More Maize in South Africa

The most appropriate thing to write today, given that I am currently gazing over the beautiful wine farms of Stellenbosch, would indeed be wine. But I will leave this duty to my colleague at Business Day, Michael Fridjhon (his columns appear on Fridays). Instead, I will be blogging about good old maize.

I was going to Tweet about this, but thought it would be better to formalise the information and provide a bit of context. Yesterday, the National Crop Estimates Committee lifted its estimate for South Africa’s 2017/18 commercial maize production by a percentage point from the previous month — to 12.9 million tonnes. This is due to expectations of higher yields.

The upward revision was mainly on white maize, which was lifted to 6.7 million tonnes from 6.6 million tonnes. Meanwhile, the yellow maize production estimate was revised up marginally and is currently at 6.2 million tonnes.

Moreover, the non-commercial or smallholder maize production estimate was left unchanged from last month, at 593 975 tonnes (down by 18 percent from last season).

If we aggregate both commercial and smallholder farmers’ figures, then South Africa’s 2017/18 total maize production is estimated at 13.5 million tonnes. While this is well above market expectations, it is well below last season’s record harvest of 17.6 million tonnes.

Overall, this data has reinforced the view that South Africa’s maize market will be well supplied in the 2018/19 marketing year. In other words, the expected harvest, combined with a large opening stock at the beginning of this marketing year, could amount to 16.4 million tonnes. This is well above the local maize demand of 10.7 million tonnes.

Against this backdrop, South Africa’s 2018/19 marketing year maize exports could, at least, amount to 2.3 million tonnes — down by 4 percent from the volume exported in 2017/18. The SAFEX maize prices could also remain at fairly lower levels, sideways around R2000 per tonne.

All in all, improved maize production estimates call for a celebratory glass of wine, but perhaps don’t go breaking the bottle just yet, given expected exports are lower than last year.


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

South Africa has Room for Small and Big Farms

Although we are in the midst of land discussions in South Africa, I have not been thinking a lot about farm sizes until this past week.

I participated in a panel discussion hosted by Nation in Conversation at NAMPO in Bothaville. The discussion focused on the importance of the economies of scale and question we had to answer was down to this: does farm size matter in South Africa?

The panel consisted of Professor Ferdi Mayer of the University of Pretoria and the Bureau for Food and Agricultural Policy, Jannie de Villiers of Grain South Africa, Francois Strydom of Senwes and Theo Vorster of Galileo Capital.

Before delving into the subject, a brief reflection on the evolution of South African farm sizes would offer some insight in this subject.

If we reflect on the past 100-year data series, the total area farmed in South Africa grew from 77.8-million hectares in 1918 to a peak of 91.8-million hectares in 1960, and declined to 82.2-million hectares in 1996 before stabilising around that level.

Over this period, the average farm size declined from over a thousand hectares in the 1940’s to around 700 hectares in early 1950’s. The farms started to increase in size again in the late 1960’s and have maintained the trend since then, with a notable increase in farm sizes in the late 1990’s.

This was partly due to consolidation after the deregulation of the agricultural markets. The deregulation marked a shift in government support financial programs and abolishment of the agricultural marketing control boards. Most importantly, South African farmers had to competitively participate in the world market.

Faced with increasing input costs, consolidation began in some areas leading to an increase in farm sizes. Against this backdrop, the late Frikkie Liebenberg noted in his PhD thesis that the average commercial farm size in South Africa was about 1 640 hectares in 2000, and continued to grow to about 2 113 hectares per farm in 2007.

Faced with the aforementioned realities and the question of whether size matter in South African farming? The general view was that South Africa has somewhat of a dualistic economy – formal and informal economy. Therefore, there is room for both small and big farms. Big farms are key to national food security and driving exports, while small farms continue to serve local markets, where big players rarely participate, due to numerous reasons which could range from economic viability, traditional business models and other issues.

South Africa is not alone in this farming structure, an example is Brazil which has mega-farms, commercial farms, medium-scale farms and small farms. All in one country, serving different needs of society.  The difference, however, between Brazil and South Africa is that infrastructure is somewhat better in some areas than South African small farm areas, which is typically former homelands.

I mention this because it has implication on the economic viability of a farm as it influences the costs of deliveries products to market.

One central point that all fellow panellists emphasized was that smallholder farmers in communal areas should have title deeds so that they can unlock investments.

PRODUCTIVITY

Moreover, the national discussion on the future of agriculture should rather focus on boosting productivity across farms, not particularly farm size.

After an hour-long discussion, on different aspects of farming, the bottom line was that South Africa needs both big and small farms as they all serve society in somewhat different ways. Improvements in infrastructure and the title deeds issue in communal areas should be prioritised. New technologies can also play a critical role in this process.

Overall, government and private sector should work hand-in-hand in ensuring the success and sustainability of the South African agricultural sector.

Written for and first published in the Business Day on 24 May 2018.


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

A Few Notes on Africa’s Soybean Production

South Africa, Nigeria, Zambia, Zimbabwe, Uganda and Egypt are the only African countries amongst the world’s top 40 soybean producers, according to data from the United States Department of Agriculture (USDA).

South Africa is the only African country with a production of over a million tons. In the current season, the crop is estimated at 1.4 million tons. This is due to an increase in area planted, technological improvements in the form of seeds, fertilizers and better farming practices, amongst others. A large number of South African farmers are increasingly planting genetically modified (GM) soybean crops.

In the 2016/2017 production season, roughly 95% of South Africa’s soybean plantings were under GM seeds. This is the only country on the African continent that produces GM soya beans. Therefore, it is no coincidence that South Africa continues to enjoy tremendous growth in soybean output, while production in other African countries remains negligible. The closest to South Africa’s production level is Nigeria, where output averaged 640 000 tons over the past five seasons.

Recent data from the USDA shows that Nigeria’s 2017/2018 soybean production could amount to 600 000 tons, roughly unchanged from the previous season due to unfavourable weather conditions over the past few months. This is slightly below Nigeria’s annual consumption of 610 000 tons of soya beans.

Zambia’s and Zimbabwe’s 2017/2018 soybean production could amount to 300 000 tons and 50 000 tons, respectively down by 15% and 29% from the previous production season. The decline in production in both countries is due to unfavourable weather conditions earlier in the season. The soybean production in both Uganda and Egypt is negligible, estimated at 30 000 tons and 25 000 tons ,respectively.


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

 

Africa’s Sunflowerseed Industry Not Well Established

I hardly write about Africa’s sunflower seed industry because there is not much to say about it. The industry is not yet well developed. South Africa, Morocco and Egypt are the only African countries amongst the world’s top 29 sunflower seed producers, according to data from the United States Department of Agriculture (USDA).

The world’s leading sunflower seed producers are Ukraine, Russia, Argentina, China, Romania and Hungary, collectively accounting for 72 percent share of global harvest of 48.3 million tonnes in the 2017/18 season.

In the continent, South Africa is on the lead with production averaging 780 000 tonnes in the past five seasons. This equates to roughly 2 percent share of global sunflower seed production.

Morocco and Egypt are small players and this is evident on 2017/18 production estimates, with Egypt’s sunflower seed crop at 19 000 tonnes, unchanged from the previous season. Morocco’s 2017/18 sunflower seed production could reach 27 000 tonnes, also unchanged from the previous season.

To service the growing sunflower oil demand, the continent imports large volumes of sunflower oil. In 2017, the continent’s sunflower oil imports amounted to 717 384, which is roughly in line with the volume imported in the previous years. The leading importers were Egypt, South Africa, Algeria, Morocco, Tunisia, Mozambique, Mauritius and Senegal accounting a collective share of 96 percent of the total imported sunflower oil.

The key suppliers of sunflower oil to the continent are typically Bulgaria, Argentina, Romania, Russia, Ukraine, Belarus, Netherlands and Portugal.

I should mention that a couple of organisation are working on the development of oilseed value chains in East Africa, which is expected to stimulate the production of different vegetable oils. I hope that in the coming years there will more interesting things to discuss, than developments in just three countries – South Africa, Morocco and Egypt.


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za 

SA’s Soybean Success Story Needs to be Heard and Replicated

Over the past couple of weeks, soybeans hit the headlines in global media, spurred by then rising tensions in US-China trade relations.

Coincidentally, the crop dominated agricultural media house headlines here at home as well, but not at a bigger scale and for different reasons.

South Africans had learned from the National Crop Estimates Committee’s monthly updates that the country’s soybean harvest could reach 1.4 million tonnes in the 2017/18 production season, which is a record harvest.

Soybean development is one of South Africa’s agricultural success stories. Its production has grown significantly since the dawn of democracy, from 67 700 tonnes in the 1993/94 production season to over a million tonnes, as previously noted. This was stimulated by growing demand for soybean oilcake or meal by the animal feed industry. This, in turn, has been driven by an increase in the demand for high protein food, particularly poultry products.

South Africa’s per capita consumption of poultry meat almost doubled over the past 17-years, currently estimated at 41 kilograms, according to data from the Department of Agriculture, Forestry and Fisheries.

To service the growing demand, South African agribusinesses, supported by the government, made investments to increase domestic soybean processing capacity from roughly 860 000 tonnes in 2012 to a level in excess of 2.2 million tonnes. This was also aimed at stimulating domestic soybean production, as part of an import substitution strategy. The farmers responded positively to these demand changes as evidenced by the expected record harvest.

Underpinning this positive production response was an increase in area planted, technological improvements in the form of seeds, fertilizers and better farming practices, amongst others. In terms of plantings, the soybean area increased 14-fold over the past 24 years to 787 200 hectares in the 2017/18 production season.

The contribution of the aforementioned better farming practices and technological advancements is apparent from improvements in yields, which increased by almost 50% from the 1993/94 production season to an expected 1.82 tonnes per hectare this season.

One of the most notable technological improvements is the adoption of the genetically modified seeds (GM) in the early 2000’s which continues to spread across the country. In the 2016/17 production season, GM seed constituted roughly 95% of South Africa’s soybean plantings.

Worth noting is that this is the only country in the African continent that produces GM soybeans. Therefore, it is unsurprising that South Africa continues to enjoy tremendous growth in soybean output, while production in other African countries remains pedestrian.

This success is not unique to South Africa, the world’s leading soybean producers such as the US, Argentina, Brazil, Paraguay, Canada and Uruguay all grow GM soybeans. In fact, about 75% of global soybean production in the 2016/17 production season was GM.

Most importantly, the investment in the expansion of South Africa’s soybean processing capacity, and improvements in production techniques have led to a success story in terms of import substitution of soybeans and oilcake.

The Agricultural Business Chamber estimates that soybean oilcake imports could reach 458 992 tonnes in 2018, down by 17% from last year and well below the level of close to a million tonnes in 2010.

I believe the success of import-substitution strategy in soybeans needs to be heard, as it contains some lessons for other industries experiencing similar challenges as those the soybean industry went through in the earlier years. It is not every day that a country records such progress in food production.

I foresee further expansion in South Africa’s soybean production, but this could possibly come at the expense of the yellow maize area, as both crops are grown in the eastern parts of the country. Ultimately, the farmers’ decisions in this regard will be informed by ‘price’ competitiveness of each commodity.

Written for and first published in the Business Day on 10 May 2018.


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

What Bee Produced You Honey?

On 20 May 2018, sitting in a coffee shop in Pretoria, I came across this honey (picture below). Sweet as she was she was totally unsure from where she came.

What bee produced you, honey? She replied “Bees have dual citizenship these days, so I usually just wing it on my label

Honey bottle

 

The ‘mixed labelling’ issue on honey products should not be taken lightly, especially given the recent upsurge of ‘natural honey’ imports into South Africa. South Africa’s honey imports increased from 476 tonnes in 2001 to 4 206 tonnes in 2017 (chart below). honey chart

This is mainly due to steady domestic demand, coupled with a decline in domestic honey production. But, worth highlighting is that on average, 76% of South Africa’s ‘natural honey’ imports came from China in the past 17 years.

I mention this because the Chinese honey has in the past dominated the headlines, but not in a good way. In 2014, food24.com ran an article which highlighted that Chinese farmers were caught producing counterfeit honey.

Europe had similar experiences with imported honey to such as extent that the in 2014, the European lawmakers ranked honey on the 6th spot on the list of 10 top products that are most at risk of food fraud.

This has been a big scandal, and even Netflix, went as far as shooting a documentary about it entitled “Rotten — Lawyers, Guns & Honey.”

Again, what bee produced you, honey?…..


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

Global Significance of the South African Maize Industry

Having spent the past three days in Bothaville – the heart of the South African maize industry — I feel compelled to say a few words about its global significance. Maize is the most important field crop produced in South Africa, so there is obviously a lot one can say about it. But my focus in this blog entry will be on trade.

South Africa is an important player in the global maize market, ranked as the 9th largest exporter in 2017, according to data from Trade Map. The countries that performed relatively better than South Africa were the United States, Brazil, Argentina, Ukraine, Russia, France, Romania and Hungary. These countries collectively accounted for 88 percent share in 2017 global maize exports.

South Africa accounted for roughly 2 percent of global maize exports. Most importantly, South Africa was the only African country amongst the top 24 leading global maize exporters.

The leading markets for South Africa’s maize exports are typically Japan, Taiwan, Botswana, Zimbabwe, Swaziland, South Korea, Namibia, Lesotho and Mozambique, amongst others. These countries could remain the key markets this year.

Spain – currently a leading buyer of South African maize in the 2018/19 marketing year – could be a new addition to the list if the volume of exports seen in the past couple of weeks continues over the coming months.

This year’s maize exports are estimated at 2.3 million tonnes, down by 4 percent from the previous year. 


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za