South Africa’s agricultural sector is now ripe for action
Various government programmes could if implemented effectively boost growth, sustain employment and attract new investment.
SA agriculture exports showed resilience in 2022 despite headwinds
Despite various headwinds throughout the year, South Africa’s agriculture exports for 2022 did not decline as much as some feared. Data for the first eleven months of the year show exports at a cumulative US$11,9 billion, up by 3% from the same period in 2021.
Global grains production outlook gives hints about the price direction for SA
For a South African farmer or consumer, the key takeaway is that rice and maize prices will not soften notably this year, although they will likely be lower than the price levels we saw following Russia’s invasion of Ukraine, while wheat and soybean prices will likely soften notably.
A notable jump in SA food price inflation
While in some regions of the world, consumer food price inflation has started to cool off; South Africa sees the opposite. The data released this morning by Statistics South Africa shows that consumer food price inflation accelerated to 13,8% y/y in January 2023 from 12,7% in the previous month.
South African farmers should target China and India among the Brics
The main interest of SA agriculture and agribusiness within BRICS is to advance agricultural exports, specifically to China and India. These are countries that have relatively solid economic growth prospects and large populations (and therefore markets).
Rice prices
After a year of generally subdued global rice prices, this year started with a notable increase in prices from various origins. With South Africa being a net importer of rice, the worldwide surge of prices presents upside risks to consumer food price inflation.
Ride out temporary price swings
The SA government or its entities, such as the Competition Commission, should not react to these temporary price swings. Instead, they should continuously monitor key staple food markets to understand trends and police bad behavior if it shows in the future. For now, the SA grain markets are operating reasonably well.
Wandile Sihlobo is the Chief Economist of the Agricultural Business Chamber of South Africa (Agbiz) and the author of “Finding Common Ground: Land, Equity and Agriculture“.
He is a Senior Lecturer Extraordinary at the Department of Agricultural Economics at Stellenbosch University and a Visiting Research Fellow at the Wits School of Governance, University of the Witwatersrand.
Sihlobo was appointed as a member of President Cyril Ramaphosa’s Presidential Economic Advisory Council in 2019 (and re-appointed in 2022), having served on the Presidential Expert Advisory Panel on Land Reform and Agriculture from 2018.
He is also a member of the Council of Statistics of South Africa (Stats SA) and a Commissioner at the International Trade Administration Commission of South Africa (ITAC).
Sihlobo is a columnist for Business Day, The Herald and Farmers Weekly magazine.
His weekly podcast, “Agricultural Market Viewpoint with Wandile Sihlobo“, is available on all podcast platforms.
He holds a Bachelor of Science degree in Agricultural Economics from the University of Fort Hare and a Master of Science degree in Agricultural Economics from Stellenbosch University.