Poor agriculture performance fuelling inflation

PHILLEPUS UUSIKU

One of Namibia’s key sectors that is involved in the production of food performed relatively poor in the second quarter of 2021 (2021Q2) and could be the reason why food prices are escalating.

According to the Namibia Statistics Agency (NSA), the inflation rate for the food items during 2021Q2 remained higher than the ‘all Item’ inflation posting a 7.1% compared to 4.6% recorded in the corresponding quarter of 2020.

This is an increase of 2.5 percentage points over the year. While the overall inflation rate increased by 3.9% during the period under review compared to 1.9% registered in 2020Q2. This indicates that food prices continue to increase at a faster pace than other products’ prices in the consumer basket for the period under review, NSA pointed out.

The agriculture, forestry and fishing sector registered a decline of 1.5% in the second quarter of 2021 compared to an increase of 32.7 % recorded in the corresponding quarter of 2020.

The second quarter gross domestic product (GDP) figures released by the NSA indicated the domestic economy grew by 1.6% from a from a decline of 11.6% recorded in the corresponding quarter of 2020. The agriculture, forestry and fishing sector contributed 13.8% of GDP (N$5.8 billion).

The decline in the sector emanates from agriculture subsector that recorded a decline of 8.0%. The reduction in real value added was recorded in both livestock and crop farming that contracted during the review period, NSA said.

However, the forestry and fishing sub-sectors performed better than the corresponding quarter, registering growth rates of 34.8% and 13.8% in real value added as opposed to a decline of 13.1% and 16.4% that was registered in the same period of 2020, respectively, NSA added.

Investments

According to the Agricultural Bank of Namibia (Agribank), over the past six years, the agriculture sector contributed approximately 7.6% to GDP.

Improving the agriculture sector’s contribution towards GDP will require the prioritisation of investments in the sector through collective and collaborative efforts. Involving the private sector to invest in agricultural businesses would unlock the real potential of agriculture in Namibia, the bank pointed out.

Some key subsectors that could be explored and accorded key investments include value addition through the processing of agricultural commodities and the introduction of branding, labelling and packaging of high-quality commodities that could be exported to earn the nation foreign currency. Additionally, significant investments that bring services closer to farmers and the securing of markets would significantly accelerate the quantity of commodities produced in the country, Agribank added.

This should be supported by organised logistical channels to transport produce from point of production to the rightful markets of consumption on time. On the end of the producers, subsidies, incentives and regular capacity building interventions to build their knowledge base will enable them to be reliable producers that meet market demand patterns regularly, Agribank [email protected]