The recent Rarnd depreciation could have short-term advantages for agriculture, says Lindie Botha, the manager of Economic Intelligence and Finance at the Agricultural Business Chamber.“It can have both positive and negative implications,” she pointed out. “In the short term, the depreciation provides excellent export opportunities, because we gain more foreign exchange for exported products.”
But according to Botha, in the long term, there will be a negative influence on the economy as imports become more expensive. She said agriculture is dependent on the import of many inputs including fuel, technology, and even some services. “The competitiveness of the agricultural sector is therefore negatively influenced if we are buying our inputs at a higher price,” she said. “We might be gaining more for our export products, but in the long term, not enough compared to what it costs for imports. Industries such as deciduous fruit, wine, citrus, table grapes and sugar will benefit in the short term, but in the long run, the weak rand will catch up with the entire agricultural sector.
Prof Koos dela Rrey of the University of Ppretoria said that the rand’s depreciation could be a boon for South African exports. “A weak rand translates into local exports becoming cheaper overseas, which might help improve the current account balance,” he said.
The rand fell further after finance minister Trevor Manuel delivered his medium-term budget policy statement forecasting lower economic growth and a widening current account deficit.The rand has recently shed more than 35% of its value against the dollar and has been further knocked by the global credit crunch. – Peter Mashala
