Agricultural Business Chamber of South Africa

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

South Africa's agricultural exports hit a new record high of US$12,4 billion in 2021

The need to improve logistics efficiency and curb the deterioration of infrastructure remains a topical issue in South Africa's agriculture. Farming communities and agribusinesses might work to improve productivity on the farms, but the ultimate goal for some agricultural commodities producers is to reach export markets. However, achieving this is not only a function of output, but also the various trade agreements that South Africa has with other countries and the efficiency of logistical infrastructure locally. In 2021, the cyberattacks at Transnet, vandalism of rail infrastructure, poor road networks across the country, which the heavy rains have now exacerbated, and inefficiencies at the ports at various periods were the key risks to South Africa's agricultural export drive.

Published: 21/02/2022

Brazil 2021/22 soybean season reduced further due to problematic weather

The United States Department of Agriculture lowered its 2021/22 forecast for Brazil’s soybean planted area further, to 39.8 million hectares (ha) and soybean production to 134.5 million metric tons (MMT). From the last estimates, weather conditions have continued to worsen in key producing regions. Principally, the drought in the south of the country has dampened prospects for a record crop. Post consequently also lowered the 2021/22 soybean export forecast to 86.8 MMT.

Published: 16/02/2022

SA agriculture machinery industry has a positive start into 2022

South Africa's agricultural machinery industry has had two consecutive years of robust sales boosted by improved farmers finances on the back of a large harvest in 2019/20 and 2020/21, combined with higher commodity prices, particularly in grains and oilseeds.1 However, 2022 will likely change the trend and show moderate agricultural machinery sales as the new machinery's replacement rate will probably be lower than the previous years. Moreover, the crop harvest, especially grains and oilseeds, which were the primary drivers of sales in the past few years, could show a lower yield this year than the past two seasons because of the excessive rains since the start of the 2021/22 production season. This could reduce the profitability of various farming businesses and, after that, equipment purchases.

Published: 15/02/2022

SA agriculture jobs up marginally in Q4, 2019

The Quarterly Labour Force Survey data for the fourth quarter of 2019 show that South Africa’s primary agricultural employment increased by 4.2% (or 36 000 jobs) from the corresponding period last year to 885 000 (see Exhibit 1). The notable job gains were mainly in the Western Cape, KwaZulu-Natal, Free State and Limpopo. This was largely in the horticulture, field crops and livestock subsectors. These activities, however, were not evenly spread across all provinces. - Wandile Sihlobo, Agbiz chief economist

Published: 24/08/2020

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