Structural Shift in South Africa’s Soybean Oilcake Imports

OK folks, I know I have recently discussed South Africa’s soybean production outlook, but here is a few lines about structural changes in oilcake import market.

To reiterate a point made on April 27, Agbiz estimates that South Africa’s soybean oilcake imports could reach 458 992 tonnes in 2018, down by 17 percent from last year (see featured image). The expected decline in imports is driven by strong local soybean production, currently estimated at a record 1.4 million tonnes.

Over the past 12-years, Argentina was the leading supplier of soybean oilcake to South Africa, accounting for roughly 99 percent of the market share (see featured image).

This year will most likely present similar dynamics, albeit Argentina having recorded a decline in its soybean production (Argentina’s 2017/18 soybean production could reach 38 million tonnes, down by 31% percent from the previous season).

There was somewhat a structural shift in soybean oilcake imports in 2017, with new entrants in the market on the processing side of the value chain. Thus, leading to a decline in Argentina’s share in South Africa’s soybean oilcake import market. The new suppliers were Zambia, Malawi and Zimbabwe. These collectively accounted for 12 percent of South Africa’s soybean oilcake imports in 2017.

With that said, South Africa’s soybean oilcake imports are on the decline, despite the aforementioned structural shifts.

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Here is the Structure of the South African Sugar Industry

The United States Department of Agriculture (USDA) recently released an interesting report on South Africa’s sugar industry. The report covers the supply and demand dynamics for the 2018/19 production season, as well as the structure of the industry.

The picture is generally positive, with sugar production set to increase by 7 percent year-on-year to 2.2 million tonnes in the 2018/19 production season. This is based on the improvement in sugarcane quality, better factory recoveries and an increase in sugarcane delivered to the mills for crushing.

In terms of structure, the South African sugar industry is well organized, with different units playing critical roles to ensure its sustainability. All of this is illustrated in the featured image.

The South African Sugar Association is the highest decision making authority in the industry on common issues of interest for sugarcane growers and sugar millers.

The South African Sugar Research Institute (SASRI) conducts research on sugarcane varieties, pests, diseases, and crop protection. Moreover, SASRI provides extension and meteorology services to industry players.

The Sugar Milling Research Institute is involved in research and technical services for the Southern African sugar milling and refining industries.

There are two associations representing sugarcane growers in South Africa, the South Africa Growers Association and South African Famers Development Association.

Roughly 80 percent of the sugarcane production is supplied by large-scale farmers, with the remaining 20 percent accounted for by small-scale farmers, including subsistence farmers.

The South African Millers Association represents the interests of the six sugar milling; Tongaat Hulett Sugar Ltd, Illovo Sugar Ltd, Tsb Sugar RSA Ltd, Gledhow Sugar Company, Umfolozi Sugar Mill Ltd and UCL Company Ltd.

These six milling companies own a combined total of 14 sugar mills in the Kwa-Zulu Natal Province (12 Mills) and Mpumalanga Province (2 Mills).

*In this blog entry, I am leaning on the work of the good folks at the USDA.

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Some Upswing in South Africa’s Soybean Production Estimates

The next eight days should remain cool and dry in the soybean growing areas, which should be supportive of the harvest process. This is at initial stages in parts of Mpumalanga province, and it could soon commence in other provinces as a large part of the crop has already matured.

The soybean crop is in good condition throughout the country. This is demonstrated in the Crop Estimates Committee’s decision to revise South Africa’s 2017/2018 soybean production estimate up by 3 percent from last month to 1.4 million tonnes (see featured image). This is underpinned by expected higher yields, as well as an increase in area planted.

The key soybean-growing provinces are the Free State, Mpumalanga and KwaZulu-Natal, making up a combined share of 87 percent. The other notable soybean-producing province is Gauteng and North West with a combined share of 8 percent.

This expected large crop implies that South Africa’s soybean market will be well-supplied in the 2018/2019 marketing year. The seasonal imports could decline by 27 percent year-on-year to 20 000 tonnes. This is a notable improvement following imports of 271 098 tonnes in the 2016/2017 marketing year.

Moreover, Agbiz estimates that in 2018, soybean oilcake imports could decline by 17 percent from last year to 458 992 tonnes. This too is a remarkable improvement from imports of close to a million tonnes in 2010.

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An Improvement in SA Summer Crop Production Estimates

South Africa is in for a fairly good harvest in 2017/18 production season. This was confirmed by the third production forecasts released by the National Crop Estimate Committee this afternoon. All summer crop production estimates were revised up from previous month’s levels, with the exception of dry beans.

This bodes well for trade and food inflation dynamics, as production volumes of major crops such as maize are set to be well above domestic consumption needs. 

Commercial maize production estimate was lifted by 3 percent from last month to 12.8 million tonnes. Of this, 6.6 million tonnes are white maize, with yellow maize at 6.2 million tonnes.

Considering the domestic annual maize need of roughly 10.5 million tonnes, at the back of expected 12.8 million tonnes of production, coupled with a carryover stock of 4.1 million tonnes, South Africa could see exports exceeding 2.2 million tonnes in the 2018/19 marketing year which starts on 01 May 2018.

More detail on this subject in the next blog entries…

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South Africa’s 2018 Cattle Slaughter Could Increase by 4% y/y

In 2016, South Africa slaughtered about 3.8 million cattle, which is a 33 percent increase from the number of cattle slaughtered in 2012 (see featured image).

This increase can be attributed to a number of factors, but the most notable one is the 2015-16 drought. Farmers slaughtered more cattle that year due to a shortage of grazing pastures and to high animal feed costs.

With the drought having ended in early 2017 in most parts of the country, farmers started restocking their herds, which meant a decline in slaughtering activity.

Moreover, the relatively lower maize and soybean prices, as well as a good recovery in pastures provided a conducive environment for the livestock rebuilding process.

This year, however, could present different dynamics, the United States Department of Agriculture forecasts a 4 percent year-on-year increase in the number of cattle to be slaughtered (to 3.5 million cattle), due to the expected increase in demand and a general recovery in the industry performance.

Above all, these slaughtering dynamics partially explain why meat inflation remained stickier in 2017 (a year characterised by a decline in slaughtering activity).

This year’s meat price inflation will again partially be influenced by the path of this slaughtering activity. Fortunately, the outlook is fairly positive on the meat price inflation front as the USDA hints of a possible increase in slaughtering.

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A Few Notes on South Africa’s Cattle Farming

The South African cattle industry is characterized by dualism — a well-developed commercial sector and an informal sector consisting of many communal subsistence farmers and a growing number of emerging farmers.

In 2016, the South African Department of Agriculture, Forestry and Fisheries estimated the national cattle herd to be about 13.4 million (see featured image). About 60 percent this herd is owned by the commercial farmers while the emerging and communal farmers account for the remaining 40 percent.

It is also worth noting that beef production accounts for about 80 percent of the total national cattle herd, while the balance is for dairy production.

The Eastern Cape province is the leading producer with a share of 24 percent in the national herd. Trailing the Eastern Cape province is KwaZulu Natal, Free State, North West and Mpumalanga with shares of  20 percent, 17 percent, 12 percent and 10 percent, respectively. The remainder is distributed across Limpopo, Gauteng, Western Cape and Northern Cape (see Chart below).

cattle head_by province


*For a nice brief overview of this sector, read the USDA (2018), South African Beef Imports Expected to Remain Flat in 2018.

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Do Women Perform the Bulk of the Work in African Agriculture?

The World Bank recently released an interesting book which questions a number of data and statements about Africa’s agricultural sector. The book is titled Agriculture in Africa: Telling Myths from Facts. It covers a wide range of topics from smallholder land access, post-harvest losses, financing of agricultural inputs, agricultural labour productivity and women’s work in agriculture amongst others.

Having recently written an article on women’s contribution to the agricultural sector, I was quickly drawn in on the chapter that dealt with the subject. The first thing which stood out was the notion that the figure often cited, namely that roughly 80% of agricultural labour input in Africa is by women, is flawed (see featured image).

The book puts women’s share of labour in crop production at an average 40%, with variations across countries. Worth noting, however, is that the data does not cover the entire continent, but selected countries, namely: Ethiopia, Malawi, Niger, Nigeria, Tanzania and Uganda. With that said, the countries cover a wide array of the continent’s farming zones.

Across the aforementioned countries, the highest share of women’s contribution to agricultural labour is 56% in Uganda, followed by 52% in both Tanzania and Malawi with the lowest being 24% in Niger.

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