Drought relief could be too costly for government

South Africa is experiencing its worst drought in more than two decades and at the latest Nation in Conversation discussion participants from the agriculture sector spoke about its political, social and economic implications.

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According to a media statement, agricultural experts on the show, which is hosted by the CEO of Galileo Captial, Theo Vorster, expressed concern that government would struggle to deal with the consequences of the drought.

Previously, government was in a position to provide state guarantees to the value of R2 billion. These guarantees made it possible for farmers to restart their businesses.

Today, R9 billion would be needed, which the state could not afford.

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Farmers have just about exhausted risk mitigation measures such as crop insurance. Commercial banks were also unlikely to provide new loans to farmers to restart their businesses.

If the current drought persisted, it would be the first time that the new democratic government would have to deal with a disaster situation of this magnitude and one of the greatest challenges would be to develop intervention that balanced the interests of new and emerging farmers as well as commercial producers.