By: Nico Groenewald, head of Agribusiness at Standard Bank
The outbreak of Covid-19 across the globe is presenting a unique set of challenges to industries and causing severe disruption to global value chains. This is especially true with respect to agriculture, and there are questions and concerns around how the locking down of countries worldwide is impacting farmers and food supply.
While the value of South Africa’s exportable agricultural commodities to countries around the world declined by 8.8% in 2019 to $9.8 billion, the picture was expected to improve somewhat in 2020 based on certain factors. The favourable rains and weather conditions have helped farmers to increase summer crop plantings, and this has bettered prospects for higher outputs.
After facing trying times in 2019 as a result of drought conditions, this will come as a relief to farmers who will then be able to meet the demand of our trading partners in Asia and Europe. The Chinese government has issued a mandate to import significantly higher volumes of agricultural products like citrus, other fruits, nuts and wines, among others, from the African continent. This is to meet the evolving consumer demands in the Asian country and has the potential to help strengthen our export position.
The lifting of the ban on meat products following the outbreak of foot-and-mouth, although bringing much pain to the sector by curtailing output, has also now allowed for our meat products to move freely.
The agriculture sector in SA is heavily dependant on global markets and most of what is produced here goes to markets in Asia and Europe combined. These are areas that have been particularly hard hit by the virus, and this is impacting people’s ability to spend and disrupting supply chains as governments restrict movement to limit the spread of the virus.
This is undoubtedly a concern for local farmers and agribusinesses. A potential slowdown in export demand would hurt an already pressured sector. The situation will then be exacerbated by what is expected to be a decline in the prices of exportable commodities. Farmers and farm workers are also placing themselves at risk of contracting the disease.
It is critical for farmers and farm workers to be supported in this regard, so that they can continue producing food and accessing the market in a way that is safe and without disruption. Taking necessary safety measures is essential to ensuring the continuation of food supply to limit the spread of infection among labourers. This also means considering the use of labour-saving practices.
Agricultural technologies are helping to combat some of the problems that have been intensified in the sector due to the impact of Covid-19. These digitalised solutions offer an opportunity to address issues with input and output, logistics and human contact.
Prior to the crisis, the use of digital technology was already prevalent throughout the agriculture industry. Farmers are increasingly adopting these solutions as they allow for farms’ field operations to be more insight led and efficient. The combination of digital technology such as the Internet of Things with big data capabilities is helping farms to become more productive.
Agricultural productivity is inherently unpredictable. The industry is sensitive to the likes of weather patterns or biological processes, which, if unfavourable, can impact growing conditions and crop production. But it is critical to produce crops of the right quality and quantity to achieve successful farming.
Technological systems such as remote sensing have made significant impact in this regard. With this application, farmers can gather data that enables them to monitor crops and identify problems ahead of time.
Further to that, the data can be recorded and arranged into a system so that farmers are able to make informed decisions around crops and future strategies for growing. This kind of information can also be used to justify support from financial institutions as it provides an independent view of the business that lenders and insurers can reference when considering financing solutions for the farmer.
E-platforms are seeing the light helping farmers to connect and manage farm workers and tasks better, with added potential to integrate operational functions with suppliers and external technicians. Supporting such activities with payment capabilities is a further outflow which is likely to be scaled to commercial levels on the African continent.
As the uptake of agritech solutions continues to increase, Standard Bank Group has committed to preparing its farming clients for a digital future. The bank is investing in innovative solutions that will deliver enhanced data through remote sensing and digital agronomy. This will allow farmers and their agronomists, whose role is to increase soil and crop productivity, to make better decisions in everyday farming life.
Standard Bank has also crafted innovative financial solutions for renewable energy installation and usage across agricultural value chains. The uptake of these offerings in support of farmers and processors’ energy management has gained significant momentum and is likely to continue.
For more information on Standard Bank’s digital offerings for farmers, speak to your Standard Bank relationship manager who will put you in touch with the relevant individuals.