Insights

A collection of Futuregrowth thought leadership pieces, media articles and interviews.

Agri-funds - Managing the current drought

01 Apr 2016

SUE HOPKINS / SPECIALIST FUNDS ADMINISTRATOR

Newsletter

Some parts of South Africa have recently experienced the worst drought in living memory. This has had a severe impact on many farmers and led to concerns about food security, farmers losing their land and farm workers losing their livelihoods.

While many commercial and small-scale farmers are sadly under threat, it may be worth noting that the agriculture sector is not a homogenous entity and the impact of the drought is not uniform across all regions and types of farming. At present, all of our Agri-fund farms have adequate water for their current needs, although the infrastructure has been under some strain in some areas and special measures have been taken.

Water availability and the efficient use of this scarce resource is a primary concern when selecting farm investments for our Agri-funds. Farms are only considered if they have secure water rights and a satisfactory supply for both current operations and planned expansion. In-depth climatic, geographic and soil analyses are done prior to investing, together with an evaluation of the optimal use of the land – both during and after the fund term. This approach is hugely advantageous when it comes to droughts.

State of the art water management and irrigation systems are installed where appropriate. These enable the farmer to monitor the needs of the plants and control the supply of water and nutrients in the most effective way. That said, irrigation systems are generally not geared to cope with very rare extreme conditions. However, according to the National Oceanic and Atmospheric Administration (NOAA) a 90% chance of normal or above average rainfall can be expected during the 2016/17 rainfall season in South Africa.

Other drought mitigation steps taken by our Agri-funds include:

•    removing invasive alien vegetation;
•    upgrading and sealing existing dams to reduce leakage; and
•    covering vineyards with shade netting, which achieves a 20 - 60% saving on irrigation.

In October 2015 the KwaZulu Natal province was declared a disaster area by the Government. Despite the hot and dry conditions our fruit farm in Eshowe is operating well and the weather has had minimal impact on the current season's crop. Most of the old mature orchards had been removed for the Agri-fund’s replanting programme. This was implemented prior to the drought as part of the long-term strategy of the farm, and the new young plants currently have less of a water requirement. The sealing of all the farm dams played a significant role in alleviating the situation. This is the only farm in the Agri-funds that had water restrictions, and new boreholes have been sunk to mitigate against possible restrictions in the future.

Although the drought has had a devastating impact for stock farmers who rely solely on rain in the Marble Hall and the Northern Cape regions, the impact on the Agri-funds’ irrigated citrus and table grape farms has been minor.

At our Marble Hall citrus farm, the overall strategy is to prioritise the permanent citrus plantings over the farm's other short-term row crops. The planting of row crops has been reduced, and the farm has also purchased some additional water to use on the remaining crops and to make it through the season should any restrictions be imposed. The strain on the irrigation infrastructure due to the lack of rain meant that some of the orchards were under moisture stress during their critical crop setting period. This resulted in a large amount of fruit dropping; however, with a smaller crop being set, a better size of fruit is expected. The hot dry weather also meant minimal pest attacks, resulting in a very clean crop for the coming season and, if there is no hail, the farm expects high export levels.

The hot dry summer weather has contributed to high yields on our Northern Cape Grape farms, with unusually large bunches and a very even berry (grape) size. Newly planted vines are growing exceptionally well and are expected to come into production earlier than usual.

Ensuring that our farms are maintained in a good condition, particularly throughout periods of stress, will contribute to long-term agricultural sustainability and the social and economic benefits that flow from this.