With forecasts pointing to a strong El Niño, farmers have been urged to reconsider planting decisions, preserve cash reserves, and prepare for lower yields before committing to seasonal expenditure.
At a high-level round-table discussion on El Niño preparedness, held on 12 October in Pretoria, Gauteng, agricultural stakeholders warned that hotter, drier conditions could develop earlier than usual, with rainfall expected to deteriorate towards the latter part of the season.
The Free State, North West, Mpumalanga, and Limpopo were identified as particularly vulnerable.
However, South Africa entered the season with substantial advantages over 2015/16, including improved soil moisture, favourable grain stocks, higher dam levels, and advances in agricultural technology.
Dr Simphiwe Ngqangweni, CEO of the National Agricultural Marketing Council, cautioned that these advantages would not benefit all producers equally.
“As of 5 October, in the major dams, water levels stood at about 90%. While this is encouraging for irrigated agriculture, it may not mean as much for farmers who depend on rain-fed production,” he explained.
Farm for profitability, not maximum production
Paul Makube, senior agricultural economist at FNB, said in a press release that farmers needed to approach El Niño as a financial risk rather than an inevitable production disaster.
“El Niño is a risk you plan for, not a guarantee that things will go wrong. The question to ask is whether your farming business is positioned to handle a more difficult season if it does materialise.”
He advised farmers to prepare cash flow budgets for three scenarios: a normal season, a weaker season, and a severe drought. This would reveal potential financing shortfalls before they became critical.
Makube also cautioned against planting every available hectare or maintaining livestock numbers beyond the veld’s carrying capacity.
“Every hectare planted ties up cash, and every animal the veld can’t support becomes a feed bill. It may make more sense to focus inputs on the lands and livestock with the best yield potential than to plant or feed everything.”
He warned against indiscriminate cost-cutting, particularly on fertiliser, maintenance, and experienced labour, where short-term savings could undermine future profitability.
Financial warning signs
Farmers were advised to monitor early signs of financial distress, including accessing overdrafts earlier than usual, carrying supplier accounts into subsequent months, and becoming increasingly reliant on short-term credit.
Makube urged producers anticipating repayment difficulties to approach their banks early with updated financial statements and realistic cash flow projections.
Speaking during the discussion, Wandile Sihlobo, presidential envoy on agriculture and land, said the round-table’s recommendations would contribute to government drought preparedness planning, with further engagement planned with financial institutions and industry stakeholders.
For farmers, Makube emphasised that the greatest danger was not necessarily one poor harvest, but the prolonged financial recovery that could follow.
“A good season always comes again. The goal is to make sure your business is still in a position to make the most of it when it does,” he said.
