Effects of stronger Rand on Agriculture

The exchange rate appreciation has positive implications for some industries, while negatively affecting others. The state of agricultural markets affects everything from the income of farmers to the trade balance. Well over half of the country's agricultural exports originate from the Western Cape and with 60% of the Western Cape agricultural produce intended for export markets, the fluctuation caused by the Rand's position against the major currencies will in the long-term impact on the Western Cape economy.

Agriculture is the only industry, which has gained and created jobs. Statistics have also shown that the average numeration of farm workers in the Western Cape is 25% higher than the average for South Africa. A stronger Rand has the possibility to change all this. In the long-term a stronger Rand coupled with the current draught situation will necessitate structural changes in order to achieve the objectives of iKapa elihlumayo - the growing Cape.

Research by the Department of Agriculture's economists at Elsenburg has shown that free monetary and commodity markets still holds the most advantages for the economy, but there is an urgent need for effective strategic planning, financial risk management systems and the requisite contingency planning.

This research has also pointed out that parties that have a direct interest in the exchange rate of the South African currency should re-organize their businesses in order to accommodate the volatile nature of world markets and the exchange rate.

We will together with other role-players monitor the situation very closely and the fluctuation caused by the Rand's position against the major currencies will be a point of discussion at the Western Cape Agricultural Summit scheduled for later this year.

Alie van Jaarsveld
Media Spokesperson
Ministry: Agriculture - Western Cape
Cell: 084 6046701