Entire country affected by drought, report reveals

The devastating drought experienced by South Africa last year could be expected to put consumers under great pressure for the foreseeable future, according to a report from the University of the Free State.

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The report, dealing with the drought’s impact on the local economy, was compiled by Prof Johan Willemse and Frikkie Mare. Although good, widespread rains were reported in the second half of January 2016, this would not go a long way to mitigate the effects of the drought on the economy as a whole, according to the authors.

High unemployment, the weakening rand, increased interest rates and the declining GDP, among others, were anticipated to put the spending ability of the South African consumer under even more pressure in the short and medium term, the report said.
According to the authors, the drought had affected the country as a whole. Most South Africans spent the bulk of their income on food, and the expected food price increases due to the decline in supply would inevitably push up the proportion of income usually spent on food, resulting in a reduction in the expenditure on luxury products – ultimately affecting the entire economy. 

The report also referred to the issue of social grants. A considerable percentage of the South African population depended on social grants. Despite these increasing year on year, it was highly unlikely that they could be increased to such an extent that they would cover the anticipated 30% increase in the price of a basic food basket, according to the report.

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According to Gerhard Schutte, CEO of the South African Red Meat Producers’ Organisation, it would take between three and four normal seasons to recover financially, and in terms of stock numbers, from the 2015 drought.