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South Africa's agricultural machinery sales are likely to moderate in 2023 compared to the robust levels of 2022

After solid activity in 20221, South Africa's agricultural machinery sales will likely soften this year. We outlined several reasons for this view in our previous update. For example, we think the possible replacement rate of older machinery will likely be lower this year as the past three years saw increased new machinery sales. The rising interest rates will also continue to pressure farmers' finances. Moreover, while the agricultural sector, specifically rain-fed areas, will likely perform well, the harvest could still be less than the 2021/22 season due to prospects of lower yields and reduced planted area. This lowers the farmers' financial muscle to spend on agricultural equipment.

Published: 09/02/2023


South Africa's rice imports to remain at stable levels as of 2022, but rice in global prices will present new challenges

After a year of generally subdued global rice prices, this year started with a notable increase in prices from various origins. With South Africa being a net importer of rice, the worldwide surge of prices presents upside risks to consumer food price inflation. The comforting part, however, is that South Africa will likely import the same volume of rice as the previous year. The International Grains Council (IGC) forecasts South Africa's 2023 rice imports at 1,1 million tonnes. This is roughly unchanged from 2022, when about 73% of the imports originated from Thailand, 23% from India, and the rest from various countries, including India, Pakistan, Brazil, and Vietnam. These origins will likely remain the same in 2023.

Published: 08/02/2023


South Africa's wheat production estimates lowered amid poor yields in parts of the Western Cape

The drier weather conditions in the Western Cape, a major wheat producer in South Africa, have weighed on the 2022/23 wheat harvest. The impact of lower yields in parts of the province is evident in the recent  Crop Estimates Committee's wheat production update, which placed the province's crop at 954 000 tonnes, down from 1,26 million tonnes in the 2021/22 season.

Published: 31/01/2023


South Africa's 2022/23 summer grains and oilseeds plantings remain at decent levels

Since the start of the 2022/23 summer grains and oilseeds production season, we have maintained a positive view of the production conditions. The robust tractor sales, the La Niña-induced rains, and the relatively higher commodity prices were some of the factors that pointed to a decent area for summer crops in the 2022/23 season. The data recently released by the Crop Estimates Committee (CEC) broadly mirrors our optimism, placing the 2022/23 total area plantings for summer crops at 4,31 million hectares of summer grains and oilseeds in the 2022/23 season. This is down by 0,7% from the previous season, and 0,9% from the intentions to plant data released earlier in the season.

Published: 31/01/2023


El Niño is showing its head again and presents risks for the 2023/24 season

As the deepening energy crisis continues to present problems for different parts of the agricultural sector, another major challenge that could confront South Africa's agricultural sector in a few months is a change in weather conditions from favourable rains to drier and hot conditions. This would be a switch from a prolonged period of La Niña to El Niño.

South Africa has had a good four seasons of La Niña-induced heavy rains from 2019/20 to 2022/23. These above-normal rains supported agriculture leading to higher yields across various field crops, fruits and vegetables. The livestock industry also benefited from improved grazing pasture. Importantly, having four consecutive La Niña seasons was an unusual occurrence. The typical cycles are two seasons of higher rainfall followed by normal-drier seasons.

Published: 26/01/2023


Agbiz continues to engage with government and Eskom on load-shedding challenges

The severe load-shedding has increased food security risks in South Africa, and financial pressures on farmers, agribusinesses and the value chain role players. Whilst the risk is great, statements on food security should only be made from an evidence base. As such, Agbiz conducted a survey this past week across all the sectors and the results are currently being analysed by a joint team of experts. Insights will be shared as soon as possible. The survey will also be used to inform possible interventions that government and private sector representatives are formulating to ensure a sound approach. The results of the survey will help enrich the response approach for the sector. Agbiz has also been engaged in various meetings with the Department of Agriculture, Land Reform and Rural Development, and Eskom to find ways to ease the pressure on agribusinesses. These engagements are ongoing and will benefit from the results of the survey.

Published: 23/01/2023


SA consumer food price inflation path uncertain as loadshedding presents risks to irrigation and processing

The data released by Statistics South Africa this morning shows that consumer food price inflation slowed marginally to 12,7% in December 2022 from 12,8% in November. The product prices underpinning this moderation include meat, oils, and fats. For the whole of 2022, the consumer food price inflation averaged 9,5% (compared with 6,5% y/y in 2021 and 4,8% in 2020). Broadly, the high prices of grains, vegetable oils, and meat for much of 2022 were the primary drivers of consumer food price inflation. This was not a unique occurrence to South Africa, but a global challenge mirrored the surge in agricultural commodity prices in the first three quarters of 2022 and the year before. The agricultural commodities price increase emanated from various factors such as the drought in South America, higher shipping costs, strong agricultural product demand in China, and the Russia-Ukraine war.

Published: 18/01/2023


South Africa saw robust agricultural machinery sales in 2022

Although we expect South Africa's agricultural gross value added for 2022 to have contracted, the year was generally favourable for the sector. The squeeze we anticipate results from mild declines in critical crop harvests such as maize, production challenges in the sugar industry, trade friction in fruits, vegetables, beef and wool, and widespread foot-and-mouth disease weighed on the sector's performance this year. In a slightly more technical sense, the strong growth in the previous two years -- 14,9% y/y in 2020 and 8,8% y/y in 2021 -- created an exceptionally high base, setting the ground for some pullback.

Published: 17/01/2023


South Africa's rice imports to remain roughly unchanged in 2022

Rice ranks second in the four major agricultural products that South Africa imports annually and account for 7% of the US$6,9 billion spent on agricultural products imports in 2021. Other products are wheat, palm oil and poultry products. In volumes terms, South Africa imported about 1,1 million tonnes of rice, both for annual consumption and exports to the neighbouring countries. The latest data from the International Grains Council (IGC) suggests that this volume could remain unchanged in 2022. Thus, the IGC has maintained its estimate for this year at 1,1 million tonnes (Exhibit 1).

Published: 19/04/2022


How Russia-Ukraine tension could influence Africa's agriculture supplies

"No man qualifies as a statesman who is entirely ignorant of the problems of wheat" -- Socrates. 

So, wheat and other grains are back at the heart of geopolitics, and African leaders must pay attention, particularly to the rising tensions between Ukraine and Russia, given the role of these two countries in the global agricultural market. For example, Russia produces about 10% of global wheat while Ukraine accounts for 4%. Combined, this is nearly the size of the European Union's total wheat production. This wheat is not just for domestic consumption but for export markets. According to data from Trade Map, in 2020, Russia accounted for 18% of global wheat exports and Ukraine 8%. Together, this is just over a quarter of global wheat exports from just two countries.

Published: 24/02/2022