Drought has hammered the economy

It’s not only farmers keeping a worried eye on the horizon for swollen rain clouds – National Treasury has noted that South Africa was expected to import more than 2 million tons of maize in 2016/17.

This emerged in the 2016 medium-term budget policy statement (MTBPS) presented by Finance Minister Pravin Gordhan to Parliament on Wednesday afternoon.

According to the MTBPS, mining growth declined while agricultural output was weaker as a result of the drought.

While that may not be surprising, growth in transport, telecommunications, electricity, gas and water all fell thanks to a weak demand.

The MTBPS noted the two successive seasons of severe drought in summer rainfall regions saw six consecutive quarters of falling output on the heels of a very successful 2014.

Some fruit, nuts and beef had weathered the drought thanks to a weaker rand, market diversification and global demand.

Still, 8.3% was taken off the value of the agricultural, forestry and fishing sectors in the first six months of this year while mining fell into the exact same number and time frame.

High operating costs, safety stoppages, “low commodity prices and weak global demand” made for a “difficult” operating environment.

While rain is agriculture’s only salvation, mining at least can look forward to a “moderate” rise in prices for its products, which started beginning 2016, and is expected to continue, argued the MTBPS.

As for drought relief over the next three years, government has provided a further R553 million on top of the previous R1.6 billion earmarked for water tankers, animal feed and borehole refurbishment.

The R553 million is to be put towards a mobile desalination plant and more animal feed, ahead of expected rains later in the year.