Episodi
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After the sharp increase in the first quarter of 2024, South Africa's agricultural exports fell slightly on a year-on-year (y/y) basis in the second quarter. According to data from Trade Map, the country's agricultural exports were at US$3.37bn in the second quarter, a 0,1% decline relative to the same period last year.
This comes after growth of 6% y/y in the first quarter of the year. The slight decrease in the second quarter reflects the moderation in the prices of some agricultural products and the decline in the volumes.
The top exported products by value include citrus, apples and pears, maize, wine, dates, pineapples, avocados, sugar, grapes, fruit juices, nuts, and wool.
Notably, while the value of the exports is down mildly from the second quarter of 2023, the efficiency at the ports this year was arguably much better than what the stakeholders experienced in 2023.
This again shows that the decline in export value is largely due to lower prices of some commodities and a decline in volumes after a challenging domestic production environment, specifically in grains and oilseed.
Listen to the podcast for more details.
Podcast production by Richard Humphries, and Sam Mkokeli
My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website -
On various occasions, I have highlighted South Africa's agricultural sector's gains in the first three decades of democracy. The sector has more than doubled in value and volume terms. Better seed varieties in crops, vegetables, and fruits, as well as improved genetics in livestock and poultry, have, among other interventions, been the catalyst for output growth. The opening up of export markets over the years has also created a solid demand that today, we export roughly half of what we produce in value terms. Our agricultural exports amounted to a record US$13,2 billion in 2023.
In appreciating this progress, some often ask about the black farmers' contribution. The data on this is shaky, but based on various industry research, we can state that black farmers account, on average, for around 10% of the commercial agricultural output. This gives one an indication of their contribution to exports. The matters of why black farmers account for this much produce thirty years in democracy and how we could build an even more inclusive agricultural sector are issues we discussed at length in our recent book, A Country of Two Agricultures. We encourage all caring South Africans to read the book.
However, another critical discussion is the issue of gender dynamics in South Africa's agriculture. As a country, we should continue to improve this area. The data about the current state of women's participation is also shaky. Still, one can lean on a few indicators, such as the recent census of agricultural statistics from Statistics South Africa, to make a point. The census report found that we have about 40k commercial farm units in South Africa. To be super clear, the census only considers farmers registered for VAT (the threshold is a turnover of R1 million a year). Therefore, there are many more farmers not accounted for in this figure who are involved in commercial farming as their primary source of income and those who practice farming as a secondary source of income.
Still, if we go with the 40k farming units, about 20% are owned or operated by women. However, we also know anecdotally that women's participation in the subsistence farming sector is perhaps much larger in various areas.
In such cases, the question remains: what can we do to ensure mobility where women can progress to the commercial level if they aspire to do so?
Another vital aspect is jobs, where women accounted for roughly a third of the 896k jobs in the second quarter of 2024. More could be done to improve women's participation, particularly in agro-processing.
Let's all agree that agriculture, as an important sector of the economy, could still deliver more jobs and expand in underutilized land. This makes the gender discussion even more valuable.
The South African government has about 2,5 million hectares of land acquired through the Pro-Acitive Land Acquisition Strategy. This land should be released to beneficiaries with title deeds and help boost inclusion in the sector and growth, such as growing the South African agricultural pie.
In selecting the beneficiaries of the land, the government will have to be guided by the existing Beneficiary Selection and Land Allocation Policy. One important aspect of this policy that is less talked about is its focus on boosting women's participation in agriculture. It states that 50% of land redistributed must be transferred to (black) women. If we follow this approach as a country, along with ensuring that there are financial instruments to assist, perhaps we could improve in the coming years in racial and gender inclusiveness in the sector.
There are many young women interested in agriculture that one sees online, and some even write to me enquiring about a range of agricultural matters. This means there is interest amongst women in joining agriculture and playing a meaningful role in addition to the gains we have made as a country. The policy environment is also supportive. Wandile Sihlobo website -
Episodi mancanti?
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The effects of the recent El Niño-induced mid-summer drought are starting to show in South Africa's agricultural jobs data. For example, the Quarterly Labour Force Survey data shows that employment in primary agriculture was down 5% quarter-on-quarter to 896k in the second quarter of 2024. From an annual basis perspective, the performance is also weak, although up 0,2% from the second quart of 2023. Still, the primary agricultural employment of 896k people remains well above the long-term jobs of 799k and generally reflects the harsh summer season we are leaving behind.
Some subsectors showing a decline in employment include field crops, livestock, and forestry. The job performance in these subsectors is unsurprising as the mid-summer drought has notably impacted them, specifically field crops. Moreover, the livestock industry faces relatively higher feed costs and lingering animal disease, which all explain these subdued job data in the subsector.
The Western Cape, Northern Cape, North West, and Gauteng are the provinces that showed significant quarterly job losses. Meanwhile, other provinces showed a mild improvement, which was insufficient to change the overall picture of a decline in employment in South Africa's agriculture.
The Western and Northern Cape provinces do not have significant summer crop production, which means that the quarterly job losses in these particular provinces mirror the generally financially constrained environment in the farming businesses. The mid-summer drought primarily added pressures in the country's northern regions.
Listen to the podcast for more details in other commodities.
Podcast production by Richard Humphries, and Sam Mkokeli
My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website -
On August 10, we drove across the Swartland region of the Western Cape from the Karoo side of the Northern Cape. As we entered the Western Cape, I couldn't miss the excellent sight of the wheat fields from a distance.
And yes, I appreciate that the Western Cape has received excessive rain recently; the picture certainly is not all rosy. Some fields have puddles of water, which may undermine the crop's growth potential. Our members in the area tell me that the southern regions of Swartland may be too wet, and the northern regions should do well.
South Africa's Crop Estimates Committee will release the area planted estimate and first production forecast for this season's crop on August 28. We will know more about the production prospects then.
What we know at the moment is that South Africa's preliminary area plantings for wheat are at 502k hectares, down by 7% from the 2023/24 season. This is the lowest area planting in seven years. The sharpest declines in area plantings are in the Free State and Limpopo.
The Western and Northern Cape provinces show a minor decline in area plantings. Other provinces, which are relatively small producers, such as the Eastern Cape, KwaZulu-Natal and Mpumalanga, also show a mild decrease in area plantings.
The major decline in winter wheat plantings in the Free State and Limpopo is unsurprising. The northern regions of South Africa experienced a harsh mid-summer drought, which led to significant crop losses. The farmers in some of these regions are under financial strain and, thus, understandably reluctant to increase the winter wheat plantings.
Moreover, the wheat prices have moderated this year, down by roughly 5% year-on-year. Therefore, in an environment with reduced soil moisture because of the mid-summer drought, lower wheat prices, and some financial pressures, farmers are likely focused on utilising more area plantings for the 2024/25 summer crop plantings that start in October 2024.
If weather conditions, particularly in the Western Cape, remain favourable for the rest of the season and we achieve a five-year average yield of 3,78 tonnes per hectare in the area of 502k hectares, then we could have a winter wheat harvest of 1.89-million tonnes. This would also be down 7% year-on-year and well below the five-year average winter wheat harvest of 2.02-million tonnes.
Podcast production by Richard Humphries, and Sam Mkokeli
My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website -
South Africa's agriculture is part of the global agricultural market. Therefore, we must consistently pay attention to the production conditions of agricultural commodities globally as they impact our domestic prices and consumers.
The world endured elevated food prices in the past few years for various reasons, ranging from drought in the major agricultural-producing regions of South America to the Black Sea wars. But in recent months, global agricultural prices and consumer food prices have softened. Food prices globally are roughly 25% less than the peak levels reached in March 2022, which was right after Russia invaded Ukraine and caused much disruption and panic in the agricultural markets.
At the moment, the global agricultural observers are shifting their focus to the new production season, which is 2024/25, of grains and oilseeds. The production has recently started in the northern hemisphere, which is in the summer season.
Farmers may begin tilling the land in the southern hemisphere around October 2024.
Still, as early in the season as we are, and a lot yet to unfold, the International Grains Council (IGC) forecasts a decent harvest. For example, in their latest update, the IGC placed the 2024/25 global grains and oilseed production forecast at 2.3-billion tonnes, up mildly from the previous season. The stocks are expected to be healthy, around 582-million tonnes, although having declined somewhat from the 2023/24 season because of the expected increase in the industrial use of grains.
We see an encouraging outlook if we consider the significant grains such as rice, wheat, maize and soybeans. For example, the IGC forecasts a 1% year-on-year increase in the 2024/25 global rice production to 528-million tonnes.
This is based on an anticipated large crop in all the major rice-producing regions, such as India, Vietnam, Thailand, the US, China, Pakistan, Indonesia, Bangladesh and the Philippines. Subsequently, the stocks could also increase by 1% to 175-million tonnes.
The production prospects for 2024/25 global soybeans are also positive, estimated at 415-million tonnes, up by 6% year-on-year. This is based on the expected large harvest in the US, Brazil, Argentina, India, and Paraguay.
Still, given that nearly half of the production is by the southern hemisphere producers, specifically South America, we view these data as tentative until the start of the season in the region in about two months.
Assuming the current estimates materialise, the 2024/25 global soybean stocks would lift by 16% year-on-year to 79-million tonnes. Such an increase in the harvest and supplies would add downward pressure on worldwide soybean prices, which is favourable for the animal feed industry.
A less optimistic view is in the major grains such as wheat and maize, although their supplies will still remain at levels above average. For example, the IGC forecasts the 2024/25 global wheat production at 793-million tonnes, slightly lower than the 2023/24 season's crop of 804-million tonnes. This is due to the expected production declines in the EU, UK, Ukraine and Russia. These overly wet weather conditions in these countries during the season are the reason for the anticipated poor yields.
With food and industrial use of wheat expected to remain strong, the IGC placed the 2024/25 global wheat stocks at 261-million tonnes, down 3% year-on-year. Be that as it may, international wheat prices have not reacted to these expectations and have remained on a moderating path in recent weeks, which is a welcome development from a consumer perspective.
Listen to the podcast for more details in other commodities.
Podcast production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli
My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website -
South Africa's agricultural sector has various institutions, organizations and committees that all play specific roles in supporting the sector's growth and sustainability. One of the vital committees housed at the Department of Agriculture is the Crop Estimates Committee. This Committee benefits on skills, among others, from government, academia, and the private sector. Its main task is to provide production forecasts for winter and summer grains and oilseed.
These data are crucial to understanding the country's food security conditions and often influence the market prices of grains and oilseeds in season. For each season, the Crop Estimates Committee typically releases about ten reports. From the fourth monthly report, there is generally some certainty about the expected crop.
We are now at the tail end of the 2023/24 summer grains and oilseed season. This comprises white maize, yellow maize, sunflower seed, soybeans, groundnuts, sorghum and dry beans. Thus, the crop size estimates we have at hand are unlikely to change much and possibly represent an actual picture of the harvest.
For example, in its sixth production estimate released on July 27, the Crop Estimates Committee placed South Africa's 2023/24 summer grains and oilseed harvest at 15,9 million tonnes. This is 0,5% less than last month. The monthly downward revisions are primarily in yellow maize, groundnuts and dry beans. The expected harvest of 15,9 million tonnes is down 21% year-on-year, signifying the sharp impact of the mid-summer drought on the grains and oilseed production.
Maize
A closer look at the data shows that white and yellow maize harvest could be 6,35 million tonnes (unchanged from last month) and 6,99 million tonnes (down 1% m/m). These revisions place the total maize production estimate at 13,34 million tonnes (down 0,53% m/m).
When viewed annually, white maize harvest is down 26%, with yellow maize down 12% from the 2022/23 season. The disparity in the crop decline is due to regions where each crop variety is planted, with white maize predominantly in the western areas of South Africa while yellow maize is in the east. Moreover, yellow maize is typically planted a month earlier than white maize. Rainfall impacts these regions and timeframes differently, ultimately affecting the expected harvest sizes. The expected harvest of 13,34 million tonnes is down 19% from the 2022/23 season.
This expected harvest will meet South Africa's annual maize consumption of roughly 12,00 million tonnes, leaving the country with approximately 1,40 million tonnes for exports (there is also support from the carryover stocks from the previous season). In this export forecast, about 840 000 tonnes will likely be white maize, with 600 000 tonnes likely to be yellow maize, according to data from the South African Grains and Oilseed Supply and Demand Estimates Committee. Still, the estimated exports of 1,40 million tonnes are down notably from 3,40 million tonnes in the previous season.
With that said, maize prices will likely remain elevated for some time because of potentially tighter supplies later in the season and into the first quarter of 2025. The white maize prices are over 40% higher than the levels we saw a year ago, with the spot price closing at R5 490 per tonne on July 26, 2024. At the same time, yellow maize spot prices is about 10% up from a year ago, ending the week at R4 180 per tonne.
The yellow maize prices have not increased much, as the supply risk could be manageable through imports. There are ample maize supplies (yellow) in the world market. The International Grains Council (IGC) forecasts the 2023/24 global maize harvest to be 1,2 billion tonnes, up 6% year-on-year. The prospects for the 2024/25 season are also positive. A majority of this expected global maize is yellow. The stocks are also robust, thus keeping the international yellow maize prices moderate. Wandile Sihlobo website -
The start of July presented three challenges whose impact will become clearer in the weeks ahead. Firstly, in the northern regions of South Africa, particularly in Limpopo, the potato crop has suffered losses because of frost after an unusually cold spell in the region. The most affected crops are the ones planted from May onwards. The scale and impact of the damage at the national level are yet to be clear. However, rough estimates and anecdotes from various industry players suggest that we are unlikely to experience a national crisis regarding supplies. Still, the farmers in the affected regions will suffer financial losses.
Secondly, the various regions of the Western Cape were affected by heavy storms. There are reports of infrastructure damage. Whether agricultural activities in the province experienced damage and what the degree of such damage could be remains unclear. We suspect the impact will mainly be on public infrastructure rather than agricultural activities. For this region, this is a busy citrus harvesting period, and the bad weather conditions have delayed activities in some fields. Moreover, the winter crop season (i.e., wheat, canola, barley and oats) is at its early stages, which would have also spared the fields from major damage, given there was no heavy erosion.
Thirdly, in the Eastern Cape, the rains in the southern regions also slowed the citrus harvest. At this early stage, we have not heard of any damage to the harvest. The field and agricultural logistics activity should gain momentum during the week as weather conditions improve. But not all things are well in the province. Foot and mouth disease remains a challenge in the dairy industry. The dairy industry and government regulators are currently engaged in possible pathways to address this challenge in the province.
Listen to the podcast for more information.
Podcast production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli
My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website -
After a challenging El Niño induced drought season in 2023/24 summer, South Africa’s agriculture may get a relief in the upcoming 2024/25 summer season.
Early indications of weather prospects are encouraging, showing a firm likelihood of a La Niña occurrence. The International Research Institute for Climate Change and Society at Columbia University places the probability of a La Niña occurrence at over 50% between now and April 2025. Such weather events typically bring above-average rainfall across South Africa and the entire Southern region.
There is hope that after a challenging 2023/24 summer production season, South Africa could transition into a favourable agricultural season, similar to what we experienced four seasons before the 2023/24 season.
Given that South Africa had one of the most prolonged periods of La Niña induced rains, from the 2019/20 season to the 2022/23 season, the news of an end to the 2023/24 season El Niño is a welcome development.
Listen to the podcast for more information.
Podcast production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli
My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website -
I view South Africa’s agricultural economic performance in the first half of 2024 as mixed. One can broadly categorise our farming economy into three subsectors: horticulture, livestock and field crops.
Horticulture — fruits and vegetables — had a reasonably positive start to the year, benefiting from improved dam levels for irrigation and a stable electricity supply. All of South Africa’s fruit and vegetables are under irrigation.
The livestock industry is recovering after an intense period of animal diseases (although there remain cases of foot-and-mouth disease in some regions of the country). The better grazing veld due to early rains in the season and late rains in April have helped somewhat. The poultry industry is also recovering following an intense avian influenza spread at the end of 2023.
Meanwhile, the field crops have suffered from the midsummer drought. For example, South Africa’s 2023/24 summer grains and oilseed harvest is estimated at 16.0 million tonnes, down by 20% year on year.
Considering the developments in these subsectors, it is unsurprising that South Africa’s agricultural gross value grew by 13.5% quarter on quarter (seasonally adjusted) in the first quarter of 2024. Indeed, the base effects also contributed to the robust performance as South Africa’s farming economy contracted in 2023. The trade figures were also strong in the first quarter, a signal for a better harvest of fruits and improvements in port performance.
Still, we worry that the poor harvest of summer grains and oilseed may suppress the figures for the third-quarter performance in the sector. Perhaps the slowdown may even show in the second-quarter figures when they become available.
Farming jobs
Also worth noting is that employment in primary agriculture remained robust, increasing by 6% year on year to 941,000 in the first quarter of 2024. This is also up, by 2%, from the last quarter of 2023.
Admittedly, the significant drought damage has been concentrated on the summer grains and oilseed regions, not across all agricultural subsectors, which somewhat explains the resilience in job data. Moreover, there could also be a lag in fully accounting for agriculture’s financial pressures and the impact on employment after that.
Quite remarkably, the sentiment in the sector paints a contrasting picture of these economic realities. For example, the Agbiz/IDC Agribusiness Confidence Index remained depressed in the second quarter of 2024, reaching 38 points from 40 in the previous quarter. This is the lowest level since Q3 2009, which was the global financial crisis, and implies that agribusinesses remain downbeat about business conditions in the country.
Reviewing the survey respondents’ comments, we found that the midsummer El Niño-induced drought’s impact on summer grains and oilseed production was one of the major factors that weighed on the sentiment. The drought coincided with the long-standing challenges of inadequate road infrastructure and municipal service delivery.
The lingering animal disease challenges and heightened geopolitical tensions are also the primary concerns for the sector. Moreover, while the farming community recognises the improvements in Transnet’s operations, they highlight the need for continuous work to address the inefficiencies of the ports and rail network.
The uncertainty about the formation of the government at the time of the survey may have added to the downbeat mood among the agribusinesses. This survey was conducted between 10 and 19 June, covering businesses operating in all agricultural subsectors across South Africa.
The path ahead
Looking ahead, we remain optimistic about South Africa’s agricultural conditions. The weather forecasters tell us that we have exited the El Niño drought period and are transitioning into a La Niña event, which typically brings rain. Such a weather outlook would boost agricultural production and performance in the sector.
Listen to the podcast for more information. Wandile Sihlobo website -
South Africa's summer grains and oilseed harvest is in full swing nationwide, and some crops are nearly complete. Thus, the crop size estimates we have at hand are unlikely to change much and possibly represent an actual picture of the harvest. For example, this afternoon, the Crop Estimates Committee lifted the 2023/24 summer grains and oilseed harvest by 0,6% from last month to 16,0 million tonnes. Still, this is down 20% year-on-year, reflecting the severe impact of the mid-summer drought.
The summer grains and oilseed harvest comprises white maize, yellow maize, sunflower seed, soybeans, groundnuts, sorghum and dry beans.
The monthly slight upward adjustment of the summer grains and oilseed harvest size is mainly because of the notable uptick in the yellow maize production estimate, while other crops remained roughly unchanged from last month. This again confirms our earlier point that the data we have, which is the fifth production estimate, may not be adjusted much from now on.
This data illustrates the scale of damage caused by the mid-summer drought to the South African summer grains and oilseed harvest. Still, from a consumer perspective, South Africa is not in a crisis regarding supplies of grains and oilseed. With that said, there are upside risks to white maize prices, especially considering the potentially ample demand from the Southern Africa region later in the year and into the first quarter of 2025 when their domestic supplies are depleted.
Listen to the podcast for more information.
Podcast production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli
My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website -
The SA agriculture sector is not immune to politics. Agriculture is a vital sector of the economy. This explains why it earned special attention in the National Development Plan (NDP), with an entire chapter, Chapter Six, dedicated to it.
Recently, there have also been pragmatic plans such as the Agriculture and Agro-processing Master Plan (AAMP) that set out practical steps to realize a vision to grow the sector and bolster its global competitiveness while achieving inclusion and transformation.
The sector must not be a casualty of politics. It is a force for good in growing the South African economy and advancing the country's place on the global map. The Government of National Unity must keep the agricultural sector uppermost in their mind. This is a sector that should offer an avenue of convergence across the political spectrum: it is crucial for rural development, food security, and employment creation.
What should priority areas be in achieving a consensus across the different political persuasions?
Some of the critical areas that deserve emphasis include protecting property rights. Moreover, the government should continue to release the state's over two million hectares of land acquired over the past few decades to appropriately selected beneficiaries. Title deeds should be a priority as they lend these beneficiaries much-needed dignity and a source of financing.
Still, releasing the government's land should not be the end-all for the land reform programme. Land reform should continue through all its existing levers: redistribution, restitution, and land tenure.
To successfully achieve transformative outcomes in agriculture, state capacity should be reinforced. The various directorates in the government that run programmes associated with land reform must be bolstered, and corruption must be dealt with decisively so that the resources for land reform reach the intended beneficiaries.
Listen to the podcast for a detailed reflection.
My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/
Podcast production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli Wandile Sihlobo website -
The collaboration between Transnet, organised business and agriculture sector stakeholders to improve efficiency at SA ports must go on. Efficient logistics are the lifeblood of SA agriculture and other exporting sectors of the economy.
Admittedly, the deciduous fruit industry faced many challenges at the Port of Cape Town at the start of 2024 related to delays that proved costly to farming businesses. Still, continuous collaboration to ensure improvements is the only viable path forward.
We are already seeing the benefits of the improvements in the agricultural sector through the rise in the value of exports. In the first quarter, agricultural exports increased 6% year on year, reaching $3.1bn according to Trade Map data, a result of both higher volumes and prices. The products leading the export list were grapes, apples and pears, maize, wine, apricots, sugar, wool, fruit juices, peaches and apricots.
From a regional perspective, Africa received the lion’s share of SA’s agricultural exports, accounting for 42%. The main export products were maize, cereal meals and pellets, sugar, prepared foods, apples and pears, fruit juices, wheat, ciders and other fermented beverages, and soya bean oil.
The EU regained its position as SA’s second-largest agricultural market, overtaking Asia, with a share of 22%. Grapes, apricots, peaches, cherries, plums, wine, apples and pears, dates, figs, avocados, guavas, mangos, wool and fruit juices were the primary products exported to the EU in the first quarter.
Asia and the Middle East as a collective were the third-largest agricultural markets for SA, accounting for 19% of exports. The main products were apples and pears, grapes, wool, sugar, beef, citrus, apricots, cherries and peaches, mutton and lamb, and soya beans.
The Americas region accounted for 6% of SA’s agricultural exports in the first quarter, manly grapes, wine, fruit juices, apples and pears, nuts, apricots and cherries. The rest of the world, including the UK, accounted for the remaining 10% of our exports.
Of course, SA doesn’t engage in one-way trade — the country imports various agricultural products. In the first quarter, these imports amounted to $1.6bn, down 4% year on year, according to data from Trade Map. The drop resulted from slightly lower volumes and prices of the major products SA imports, such as wheat and rice, whose prices cooled off at the start of this year from the rally we saw in 2023.
As in most years, SA’s major imports in the first quarter were wheat, rice, palm oil, poultry products and whiskies. SA lacks favourable climatic conditions to grow rice and palm oil, and thus relies on imports of these products. In the case of wheat, we import nearly half of our annual consumption because of unfavourable climatic conditions to expand domestic wheat production beyond the regions where we already cultivate winter wheat.
Accounting for both exports and the imports, SA’s agriculture recorded a trade surplus of $1,4bn in the first quarter, up 20% from the first quarter of 2023. The sharp rise resulted mainly from imports falling, while exports lifted slightly.
Overall, SA should stay focused on improving the logistical infrastructure efficiency and on the export market expansion mission for the agricultural sector. There is a need for increased investment in port and rail infrastructure and improving roads in the farming towns that continue to constrain the sector’s growth. Listen to the podcast for a detailed reflection.
My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/
Podcast production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli Wandile Sihlobo website -
After publishing a sharp contraction of -12,2% year-on-year in 2023 of the agricultural gross value-added performance, Statistics South Africa revised the figures to a mild contraction of -4,8% year-on-year. This revised figure is roughly in line with the expectations of various researchers, most notably the Bureau for Food and Agricultural Policy (BFAP).
Importantly, South Africa's agricultural gross value added grew by 13,5% quarter-on-quarter (seasonally adjusted) in the first quarter of 2024. This improvement is based on the robust production conditions of various horticulture products, the livestock and poultry industry recovery after a few challenging months of animal diseases that weighed on production, and the base effects. Admittedly, the production conditions in some livestock and poultry businesses may not be fully back to their normal levels, but the general subsector performance is on a recovery path.
The mid-summer drought, which has led to a 21% year-on-year decline in South Africa's summer grains and oilseed production to an expected harvest of 15,9 million tonnes in the 2023/24 season, will likely reflect on the second and third quarter figures of the sector performance.
The horticultural industry was not severely affected by the mid-summer drought because the production was all under irrigation. Also, the dam levels across South Africa had benefitted from heavy rains at the end of 2023 and into the start of 2024 before we experienced a mid-summer drought. These better dam levels, mild load-shedding, and better energy supply from various sources all catalysed the excellent production in the horticulture subsector.
Overall, the first quarter recovery of the South African farming economy is a welcome development and aligned with our general observations in various travels across the country. Still, we worry that the poor harvest of summer grains and oilseed may suppress the figures for the next two quarters.
Listen to the podcast for a detailed reflection.
My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website -
We appreciate that the minds of many South Africans are on national elections matters, but food matters remain vital in the midst of all.
Thus, reflecting on the latest Crop Estimates Committee's (CEC) forecasts for the 2023/24 summer crop production season is valuable. This is a fourth production estimate for the season, and the harvest across the country is underway, so we may put more weight on the accuracy of this figure than our tentative view in the previous estimates.
At the end of May 2024, the CEC placed South Africa's 2023/24 total summer grains and oilseed production forecast at 15,9 million tonnes, down 0,5% from the previous month's forecast and 21% lower than the last season's harvest.
Maize
A closer look at the data shows that white and yellow maize harvest could be 6,4 million tonnes (down 0,9% m/m) and 6,9 million tonnes (down 0,3% m/m). These revisions place the total maize production estimate at 13,3 million tonnes (down 0,6% m/m).
When viewed annually, white maize harvest is down 25%, with yellow maize down 13% from the 2022/23 season. The expected harvest of 13,3 million tonnes is down 19% from the 2022/23 season.
We are optimistic that this harvest may materialize, although we are unsure of the quality. Suppose we are correct; this harvest would meet South Africa's annual maize consumption of roughly 12,00 million tonnes, leaving the country with over a million tonnes for exports.
With that said, maize prices will likely remain elevated for some time because of potentially tighter supplies later in the season.
Oilseeds
The 2023/24 soybean harvest was lowered by 2% from last month to 1,7 million tonnes (down 36% y/y). This annual decline results from lower yields in various regions of South Africa. We now believe South Africa may not play a robust position in soybean exports like the previous season. If anything, soybean oilcake imports this new season are now a possibility.
Meanwhile, the sunflower seed harvest estimate was again lifted from last month by 6% to 649 250 tonnes (down 10% y/y). The area plantings are moderately down from the previous year, which means the primary driver of the annual decline in the harvest is the expected poor yields, especially as most of South Africa's sunflower seed is planted in the western regions that experienced dryness and heatwave in February and March.
Other grains
The 2023/24 groundnut harvest estimate is 54 440 tonnes (up 3% y/y), sorghum is at 95 830 tonnes (up 2%), and dry beans are at 52 190 tonnes (up 4%).
Concluding remarks
The current production data illustrates the scale of damage caused by the mid-summer drought to the South African agricultural sector. The complete scale of the financial impact of this drought on the farming businesses is yet to be clear.
Still, from a consumer perspective, South Africa is not in a crisis, in our view. The recent drought presents upside risks to food price inflation but not the overall basket. The challenge is primarily the white maize, especially considering the potentially more robust regional demand later in the year.
Listen to the podcast for a detailed reflection.
My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/
Podcast production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli Wandile Sihlobo website -
While South Africa's agriculture has had a rough start to the year, characterised by El Niño-induced drought, the employment conditions remain encouraging.
The data recently released by Statistics South Africa shows that employment in primary agriculture lifted by 6% year-on-year to 941,000 in the first quarter of 2024. This is also up 2% from the last quarter of 2023.
Admittedly, the significant drought damage has been concentrated on the summer grains and oilseed regions, not across all agricultural subsectors, which somewhat explains the resilience in job data. Another consideration is that there could also be a lag in fully accounting for agriculture's financial pressures resulting from the drought and the impact on employment afterwards.
We can observe from the current data that jobs generally increased across most subsectors of agriculture in the first quarter compared with the corresponding period last year. The decline in employment was only in the production of organic fertilisers, fishing, and fish hatcheries. Again, this could indicate the potential delay before the subsectors heavily impacted by the mid-summer dryness fully reflected the financial impact and subsequent jobs effect. We may have a complete picture of such in the second quarter jobs data.
From a regional perspective, the Eastern Cape, Northern Cape, North West, Gauteng, and Mpumalanga were behind the annual uptick in agricultural employment. These provinces broadly comprised various agricultural commodities or value chains. Thus, the uptick in jobs is not primarily on the back of a particular value chain but spread across a range.
Surprisingly, the Western Cape, KwaZulu Natal and Limpopo are amongst the provinces that recorded a mild decline in employment in the first quarter compared to 2023. These provinces are amongst those that hold significant shares of horticulture production, which benefitted from the irrigation throughout the harsh mid-summer season.
Meanwhile, the mild reduction in employment in the Free State could be somewhat explained by the province's vast grains and oilseed production and the expected decline in production because of the drought.
As we look in years ahead, the agricultural sector remains crucial for employment creation in South Africa's rural communities.
Listen to the podcast for a detailed reflection.
My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/
Podcast production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli Wandile Sihlobo website -
April marked the end of South Africa's 2023/24 marketing year for maize. This marketing year corresponds with the 2022/23 production season, as the crop harvested mid-year in 2023 was marketed from then through to the end of April 2024. According to data from the Crop Estimates Committee (CEC), the 2022/23 production season was characterized by an excellent harvest of 16,4 million tonnes. This was because of large plantings and the favourable summer rainfall that boosted the yields.
The ample harvest allowed South Africa to maintain its position in export markets. South Africa is the world's ninth largest maize exporter, trailing the US, Brazil, Argentina, Ukraine, Romania, France, Paraguay and Poland. Data from the South African Grains Information Services shows that in the 2023/24 marketing year, the exports amounted to 3,4 million tonnes, down by 6% from the previous year. About 63% of the exported maize was yellow, with 37% being white maize.
In the past, South Korea, Japan and Taiwan were the leading markets for South Africa's maize exporters. But in the 2023/24 marketing year, Zimbabwe took the lion's share of the exports, accounting for 18% of the 3,4 million tonnes of exports. The surge in exports to Zimbabwe comes after a few years of modest exports to the country because of decent domestic harvest and the restrictions on genetically modified maize, which the government often used as a barrier to imports in certain seasons.
However, the regulations have changed, and Zimbabwe now imports genetically modified maize. Other large maize export markets in the African continent are Botswana and Mozambique, which accounted for 9% and 6% of South Africa's total maize exports, respectively. South Korea, Japan and Taiwan remained significant export markets for South African maize, accounting for 14%, 13% and 13% shares in the total exports, respectively. Another important maize export market for South Africa in the Asian region is Vietnam. Still, its exports were slightly lower than other countries, accounting for a 5% share in the overall export markets.
While the export season was a success, the coastal regions of South Africa started worrying about the maize supplies at the end of the 2023/24 marketing year, specifically pricing when considering the transport costs from central regions of the country that are the main maize producers. Disappointingly, the excellent 2022/23 maize production season is followed by a less promising season. In the 2023/24 production season (which corresponds with the 2024/25 marketing year), South Africa's maize harvest is forecast to fall by 19% year-on-year to 13,3 million tonnes. This is according to data from the CEC.
This decline in harvest is primarily due to unfavourable weather conditions in February and March, where dryness and heatwave caused widespread crop damage in various regions of South Africa.
Subsequently, the coastal areas in South Africa worry about tight supplies in the new marketing year. This led to 32 691 tonnes of yellow maize imports from Argentina in the last week of the 2023/24 marketing year. We suspect there will be additional imports in the 2024/25 marketing year, primarily for the country's coastal regions. These imports will help increase supplies for the animal feed industry.
Notably, while South Africa expects a significantly lower harvest this year, the country could remain a net exporter of maize.
With an annual maize consumption of approximately 12,0 million tonnes and a harvest of 13,3 million tonnes, South Africa will have over a million tonnes of maize for exports. We also believe there are decent carryover stocks from the past season, which will help increase the maize supplies for the new marketing year of 2024/25.
Listen to the podcast for a detailed reflection.
My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/
Podcast production by Lwandiso Gwarubana, Richard Humphries Wandile Sihlobo website -
Export opportunities for South Africa's agricultural products are opening up within BRICS+ countries. Over the past two years, China, the Kingdom of Saudi Arabia, and Egypt have widened market access for various agricultural products from South Africa.
Admittedly, Egypt and the Kingdom of Saudi Arabia have recently joined the BRICS+ grouping, and market access is part of the long-term bilateral engagements with South Africa. South Africa has access to selected fruits, wine, wool, meat and grains.
However, South Africa aims to broaden market access in BRICS+ for most of the country's agricultural products. For this reason, through the 2023 BRICS Summit in Johannesburg and the prior engagements, South Africa prioritized trade as a significant point on the agenda for discussion.
The political principals broadly agreed that deepening trade was necessary for the BRICS countries. Still, each country's trade and agricultural authorities are responsible for taking the lead and seeking market access from member countries.
The idea of a BRICS agricultural trade agreement that some argued for has not yet been thoroughly ventilated. The priority so far was for each BRICS member to work to reduce import tariffs and address the phytosanitary constraints for various products that BRICS member countries would present.
Even before adding the new members, the original BRICS countries were already significant importers of agricultural products. Between 2019 and 2022, this group's agricultural imports averaged US$255 billion annually, according to Trade Map data.
China accounted for 71% of all the agricultural imports into the group, followed by India at 11%, Russia at 11%, Brazil at 4% and South Africa at 3%. Despite these sizeable agricultural import figures, the intra-BRICS agricultural trade remained relatively low.
The products these countries imported include soybeans, beef, maize, berries, wheat, palm oil, poultry meat, cotton, barley, dairy products, pork, apricots and peaches, sugar, wool, sunflower seed, nuts, sorghum, goat meat, wine, grapes, bananas, avocados, mangos, guavas, and fruit juices, among other products.
South Africa produces some of these products in abundance and has surplus volumes for exports. Thus, the country championed a need to deepen trade in the 2023 BRICS Summit.
Admittedly, the positive reception that South Africa has received from some BRICS countries lately is not entirely because of the groupings' focus on trade. Indeed, some discussions regarding market access to China have been underway for some time. Still, when agricultural trade is prioritized in various political forums, there is naturally urgency to deliver some results.
With BRICS adding new members to form a bigger BRICS+, the agricultural trade opportunities have increased.
Listen to the podcast for a detailed reflection.
My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/
Podcast production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli Wandile Sihlobo website -
Many, including myself, may have been a bit pessimistic about the 2023/24 summer crop growing conditions when we signalled a potential further downward revision of the harvest estimate this month.
The data released last week by the Crop Estimates Committee showed mild upward adjustments in the crop size from last month's figures. South Africa's 2023/24 summer grains and oilseed harvest is estimated at 16,0 million tonnes, up 1% from last month.
Indeed, this is not a cause for celebration. The figure does not change the reality that we have been through a challenging season of El Niño-induced drought and heatwave in February and March that weighed on the summer grains and oilseed harvest in various regions of the country. The current estimated harvest of 16,0 million tonnes is down 20% from the 2022/23 production season.
Maize
A closer look at the data shows that white and yellow maize harvest could be 6,4 million tonnes (up 2% m/m) and 6,9 million tonnes (roughly unchanged from last month). These revisions place the total maize production estimate at 13,3 million tonnes (up 1% m/m).
When viewed annually, white maize harvest is down 25%, with yellow maize down 13% from the 2022/23 season. The expected harvest of 13,3 million tonnes is down 19% from the 2022/23 season.
If it materializes, the expected harvest will be sufficient to meet South Africa's annual maize consumption of roughly 12,00 million tonnes, leaving the country with a small export volume. Still, we will likely see prices remaining elevated for some time because of the potentially tight supplies.
The Southern African regional demand, particularly for white maize, also remains a significant upside driver of prices.
Oilseeds
The 2023/24 soybean harvest remained unchanged from last month, estimated at 1,8 million tonnes (down 35% y/y). This annual decline results from lower yields in various regions of South Africa. We now believe South Africa may not play a robust position in soybean exports like the previous season. If anything, soybean oilcake imports this new season are now a possibility.
Meanwhile, the sunflower seed harvest estimate was lifted from last month by 4% to 615 000 tonnes (down 15% y/y). The area plantings are moderately down from the previous year, which means the primary driver of the annual decline in the harvest is the expected poor yields, especially as most of South Africa's sunflower seed is planted in the western regions that experienced dryness and heatwave in February and March.
Concluding remarks
The recent rains in much of South Africa's summer crop-growing regions are too late. The damage to the crop occurred in February and March during the heatwave and the El Niño-induced dryness. The current crop forecasts reflect this challenge, as the major crops are down notably compared to the 2022/23 production season.
Listen to the podcast for a detailed reflection.
My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/
Podcast production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli Wandile Sihlobo website -
There are divergent views about the effectiveness and extent to which South Africa's agricultural policies have been implemented.
Regardless of how experts feel about the capacity of the state and the policy stance of the South African government since the dawn of democracy, the one undeniable fact is that the sector has grown tremendously. Data from the Department of Agriculture, Land Reform and Rural Development show that domestic agricultural output in 2022/23 was twice as much as in 1993/94.
Whether this growth has been inclusive and transformative is a question I will return to later in this piece.
For now, it's important to emphasize the growth of the industry and the drivers of its expansion. Significantly, this expansion was not driven by a few sectors but has been widespread -- livestock, horticulture and field crops have all seen strong growth over this period.
Of course, the production of some crops, most notably wheat and sorghum, has declined over time. This, however, had a lot to do with changes in agroecological conditions and falling demand in the case of sorghum, not policies.
These higher production levels have been underpinned, mainly by adopting new production technologies, better farming skills, growing demand (locally and globally), and progressive trade policy. The private sector has played a major role in this progress.
Listen to the podcast for a detailed reflection.
My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website -
South Africa has experienced two months of extremely dry and hot weather —
February and March. The impact of harsh weather conditions on agriculture across
the country is visible through crop failures. The 2023/24 summer grain and oilseed
production is down 21% year-on-year, estimated at 15.8 million tonnes.
We are now at an advanced stage of crop development where there would be
minimal to no improvement, even if it rains. Indeed, if one reflects on the past few
days, we have received some excellent rainfalls in various regions of South Africa,
but this has had minimal benefit on crops.
The soil moisture is enhanced, but this will unlikely improve our summer grain and
oilseed production outlook. However, the grazing veld for the livestock will be
improved somewhat.
The map below illustrates the increased soil moisture levels in the central and
eastern regions of South Africa following the recent rains. The improved moisture will help in the winter crop season, which starts at the end of this month in most regions of the country.
Regarding summer grain and oilseed production prospects, South Africa is in a
better condition than the rest of the southern African region, where there are massive crop failures and countries have to rely on grain imports.
South Africa has sufficient grain for domestic consumption; if the forecast crop
materialises, we hope it does.
Listen to the podcast for more insights.
My writing on agricultural economic matters is available on my blog:
https://wandilesihlobo.com/
Podcast production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli Wandile Sihlobo website - Mostra di più
