Tipping point for farming

JANA-MARI SMITH



The crippling cost of the prolonged drought has pushed many commercial farmers to a tipping point which could lead to a surge in farm sales next year.

According to numerous expert observers, for many commercial farmers who have struggled to survive the four-year drought in the face of crushing odds, the option to sell in order to ensure long-term survival is overtaking the option of staying on in the hope of a good rainy season.

“There are many farmers who now have to decide whether to stay or to rather sell their farms and invest in something else,” says Propcor Namibia’s Pieter Kotzé, who has operated as a commercial farm sales agent and liaison between landlords and the government for many years.

Maans Dreyer of Aqua Real Estate says it is difficult to speculate what the impact on farm sales will be.

Nevertheless, he says it is clear that many farmers are in financial trouble. Aqua Real Estate’s figures for the past three years show a 26% increase in farms being offered to the government.

In 2014, 132 farms were offered, while last year 139 farmers decided to sell through the estate agency. So far this year, 175 farms have been offered for sale, Dreyer says.

Since 2015, the number of farms that had to be sold because of unpaid debt rose from three to eight.

According to one farmer, some farmers are paying more than N$10 000 a day for fodder for their livestock. Several farmers have been forced to reduce their herds and lay off workers.

Kotzé adds that an increasing number of farmers are forced to sell their farms, or portions of their farms, because of mounting debt.

“There are some farmers who simply won’t be able to recover. At the current prices, and with the current livestock remaining on the farms, there aren’t enough resources to generate the required income to keep on going,” he says.

Besides the drought, farmers face numerous other challenges, including revised rules for animal imports in South Africa, disease outbreaks, low meat prices and high operational costs.

“So all these factors together make it very difficult,” Kotzé says.

He says until this year, most farmers have been able to cling on by the skin of their teeth. But for many the end of the line is near.

“This is the start of a new phase,” he points out.

Despite predictions of normal to above-normal rainfall this season, the experts agree that for many farmers it is probably too late and their chances of recovering from the drought are increasingly slim.

“The average farmer is really struggling. And the chances are that the rains won’t be able to soften the blow of this drought. Even if it rains now, there are still many difficult months that lie ahead,” Kotzé says.

Experts tell Namibian Sun that while exact data is not yet available directly linking an increase in farm sales to the extended drought, there is sufficient anecdotal evidence that indicates this trend, and it is one which is expected to make a sharp upward turn as from next year.

“Our experience in this industry, what we have picked up, is that many farmers are on their knees. And this could indicate that many more farms will be offered to the government, especially from next year,” says Alex McDonald of NamAgri.

He says several farmers have admitted that “the money has dried up and they have used up their securities”.

Increasingly, reports are coming in of farmers struggling to avoid defaulting on debt.

Sakkie Coetzee, executive manager at the Namibia Agricultural Union (NAU), said there are strong indications that farmers have been pushed too far, and many won’t be able to able to continue.

“We can only work on assumptions at this stage, but the drought is having a big impact, and we can assume that out of all the farms put up for sale this year a notable percentage can be linked to the drought.”

He says it is very likely that “the financial position of many farmers at this stage is probably at a very difficult stage”.