by Wandile Sihlobo | Mar 9, 2025 | Agricultural Trade
I just read a piece in the ChinaDaily about China’s efforts to improve food security. I thought it would be helpful to comment on how South Africa could participate in China’s journey toward food security.
China will continue to be a priority for South Africa’s efforts to enhance its agricultural exports. While we currently lack extensive access to China for our agricultural products, tremendous potential exists.
The latest comments by China’s Agricultural Minister, Mr Han Jun, that their grain supplies remain tight and food security remains a priority again underscores the importance of the Chinese market.
Indeed, China’s long-term ambition is somewhat self-reliance. The Agricultural Minister, Mr Han Jun, stated today, March 8, that:
“As a nation of 1.4 billion people, we must rely on ourselves to feed our population. We cannot depend on others,” .”Food security is a priority, and we must always remain vigilant.”
Still, as a country that accounts for 11% of global agricultural imports, China’s reality of being an importer won’t change soon.
China is the biggest opportunity, mainly because of its population and economic size. China, the world’s second-largest economy after the US, must feed its large population. To do this, China is a huge importer, resulting in an agricultural trade deficit with the rest of the world of about US$117 billion – see the featured chart. This suggests there’s a gap for countries with good agricultural offerings.
South Africa has lagged behind its competitors in gaining from this growth in Chinese imports. It stands at number 32 in the list of countries that supply China with food. South Africa’s agricultural exports to China accounted for a mere 0.4% of Chinese imports in 2023.
China’s size warrants more attention from South African policymakers. The South African agricultural sector has been calling for greater efforts to increase South African exports to China.
China’s top agricultural imports include oilseeds, meat, grains, fruits and nuts, cotton, beverages and spirits, sugar, wool, and vegetables. South Africa is already an exporter of these products to various countries in the world and is producing surpluses for some. This means there is room to expand to China, especially as South Africa’s agricultural production continues to increase, with more volume expected in the coming years.
Therefore, it makes sense for South Africa to focus more on widening export markets to China. This means arguing for a broad reduction in import tariffs that China currently levies on some of the agricultural products from South Africa. Removing phytosanitary constraints in various products is also key.
There is room for more ambitious export efforts. Three government departments must lead the conversation – Trade, Industry and Competition; Agriculture; and International Relations and Cooperation.
The South African authorities must continuously engage China to soften these barriers and encourage agricultural trade between our countries.
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by Wandile Sihlobo | Mar 7, 2025 | Agricultural Trade
The first week of February 2025 was eventful for global agriculture. Following U.S. President Donald Trump’s announcement of further tariffs on China, China retaliated.
On 4 March, China announced retaliatory tariffs on U.S. agricultural products, imposing a 10% tariff on sorghum, soybeans, pork, beef, aquatic produce, fruits, vegetables, and dairy products, alongside a 15% tariff on chicken, wheat, corn, and cotton.
During President Trump’s first term, when China imposed retaliatory tariffs targeting agriculture, U.S. farmers were among the most affected due to China’s significance in their exports. This time around, it will be no different.
One would even argue that China is now more prepared than in the past, as it has been building its domestic agricultural production for the past few years and switching to new suppliers of vital farm products in South and Latin America.
The featured chart clearly illustrates what is happening with China’s agricultural imports. What is clear now is that South America, like in 2018, may be among the winners as China searches for new sources of agricultural products.
The ASEAN countries and the Black Sea region are also among the primary beneficiaries of these changes in agricultural trade shifts.
With all the progress China has made in boosting its agricultural produce, it remains a major importer. In 2023, China was a leading agricultural importer, accounting for 11% of global farm imports, totalling over US$200 billion, as the chart above shows.
The top agricultural products China imports from the world market include soybeans, beef, various fruits, maize, wheat, rapeseed, palm oil, poultry meat, and sorghum, amongst other products.
The major suppliers of agricultural products to China are Brazil, the U.S., Australia, Thailand, Vietnam, New Zealand, Indonesia, Canada, France, Argentina, Chile, Russia, and Malaysia, amongst others.
South Africa is the only African country in China’s top 30 agricultural suppliers, which ranked 28 in 2023. Still, South Africa remains a negligible player in the Chinese agricultural market, accounting for a mere 0.4% (US$979 million) of China’s agricultural imports of US$218 billion in 2023.
Sudan and Zimbabwe are other African agricultural suppliers to China, ranked 33 and 34, respectively.
Are there any opportunities for South Africa during this disruptive time?
There certainly is an opportunity. Even without China’s clashes with the U.S., South Africa had a chance and was willing to expand its access to the Chinese market.
South Africa’s significant challenges in the Chinese markets are higher import tariffs and phytosanitary barriers for various products.
The higher tariffs make South African farm products less competitive than Australia and Chile, which access the Chinese market for duty-free products.
Given the reality of clashes between China and the U.S. and China’s efforts to diversify its agricultural suppliers, it is key that the South African message in engagements with the Chinese authorities is more firm and persuasive in promoting agricultural exports.
South Africa has an agricultural surplus yearly and has maintained a trade surplus for over a decade. In 2024, South Africa’s agricultural exports amounted to a record US$13.7 billion.
Indeed, this is far from the staggering US$218 billion that China spends each year on importing agricultural products from around the globe.
China is already one of South Africa’s major agricultural markets for fruits, wine, red meat, nuts, maize, soybeans, and wool.
However, there is room for more ambitious agricultural export efforts. Importantly, these products would be even more competitive if there were zero duties in accessing the Chinese market.
Ultimately, the South African agricultural sector—organized agriculture and researchers—consistently points out the need to lower import tariffs in China and remove phytosanitary constraints on various products.
The South African government must build on this momentum and message in its engagements with Chinese authorities.
At a time when South Africa’s export-oriented agricultural sector faces some uncertainty in some of its markets, mainly the U.S., it may be appropriate to argue for greater access to China to diversify our agricultural exports and help China diversify its sources.
Still, in engagements with China, South Africa should maintain an open-minded posture with other regions that are key markets. For example, South Africa must consistently work to retain the duty-free access we enjoy in the U.S. market and other key export markets in the African continent, EU, Middle East, Asia, and other regions.
Our engagements with China are primarily for diversification, not replacement of the existing export markets.
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by Wandile Sihlobo | Mar 1, 2025 | Agricultural Production
Positive news is rare these days, so it is essential to highlight encouraging developments when we notice them.
One piece of good news is that South Africa’s agricultural production conditions are improving, bolstering our long-held belief in a better season ahead.
We have been stating for some time that this will likely be a recovery year for South Africa’s agriculture. This follows a severe mid-summer drought in the 2023-24 season, which negatively impacted the harvest of grains and oilseeds.
The first production estimates for 2024-25 summer grains and oilseeds, released at the end of February 2025, suggest a better harvest. The Crop Estimates Committee forecasts the harvest at 17.2 million tonnes, up 11% from the previous season. This comprises maize, sunflower seeds, soybeans, groundnuts, sorghum, and dry beans.
The expected yield improvements support better harvest prospects. The overall area planted is 4.4 million hectares, roughly unchanged from last season.
As this is a preliminary production estimate and may not completely reflect the benefits of the widespread rains in the final two weeks of February, we could expect further upward revisions in the months ahead. After all, there are nine more estimates to be published monthly.
A closer look at the data shows the first maize production estimate at 13.9 million tonnes, up 8% year over year (y/y). About 7.4 million tonnes is white maize (up 22% y/y), and 6.5 million tonnes is yellow maize (down 4% y/y). The difference is caused by the area switch, with white maize taking a more significant area and the yield expectations.
The prospects of a better maize season have already added downward pressure on prices. For example, on 27 February 2025, the white maize spot price closed at R5 500 per tonne, down roughly 18% from mid-January (although still up about 30% year over year). The yellow maize spot price was around R4 780 per tonne, down 16% from mid-January (albeit up by roughly 26% year over year).
If the production forecasts are lifted further in the coming months, as we suspect, the maize prices may continue on this moderating path. This could be good for consumer food price inflation.
Importantly, this would mean a better inflation path for grain-related food products in the inflation basket, which would moderate in the second half of the year. The first half may see mild increases, reflecting the recent higher grain prices in the country, which have yet to be reflected at the retail level.
Importantly, for the long term, expected maize production for the 2024-25 season is well above South Africa’s annual maize needs of about 11.8 million tonnes.
The outlook is also optimistic regarding oilseeds, which are vital for food inflation and animal feed. For example, the soybean harvest is estimated at 2.3 million tonnes, up 26% year over year. This is due to anticipated better yields, as the area is roughly the same as last season.
Moreover, the sunflower seed harvest is forecast at 720 050 tonnes, up 14% year over year, benefiting from expected higher yields.
The groundnut harvest is estimated at 65 359 tonnes (up 26% year over year), sorghum production is estimated at 129 620 tonnes (up 32% year over year), and dry beans harvest is estimated at 75 966 tonnes (up 50% year over year). The base effects also boost the significant annual increases, given the poor harvest we recorded in 2023-24 during the drought.
Overall, this is shaping up to be a better agricultural season. Still, the weather conditions in the coming months will more significantly determine the development of crop conditions.
The season is late by roughly a month because of the late start of rains in some regions. This means the grain deliveries may be late, thus somewhat curbing the possible fast deceleration in maize prices.
South Africa must get favourable rains through March as some crops may pollinate. Fortunately, the weather prospects suggest that there could still be favourable rains next month.
Also worth noting is that as encouraging as this picture is, some regions may not share it, whose crops have been affected by massive rains in recent weeks and some by erratic rains in the past month. We mainly saw such challenges in Limpopo. For such areas, farmers may face financial challenges.
Without minimizing those unique challenges, the national picture remains favourable for agriculture this year. We remain convinced that this is a recovery period. The horticultural industry also benefits from these recent rains, like the livestock industry, through improved grazing veld.
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by Wandile Sihlobo | Feb 26, 2025 | Food Security
Statistics South Africa has just completed one of its regular reweighting and updating of the Consumer Price Index (CPI). The basket component I watch closely –food – now has a higher weighting of 16,84 (from 15,30 out of 100,00).
Notably, the reweighting of the CPI basket has not shifted the trend of moderating food price inflation we have been observing in recent months.
Statistics South Africa recently released data showing that consumer food price inflation slowed to 1.5% in January 2025 from 1.7% in December 2024.
An important clarification is necessary here: we must remember that lower food inflation does not equate to lower prices. Inflation is the pace of price increases. So, while that pace has slowed to 1.5% in January 2025, some food item prices are still rising.
Now, back to the data: This deceleration was underpinned by most products in the food basket, particularly “meat,” “fish and other seafood,” “milk, other dairy and eggs,” and “fruit and nuts.”
Essentially, the base effects and the recovery in supplies of various products continue to be the primary drivers of the slowing rate of food price increases.
At the start of 2024, the challenges of lower vegetable supplies following the impact of load-shedding on irrigation the previous year and the tail-end effects of avian influenza on poultry were the topical issues underpinning food price inflation. We are far from that scenario now, and supplies have recovered.
The outlook for 2025 remains promising that consumer food price inflation could be relatively comfortable.
The recent rains across South Africa have benefitted agricultural production, and farmers planted a decent area of crops. For example, the preliminary plantings data released by the Crop Estimates Committee last month showed that South African farmers likely planted 4,45 million hectares of summer grains and oilseeds in the 2024-25 season, up mildly by 0,3% from the previous season.
We see similar and better production conditions for fruits and vegetables.
That said, for the first half of 2025, grain-related products remain the upside risk to consumer inflation following a surge in white maize prices in recent months due to the poor crop harvest caused by the drought.
Moreover, we suspect that poultry products and other red meat prices could increase moderately in the coming months because of higher feed costs, mainly soybeans and yellow maize prices, which are elevated as the country awaits a new crop season.
Still, these product price increases are unlikely to be notable as the consumer is also broadly under pressure, and the demand may still be relatively weak.
The headline CPI was 3,2% in January 2025, up from 3,0% in December 2024.
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by Wandile Sihlobo | Feb 25, 2025 | Agricultural Environment and Natural Resource
February 27 is an important day in South Africa’s agriculture. The Crop Estimates Committee will release its first production estimates and revised area plantings for South Africa’s 2024-25 summer grains and oilseed production, which includes maize, sunflower seeds, soybeans, groundnuts, sorghum, and dry beans.
In its preliminary area plantings data, the Committee was reasonably optimistic, placing the area plantings for all crops at 4,45 million hectares, up by 0,3% from the previous season.
Ordinarily, these early production estimates would guide the season’s outlook, with monthly revisions until the season is complete. However, two factors may complicate the production forecast this time or lead to notable adjustments in the coming months.
First, some regions planted their crop roughly a month behind schedule because of the drier weather conditions from November to December. For such areas, the yield forecast may be a challenge. The most accurate picture may be in the coming months’ figures.
Second, the recent weeks have brought much welcome rainfall, whose benefit in crop conditions improvement will likely show in the coming weeks and months. Depending on when the Crop Estimates Committee did their assessment, they may not have fully accounted for some of these gains.
Again, this will be a first estimate. Nine more monthly reports will follow, accounting for all crop condition developments in the coming months. So, when the data is out, we should view it from this perspective.
The weather prospects for the coming months remain optimistic. South Africa could receive favourable rainfall through to March, benefiting the late-planted crops that may pollinate mainly next month. Summer crops typically require more moisture during the pollination stages.
On a cautious side, the risk that some have in mind is the likelihood of frost later in the season and what impact this could have on yields. Still, if recent history is anything to go by, we may not have challenging frost later in the season.
Recently, there have been times when South African farmers planted late and still proceeded to have a decent harvest.
On the downside, we suspect a few areas, especially in Limpopo, received more moisture than required in the past few weeks’ rains. It is unclear whether this will be a significant challenge for such areas.
The warm weather conditions provide a breather and perhaps relief for them.
Beyond the production conditions, one aspect to remember is that the late start of the summer crop season implies that producer deliveries may be late. This could keep grain prices slightly wobbly in the next few weeks, although they are broadly on a moderating path from last month.
The primary issue is that the grain stocks from the past season are tight. We will only get a breather when the new crop is delivered to the market.
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by Wandile Sihlobo | Feb 24, 2025 | Agricultural Environment and Natural Resource
South Africa’s chairing of the Group of 20 (G20) also means the country leads the G20 business forum, the B20.
The G20 comprises 19 countries (Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Saudi Arabia, South Africa, Russia, Turkey, the UK, and the US) and two bodies: the AU and the EU.
South Africa’s agenda is “Solidarity, Equality, and Sustainability.”
The B20 brings together business representatives from the G20 countries and sets out workstreams that take their cue from the theme defined by the government, though its actual work is autonomous.
As a critical stakeholder in the B20, the South African agricultural sector must outline bold goals.
1. There should be a strong call for knowledge sharing on climate-smart agricultural practices. This theme is relevant not only for the G20 countries but also for the African continent. There is much more to learn from the experiences of Australia, Canada, the EU and others. South Africa must open an avenue for this discussion. The insights must be canvassed with the continent to help improve Africa’s agricultural resilience in the challenging climatic environment.
2. South Africa should pursue deepening agricultural trade. As a country we already enjoy access to several G20 economies. Still, prioritising trade integration and ensuring the policies of relatively open borders on agricultural trade are maintained is vital. This point is essential in this climate of trade fragmentation and “friendshoring”.
South Africa’s agricultural sector is export-orientated. Therefore, it is in businesses’ interest to ensure practices are maintained. Africa as a whole, whose agricultural sector still faces productivity challenges, may not benefit as much as South Africa from this theme in the near term. However, in the long run the benefits will be widely shared.
3. South Africa should continue prioritising discussions about deepening the fertiliser trade in Africa. Sub-Saharan Africa (excluding SA) has poor agricultural productivity due to various factors. One challenge is poor fertiliser usage and another is lack of access to affordable finance. More fundamentally, conducive infrastructure is essential to ensure the fertiliser reaches the farmers and their produce gets to market.
Linking the fertiliser matter with a need for investment in network industries is therefore key. If political leaders want to raise a theme that would have a broader positive continental impact in reducing hunger, a discussion about fertiliser would be worthwhile.
This would also entail thinking about ways to raise funds to buy and distribute fertiliser to the most vulnerable regions of the continent. Improvements in agriculture will help reduce hunger.
We know from the literature that growth in agriculture is generally two to three times more effective at reducing poverty than an equivalent amount of growth generated outside agriculture. Moreover, the advantage of agriculture in reducing poverty is largest for the poorest individuals in society and extends to other welfare outcomes, including food insecurity and malnutrition.
4. South Africa must discuss sharing insights about agricultural technology and investment opportunities. This workstream would involve most mechanical and IT-related technologies, which are increasingly vital for agricultural productivity and the efficiency of food value chains. The G20 countries are advanced in this area of work, and knowledge sharing would be beneficial, mainly for the broader African continent. SA, therefore, has good reason to support this theme.
The South African government should define a clear agenda that considers Brazil’s outcomes and charts a new path. This work needs to start sooner rather than later.
South Africa’s businesses must first undertake detailed thinking and formulate priorities linked to the economy’s sectors.
The next step is to engage the government in such priority areas. This will help ensure South Africa formulates an inclusive agenda for the B20 that aligns well with the G20 priorities.
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by Wandile Sihlobo | Feb 23, 2025 | Agricultural Labour Market
Some people have issues with the agricultural figures in the Quarterly Labour Force Survey data. However, the data still provide a valuable picture of farming jobs in South Africa.
South Africa’s 2023-24 production season was challenging. The mid-summer drought and animal diseases added immense pressure to the sector. These two factors, among others, probably explain much of the decline in employment in the last quarter of 2024.
Still, the numbers paint a much milder picture than we anticipated. For example, primary agriculture employment fell by 1% from the third quarter to 924k jobs in the last quarter of 2024.
The field crops, game and hunting, and forestry are the subsectors that registered notable losses.
However, from an annual perspective, the employment was roughly unchanged from the last quarter of 2023. Positively, the primary agricultural employment of 924k people is well above the long-term jobs of 799k.
Given the resilience of recent quarters’ job performance, employment conditions may recover in 2025. South Africa’s agriculture is also on its recovery path, supported by favourable rainfall and progress in controlling the spread of animal diseases.
Of course, we assume no pressing trade-related challenges will affect the sector’s profitability in the near term.
The mild increase in the minimum wage this year, while challenging for some commodities and adding to already higher input cost pressures, may also not be a major hindrance.
With all this said, there is significant trade uncertainty, mainly in the African Growth and Opportunity Act (AGOA).
From a regional perspective, the Eastern Cape, Free State, and Limpopo are the only provinces registered quarterly job losses. Meanwhile, other provinces saw mild quarterly increases.
Overall, South Africa’s agricultural sector is recovering this year from a production perspective, but there are heightened risks associated with international trade.
We continue to watch closely the AGOA’s duty-free access to the US market and generally fractured geopolitics as they affect agricultural product exports, farm profitability, and, ultimately, the sustainability of agricultural jobs.
While South Africa’s agricultural exports to the US account for only 4% of the overall agricultural exports of US$13,2 billion, the industries concentrated in the US market are citrus, wine, grapes, nuts, and fruit juices.
Importantly, these are also mainly produced in the Cape provinces of South Africa (Eastern, Western, and Northern) and Mpumalanga and Limpopo. Therefore, duty-free access in the US market is valuable and offers South African products price competitiveness.
Of course, an exclusion would not necessarily mean a complete closure of the US market to South Africa’s agriculture, but we could face import duties of around 3% (at MFN rates).
This uncertainty demands that South Africa work on a post-AGOA sustainable trade arrangement with the US.
Anyway, I want to underscore that, in addition to global factors, port inefficiencies, poor rail and road infrastructure, crime and stock theft, and worsening municipal service delivery remain significant risks to agriculture’s long-term growth prospects.
This sector has great potential for job creation and growth. However, for this to materialize, the South African government must tackle these issues head-on, collaboratively with organized agriculture and the private sector.
We also need to focus all our energies on global trade issues and geopolitics without focusing on the local issues I highlighted above, as these directly impact farming, agribusiness, and other businesses in the small towns of South Africa.
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