Foot-and-mouth disease: while Minister bickers about state control, rural economies grind to a halt

Image: courtesy of Freedom Front Plus

While the Minister of Agriculture, Mr John Steenhuisen, is defending government's exclusive right to procure and administer foot-and-mouth disease vaccines in court, the economic crisis affecting rural communities keeps expanding.

Most rural towns are primarily sustained by agriculture. Rural economies consist mainly of input suppliers, businesses that receive and process agricultural products, financial and personal services, and trade. At the heart of all these lies agriculture.

Most farming operations, whether big or small, are mixed. This means that crops are cultivated, while livestock are fattened on a mixture of natural veld, planted pasture, crop residues and purchased feed. A farming operation's cash-flow planning is a complicated exercise, with the free marketing of livestock at specific times being an essential element. 

When farmers cannot market their livestock, non-essential expenses are the first to go. This may support the farmer’s cash flow, but it dries up the cash flow of everyone from the church and the hairdresser to input suppliers and non-essential labour.

If businesses close and owners are forced to move to the city, or even seek refugee status in the USA, the local economy cannot automatically recover once livestock is marketed again.

Every week this crisis is allowed to continue, the irrevocable damage is compounded.

Government ought to have the financial resources to cover the costs of procuring, distributing and administering vaccines. It clearly lacks the necessary human and logistical capacity, though. Assistance from the private industry should, therefore, be welcomed rather than rejected.  

In the meantime, the Freedom Front Plus (VF Plus) calls on banks to treat any losses caused by this crisis as losses incurred due to a natural disaster and not mere operational losses. Lenient credit measures could, in the long run, save the entire local economy.

Business rescue is an option for farmers who foresee a financial crisis. Farmers who are considering business rescue should bear in mind that the timeframe for presenting a rescue plan and initiating negotiations with creditors is extremely tight – especially for a complex enterprise such as a farm.

Clearly, the entire financial sector – from the Land Bank, through agricultural companies (former cooperatives), commercial banks and business rescue practitioners – will also have to do its part to help ensure the survival of rural communities.