Farmers should not panic over the International Monetary Funds’ shocking prediction the world economy would shrink for the first time in about six decades by an estimated 1,3%, said Absa Agribusiness head Ernst Janovsky. “It won’t have a significant impact on agriculture as a whole,” he judged. “People have to eat.”
“People have to eat”
“People might lose their houses and cars, but they will still have access to government support systems, such as the dole in England, food coupons in the US and social grants in South Africa, all of which would help them buy food,” explained Janovsky.
Janovsky said he believes these government-support systems prop up food prices, which is why they haven’t tumbled along with prices for almost everything else.
He added the fruit and wine industries are currently having one of their best seasons yet, due to the weakening of the rand against major export currencies.
However, Janovsky said it’s true niche products such as ostrich leather, hides and skins, and wool would suffer, as people would most probably buy fewer wool and leather products.
The drop in car sales will also affect the hides and skins industry as there will be smaller demand for car upholstery.
Pick ‘n Pay feeling confident
Pick ‘n Pay also showed its confidence in South Africa’s ability to recover relatively quickly from the economic downturn, by pledging to invest R1,4 billion in the year ahead to help create new jobs through its new store roll-out and refurbishment programme. The company plans to open 58 new stores.
Pick ‘n Pay performed well in 2008 despite the economic downturn, with a turnover growth of 17,4% up to R49,9 billion. Trading profit increased by 11,2% and diluted headline earnings increased by 18,1% per share.
Headline earnings increased 13,4% per share for the year ending February 2009. The company declared a dividend for the year of 170c, an increase of 14%.
Pick ‘n Pay CEO Nick Badminton said he was optimistic for the year ahead because of the company’s strategic investments, now starting to bear fruit, the relief brought to consumers by lower interest rates and falling inflation.
Badminton predicted improved growth in 2010 headline earning per share over what the company achieved this year. – Glenneis Kriel
