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SA starts the 2022/23 crop season

South Africa is starting the 2022/23 summer crop production season this month. The preliminary insights suggest that South Africa could have another good season. The three critical indicators we have thus far, i.e., (1) the tractor sales, (2) the weather outlook for the next four months, and (3) grains and oilseed prices, paint a positive outlook for the 2022/23 season.
In this week’s podcast segment, agricultural economist, Wandile Sihlobo, provides insights into these indicators and the broader outlook for the 2022/23 summer crop season.

Production by Lwandiso Gwarubana, Richard Humphries and Sam Mkokeli.

Agricultural input prices elevated

While some farmers in the grains and oilseeds industry benefited from the unusually long period of large yields and higher prices, higher input costs since the start of 2020 have limited the benefits.

For farmers in the horticulture industry, where commodity prices did not increase as much as in grains, the higher input costs were an even heavier burden. These price increases were mainly in agrochemicals (herbicides, fungicides, insecticides), fertilizers and fuel.

Various factors caused the price increases, but the main ones were the disruptions in industrial production when the covid-19 pandemic started, protracted supply chain bottlenecks, higher shipping costs, China's decision to limit fertilizer exports, and more recently, the Russia-Ukraine war. In the months after the war started, prices of some products increased to record highs.

Fortunately, prices have come off in recent months from those highs. For example, at the beginning of September, the global fertilizer price index is down by 18% compared with April 2022 highs. Despite the recent moderation, current price levels are about 60% higher than a year ago. The market is still far from adjusting to levels before covid-19 and the Russia-Ukraine war. Similarly, Brent crude prices have come off the recent highs, averaging US$93 per barrel in the first half of this month. Still, these levels are 31% higher than a year ago. We see similar price dynamics in the agrochemicals, which have softened over the past few months, but are roughly 20% more than a year ago.

These price dynamics matter, especially as South Africa approaches its summer crop season, which starts in October. This includes the horticulture industry, which will also be busy in the fields in the summer season. With that said, the grains and oilseeds industry is arguably still in a relatively better position compared with other subsectors of agriculture, which have been confronted by various other challenges these past few months which weighed on profitability for some.

In this week’s segment of the podcast, agricultural economist Wandile Sihlobo provides insight on how the agricultural sector is coping with the rising input costs.

Production by Lwandiso Gwarubana, Richard Humphries and Sam Mkokeli.

Wheat in South Africa

If one is not dealing with a particular commodity in their daily business, they rarely keep an eye on whether it is produced sufficiently locally or imported. The main concern for consumers is always whether they get their preferred products on shelves when they go to the store. This has been the reality of wheaten products in South Africa.
Hence, some South Africans realising that the country imports roughly half of its annual wheat consumption has sparked a discussion about why it is not expanding domestic production in all the fallow land in some provinces. This is a fair question about the threat of rising wheat prices and supply constraints amid the Russian invasion of Ukraine; both countries account for nearly a third of the world's wheat exports and have increased food security concerns.
South Africa began importing over a million tonnes of wheat from the 2003/04 marketing year. In the years before, wheat imports averaged 458 518 tonnes, for example, between 2002/03 and 1989/90. The import surge resulted from increased consumption and a decline in area plantings.
In this week's segment, agricultural economist Wandile Sihlobo provides insight into South Africa's wheat production changes over the past decades and the current import activities. He closes by assuring South Africans that there are no possible wheat shortages in the country.

Production by Lwandiso Gwarubana, Richard Humphries and Sam Mkokeli.

SA is in a weather market

We are a month away from the start of the 2022/23 summer season. Farmers in the eastern regions of South Africa, which includes the eastern Free State, Mpumalanga, KwaZulu-Natal and Eastern Cape, will start planting by mid-October. This will primarily be summer grains and oilseed plantings.

The Northern Hemisphere experienced extreme heat and drought these past few months, which prompted us to wonder if the Southern Hemisphere could experience similar extremes in the upcoming 2022/23 summer season. We are in a La Niña cycle, which means there is a possibility of above-normal rainfall for Southern Africa. Meanwhile, East Africa and South America could experience drought. This will have implications for the agricultural output in these regions.

Thus, in this week’s segment, agricultural economist Wandile Sihlobo unpacks the potential impact of the forecast La Niña on agriculture in South Africa, and globally.

Production by Lwandiso Gwarubana, Richard Humphries and Sam Mkokeli.

SA agriculture exports up 5% in Q2, 2022

Trade is at the core of South Africa's agricultural progress. But the past few months brought challenges in key markets such as China and the EU, threatening South Africa's export activity. Fortunately, some of these challenges have now been resolved, and South Africa could see continuous exports, specifically to China.

We now also have the second quarter data of South Africa's agricultural exports, which shows a 5% improvement from the first quarter of 2021. The top exportable products were citrus, maize; apples and pears; wine; grapes; figs, dates, avocados, nuts; fruit juices, wheat, wool, and sugar, among others.

From a destination point of view, the African continent remained the largest South African agricultural export market in the first quarter of this year, accounting for 35% in value terms. Asia was the second largest region accounting for 28% of the exports, with the EU holding the third position with a 21% share in the total exports in value terms.

In this week's segment, agricultural economist Wandile Sihlobo explores these trade developments.

Challenges in SA farming

To understand the real challenges of farmers, it is necessary to spend a considerable amount of time on the ground talking to farmers and to get a better feel of the markets. In such engagements in the last week of August 2022, one theme that came up time and again in most discussions with role players in the sector, is the need for the diversification of the export markets to non-traditional regions while retaining the sector’s foothold in key markets such as the European Union.
Other issues that keep farmers sitting up and scratching their heads at night are the need to improve logistics – roads, rail and ports; expansion of agricultural finance, particularly developmental finance or flexible finance products for the new entrant farmers, and strengthening of trust between government and the industry.
In this week’s segment, agricultural economist Wandile Sihlobo takes a deeper look on these aspects and reflects on his recent engagements with farmers across South Africa.

SA agricultural exports could decline

South Africa's agricultural export activity will likely soften this year from the 2021 record of US$12,4 billion. Lower production of key crops, animal disease spread and changes in phytosanitary regulations in key markets such as the EU will all weigh on the export activity this year. The changes in export volumes and values might not show in the year's first half but will likely reflect in the second half of the year.
In this week’s segment, agricultural economist Wandile Sihlobo unpacks South Africa’s agricultural trade and the expectations of export activity in 2022.

Southern and East Africa maize supplies

In the current environment where food security is at the top of the global agenda, we must review the Southern and East Africa region’s staple grains supplies. Maize is one such important staple grain for both food and animal feed. South Africa, Zambia, and Tanzania are the major producers of maize in the region, and all face a double-digit decline this year. The question then is whether there will be sufficient maize supplies for the region if all the key suppliers face a decrease in the harvest. These are questions we attempt to clarify in this week’s segment.

SA agricultural outlook 2022/23

As the harvest for the 2021/22 summer crop season draws to a close, the focus is shifting towards the 2022/23 production season, which commences in October. The preliminary insights suggest that South Africa could have another good season. However, we fear the extreme rains and heat observed in the northern hemisphere summer season could be a reality here as home too. Still, the three critical indicators we have thus far, i.e., (1) the tractor sales, (2) the weather outlook for the next five months, and (3) grains and oilseed prices, paint a positive outlook for the 2022/23 season.

SA grains and oilseeds supplies

In this episode of Agricultural Market Viewpoint, agricultural economist Wandile Sihlobo discusses South Africa’s summer and winter grains and oilseeds production conditions and answers the question of whether the country has sufficient supplies for domestic consumption and exports.

This is an essential topic as food security is a significant focus globally following the invasion of Ukraine by Russia, which disrupted the supply chains and production in this vital production region. This comes on the back of pre-existing challenges such as drought in South America and rising demand in China, all of which have weighed on global grains supplies and pushed up prices.

10 episodes