Many people are worried about the uncertainty surrounding the discussion about land reform policy in SA. However, some allow the fear to get ahead of themselves. I have heard folks saying “farmers stopped planting” in SA, possibly due to uncertainty caused by land reform.
However, a closer look at the data suggest that this is hardly the case. Just this week the SA Agricultural Machinery Association indicated that tractor sales were up 11% year on year in September, with 612 units sold. In the first nine months of the year tractor sales amounted to 5,001 units, up 7% from the corresponding period in 2017.
On October 25 the crop estimates committee will give us an indication of farmers’ intentions with regard to planting summer crops in the 2018-2019 production season. The optimal planting window for maize and soya bean opened earlier this month in the eastern and central parts of the country, and observers, such as the International Grains Council, are fairly optimistic, at least from a planting perspective.
The council’s production forecast for maize, SA’s staple grain, is 12.3-million tons, which is 11% lower than the previous season’s harvest (commercial and noncommercial maize). But the expected decline is mainly due to prospects of lower yields due to an El Niño weather phenomenon anticipated later in the summer.
With such a harvest, SA would remain a net exporter of maize until April 2020. We consume about 10.8-million tons of maize a year and will probably have about 3.3-million tons of stock when the 2019-2020 marketing year starts in May 2019. If we add the expected production of 12.3-million tons and the potential 3.3-million tons of stock, SA’s maize supplies will be in good shape over the next two years, all else being equal.
To further refute the claims — farmers stopped planting — between May and August this year SA farmers planted 508,350ha of winter wheat, up 3% year on year, and 119,000ha of barley, up 30% year on year. There is also fairly good activity in other field crops, horticulture and the livestock sector. With numbers like those, it is clearly inaccurate to state that “farmers have stopped planting”.
This is not to suggest that all is rosy in the SA agricultural sector. In September the Agbiz/IDC agribusiness confidence index fell below the 50 neutral mark to 46 index points, suggesting that agribusinesses are somewhat downbeat about business conditions in the country. The root cause of the pessimism was the lingering uncertainty around land reform policy and weak economic growth, amongst other issues.
The recent tractor sales data are, therefore, an encouraging barometer of the investment path in the SA agricultural sector following a slowdown in agribusiness confidence. Of equal importance is that even though the recent tractor sales data paint a fairly optimistic picture about activity in the sector, the decline in confidence is a concern. As the Agricultural Business Chamber pointed out in its official statement in September, “the deterioration in confidence could potentially undermine investment and long-run growth prospects in the agricultural sector”.
People are right to be concerned about the country’s land reform policy path, but in equal measure we all have a responsibility not to prejudge the situation in a way that is at odds with the data and causes alarm. Hopefully the debate in the country will lead to a positive outcome that will sustain and grow SA’s resilient agriculture sector.
*This blog post was adapted from my Business Day Column, published on 11 October 2018.
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