stores of maize to maintain sufficient levels at all times.

“However, what came to light at the end of last year, when the Zambian kwacha depreciated significantly, was that inflation prospects in the country had raised significantly,” Sihlobo said.

The nation is highly dependent on its copper industry, but slowing growth and structural changes in China have seen the metal price plummet, affecting the Zambian fiscus. Paired with an energy crisis as a result of the low levels in the Kariba Dam, it caused the currency to weaken dramatically.

The agency has resolved to sell its maize reserves to Zambian millers only. But Zimbabwean publication Newsday last week reported that, although the agency has stopped selling for export, Zambia continues to export maize through private-sector trading companies, which have substantial stocks. The Herald newspaper in Zimbabwe this week reported that Zimbabwe planned to import 230 000 tonnes of maize from Zambia.

There are also concerns that South African port infrastructure is not adequate to handle the increased imports. “Many of these countries are landlocked and there are very few with good, functioning ports,” Van Zyl said. Durban may therefore become overloaded with imports destined for Zimbabwe, Zambia, Namibia and Malawi. “It’s going to create massive logistical issues.”

If food shortages in neighbouring countries can’t be overcome, the crisis could be accompanied by migration.

“Zimbabwe is one of our top five export countries for agricultural produce. We export a lot to these [neighbouring] countries and many of them are completely reliant on us,” Van Zyl said.

According to Bart Stemmet, a senior economist at NKC African Economics, hardship in neighbouring countries could lead to an influx of migrant workers seeking greener pastures. “Domestically, the drought has broadly affected agricultural sectors, which are not the most labour- intensive, which means incoming labourers will likely head to urban areas,” he said.