Tech platforms help agricultural supply and demand issues amid Covid-19
THE PANDEMIC has significantly altered the agricultural supply and demand chain, but technology platforms were creating efficiencies.
Standard Bank’s head of Agribusiness, Nico Groenewald, said last week that the closure of restaurants, school feeding schemes, farmers’ and fresh produce markets. as well as reduced grocery shopping hours, during levels 3 to 5 of the lockdown, had significantly shifted the demand for fresh produce and other perishables.
This had led to emerging and smallholder farmers experiencing disruptions to their supply chains. Farmers had, at times, been sitting with excess stock, and, without buyers, this stock had been dumped or destroyed at a cost to the farmer.
“Even in level 1, we will feel the effects for a while to come, with an additional 2.2 million people unemployed, travel still to return to normal levels, suppressed usage of the hospitality industry, and many other contributing factors. These challenges are by no means unique to South Africa, and are being experienced by emerging markets across the continent. The pandemic environment has also pushed millions of Africans into poverty as incomes vanished, creating an overwhelming need for food relief and assistance,” said Groenewald.
Groenewald said if easy access to the market was created, particularly for small farmers, the risk of financial failure would be reduced, and their economic activity could contribute to uplifting communities through employment.
The need for food relief was now greater than ever, as more than 12 million South Africans were unsure of from where their next meal would come. “At the same time, however, current estimates show that about 10 million tons, or 30 percent, of local agricultural production in South Africa was wasted each year. This is equivalent to an estimated R60 billion annually, or 2 percent of gross domestic product (GDP).”
Although some buyers of produce might have disappeared, demand has not died. It had shifted, as supply chains had not been able to adapt fast enough, he said. This had created an opportunity to help suppliers adapt by matching their excess supply to a different source of demand, which was the relief market.
The rise of the “platform economy” was one recent development that offered a way to tackle food relief and recreate markets for farmers in the post-Covid-19 recovery period.
He said the platform model was driving efficiencies across various industries, including agriculture, and improving the lives of various stakeholders. It also had immense potential to deliver social impact.
Standard Bank’s OneFarm Share, for instance, was safeguarding the sustainability of farmers while also contributing to food security.
“Matching the tremendous needs of organisations that provide food relief with farmers of all sizes with excess supply, OneFarm Share has the potential to contribute to driving sustainability of the agricultural sector and reducing hunger and malnutrition,” said Groenewald.
The OneFarm Share platform provides farmers and food producers with access to a marketplace that co-ordinated the procurement and distribution of food to charities and their beneficiary organisations.
Meanwhile, Anchor Capital investment analyst Casey Delport said 2020 had proved to be a remarkable year for growth in the agricultural sector, notably occurring when all other sectors in the economy experienced significant contractions because of the global Covid-19 pandemic.
“The South African economy saw a record annual decline of 7 percent year-on-year in 2020 - its biggest contraction since at least 1946. In contrast, the local agricultural sector posted annual real GDP growth of 13.1percent year-on-year and was also the only sector (apart from government services) that recorded any expansion,” said Delport.
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