Commercial farming in crisis

Following the drought of the last seven years, the Namibian agriculture sector is on its knees.

29 January 2020 | Agriculture

Crushing debt, stripped-down livestock numbers and limited support to help Namibian farmers weather the crippling seven-year drought has plunged commercial farming into a crisis.

“The majority of commercial farmers were severely affected by the seven-year drought and in most cases have been pushed to the brink of total collapse in terms of herds, operations and human endurance,” Dederick Jankowitz of Auction Dynamix and a part-time farmer said recently.

Roelie Venter of the Namibian Agricultural Union (NAU) agreed that following the “disastrous drought of the last seven years, the total agricultural sector is on its knees”.

Some warn that the severe drought could signal a turning point for commercial farming in Namibia.

“Commercial farming is not viable any more. The average age of farmers is probably approaching 65 and young farmers are scarce, as other professions offer more money,” Pieter Kotzé of Propcor said.

He said going forward “it will be survival of the financially fittest”.

Kotzé warned that even with normal to above-normal rain, grazing recovery will take at least two to three years, during which many are likely to “fall off the bus”, as cash-strapped farmers juggle servicing huge debts with rebuilding their stocks.

Jankowitz underlined that although the rainfall season is not over, “most farmers will again face a shortfall in grazing in the months leading up the next rainfall season”.

“Namibia needs a number of years of good rainfall to achieve what used to be the theoretical carrying capacity on farms.”



Barren farms

Maans Dreyer of Aqua Real Estate said the crippling drought forced farmers to significantly reduce their herds and use the proceeds to feed remaining stock on barren farms.

“They are currently in a position where they have little cash flow left, and are therefore unable to buy additional stock when grazing recovers somewhat.” He added that with the available livestock left, many farmers are “unable to build stock and service their debts”. Kotzé confirmed that the myriad of headwinds faced by farmers seven years into the drought has pushed many to sell, “and many more will consider selling”.

Moreover, mounting debt has brought banks to the doorsteps of farmers, as financial institutions face their own challenges amidst the economic downturn.



Helping hand

Jankowitz underlined that although farming in Namibia is “definitely not easy”, there is hope.

“If farmers remain positive, and government can serve farmers and protect their interests, then we have hope for commercial, communal and resettlement farmers.”

The NAU's Venter stressed that survival depends on several factors.

“We as a sector urgently need assistance on a national level to be able to manage cash flow. This includes consolidation of debt at lower interest rates, as well as the introduction of a payment holiday on the repayment of debt while herds rebuild and cash flow improves.” He said teamwork is urgently needed across the agricultural sector to identify and implement solutions to help producers get back on their feet.

Apart from the drought, Jankowitz pointed out that over the past decades, commercial farming in Namibia has seen a steep rise in input costs compared to income generated.

Moreover, farmers face unreliable rainfall patterns and support from government has been limited.

“There is still hope for farmers in Namibia, but a concerted effort should be made to achieve realistic goals. Subsidies may work to assist farmers, but should be available to everyone and across a spectrum of farming-related items”.

He warned that if Namibia does not pay urgent attention to the agriculture sector to help ensure its survival in a time when the demand for food is growing sharply, “we will be in for a rough ride”.



Diversify

Recent studies by the NAU found that if producers are left with 50% of their farm's potential herd, and only rely on livestock production while debt must still be paid, their farms will not be financially sustainable.

“Producers will need alternative income sources to recover after the drought. A definite new mindset is needed by all farmers that other income opportunities must be exploited to complement income sources from livestock,” Venter said.

Tourism, hunting, charcoal and cash crops are possible options.

Dr Ndahafa Nghifindaka of the Namibia Emerging Commercial Farmers' Union stressed that farmers “need to develop new strategies to survive and plan for emergencies”.

She underlined that farming should be treated as a business and farmers need to be “ready for farm-related risks derived from human or natural factors”.

Venter outlined that farming in Namibia has always faced challenges and historically is a low profit business with significant risk. And while current conditions are tough, he said, this does not mean commercial farming on a relatively small scale is no longer viable.

JANA-MARI SMITH

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