Drought takes toll on auctions

The price per head of cattle has continued to decline since 2011,while the number of cattle marketed has also decreased.

30 November 2016 | Agriculture

The intensity of the drought that has gripped the country since 2013 has increased exponentially, as can be seen in the decline of livestock marketed at auctions held by Agra.

Despite this, the company has performed exceptionally well this financial year - most likely due to its diversification of activities.

Despite the unfavourable economic climate, Agra was able to achieve a net profit before tax of N$47.751 million. The net profit before tax for the Group amounted to N$56.581 million for the year under review.

Arnold Klein, the company CEO, says severe drought conditions continued this year, causing water restrictions to have a major impact on various sectors of the Namibian economy.

“The agricultural sector, being highly dependent on rainfall, was the sector most affected by the prolonged drought. New export restrictions for livestock on the hoof to South Africa were implemented, causing large stock sales to South Africa to come to a standstill. Having battled all the challenges we were faced with, we are proud and grateful to have achieved excellent financial results,” he said.

Klein said the average price realised per head of cattle declined, but remained fairly consistent for goats and sheep.

However, he added it is of concern that the price per head of cattle has continued to decline since 2011/12 in real terms. The price per head realised in 2015/16 was lower than the prices achieved in 2011/12 which, apart from the severe drought and South African import restrictions, further contributed to the financial pressure on farmers.

He said the increase in headcount of cattle did not mitigate the negative effect of the reduced head price on sales. With cattle sales being the main contributor to Agra Auctions'' income, a decline in total auction turnover was experienced.

According to the report, during the 2015/16 financial year 128 150 head of cattle were marketed. This shows a decrease from previous years. In 2011, 151 037 cattle were marketed.

The price per head of cattle this financial year stood at N$4 294, which also indicates a drop from the previous years. In 2012, a head of cattle sold for N$4 947 and last year the figure stood at

N$4 611.

There was also a huge drop in the marketing of sheep over the past few years. In 2011 a total of 193 328 sheep were marketed and this financial year only 140 468 were put on the market.

The price per head of sheep was N$710 in 2012, increasing slightly last year to N$793 and growing further this year to N$814.

In 2011 a total of 92 611 goats were auctioned while this year there were only 52 477 goats marketed. The price per goat in 2012 was N$711. It then dropped slightly until it rebounded to N$733 last year and this year it stood at N$814.

According to Agra''s board chairman, Ryno van der Merwe, farmers have had to take emergency measures to decrease their herds and crop plantings regardless of prices.

He said the negative impact of the drought, weaker prices and increasing input costs are reflected in the fourth National Development Plan (NDP4) results. The overall target for growth in agriculture was set at 4% and the eventual outcome was -0.6%.

Taking into account the two main agricultural subdivisions in the country, the target for growth in the livestock sector was set at 4.1% and the outcome was -2.3%, while the target for growth in crop farming was set at 3.9% and the outcome was 2.4%.

The contribution of livestock farming to the GDP declined from 3% to 1.9% over the same period, while crop farming''s contribution declined from 1.9% to 1.3%.

These trends should be a national cause for concern, Agra says. The real GDP for the second quarter of 2016 recorded a decline of 1.2% compared to a 7% growth registered in the corresponding quarter of 2015. In general, the Namibian economy has slowed down and shows signs of stress.

ELLANIE SMIT

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