by Wandile Sihlobo | Feb 1, 2021 | Africa Focus
Zimbabwe has not had a good maize production season since 2018/19. Since then, the country has had to import nearly a million tonnes of maize each marketing year to meet its domestic annual requirements.
The 2020/21 production season started on a sound footing for most Southern African countries, with forecasts of favourable rainfall that should support plantings. Unfortunately, this will still not suffice to take Zimbabwe close to self-sufficiency as was the case in the 2018/19 maize production season.
The preliminary estimates from the United States Department of Agriculture (USDA) and the International Grains Council (IGC) showed that Zimbabwe’s 2020/21 maize production could amount to 908 000 tonnes. Admittedly, this is 17% higher than the previous season’s harvest impacted by dryness at its commencement. Nevertheless, the uptick in the area planted was not much of a deviation from long-term average planting.
The government of Zimbabwe estimated the country’s 2020/21 maize plantings at 1,40 million hectares, which is roughly in line with the ten-year average area for the country. A potential maize harvest of 908 000 tonnes would mean that average yields are expected to improve to 0,65 tonnes per hectare in the 2020/21 production season.
These estimates were released at the start of January 2021, before the heavy rainfall-induced by Cyclone Eloise. We know from the preliminary reports that Masvingo, Manicaland and Matebeleland provinces covering the south-eastern parts of Zimbabwe have been the most affected by the cyclone’s heavy rains (see red-coloured parts in Exhibit 1 below).
Exhibit 1: Map of Zimbabwe highlighting areas affected by Cyclone Eloise
Source: Zimbabwe Red Cross Society
While the cyclone’s actual impact on maize production is yet to be announced by the Zimbabwean authorities, the provinces affected by the cyclone’s heavy rainfall are mainly not the primary producers (see Exhibit 2 below).
Exhibit 2: Zimbabwe’s maize production regions
Source: USDA
Even if the 908 000 tonnes estimate materializes, and maize production ticks up to a million tonnes, Zimbabwe would still need to supplement production with imports as its annual consumption is roughly 1,8 – 2,0 million tonnes.
I expect a more updated estimate of crop conditions and the potential harvest later this month. But It is worth noting that these maize production developments unfolding in Zimbabwe have implications for South Africa’s maize market. Zimbabwe is one of South Africa’s foremost regional maize importers. Hence, if their potential maize import needs shift drastically, there could be a material impact on the South African maize market prices.
In the current 2020/21 marketing year, Zimbabwe has required a million tonnes to meet its annual maize needs. This increased demand along with the relatively weaker rand-dollar exchange rate and higher global maize prices added support to the South African maize prices.
We started this year with a view that the Southern African maize import requirements would be muted somewhat, because of the potential increase in various countries’ domestic production. But the damages caused by the cyclone have thrown a spanner in the works of this view.
We are now at a point of uncertainty about the cyclone’s impact in Zimbabwe and to regional maize production in countries such as Malawi and Mozambique. Some clarity on these questions will enable us to revisit the views we expressed about the South African maize price outlook and implications thereof on food price inflation.
Importantly, these are preliminary views based on the USDA and IGC data, the insight from the analysts on the ground suggest that the crop in Zimbabwe is in much better shape. I will continue to monitor Zimbabwe’s situation and update the views as more information and data become available.
For Background, here is Zimbabwe’s maize production trend (see Exhibit 3 below).
Exhibit 3: Zimbabwe’s maize production
Source: USDA
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by Wandile Sihlobo | Dec 31, 2020 | Africa Focus
Agriculture remains an important economic sector in the sub-Saharan Africa region. But when various countries start to craft their economic recovery plans following the devastation caused by the COVID-19 pandemic they will need to think differently about the sector.
A lot has been said about the need for basic infrastructures, such as roads, ports, and electricity but there are some basic things that, if executed properly, will help the recovery: much of agriculture depends on the effective (and timely) execution of the administrative and regulatory tasks of government: licenses, permits, regulations, enforcement, etc. These aspects have been constraining the growth and transformation of the agricultural sector for many years and require serious attention. Linked to this is a good land administration system, effective registration of title deeds/land rights in a well-functioning deeds office.
It is however also true that many sub-Saharan Africa countries still have weak property rights, which not only lead to lower levels of investment but also poor management of the land.
The economic recovery road from the pandemic presents an opportunity for various governments to explore available technologies (such as GPS systems and mapping and blockchain technology) that could help in the registration of land rights. This will help to solve disputes, contestation and also help with tradability of rights. This process can be piloted in agricultural land, and thereafter encourage private sector players to partner with the new landowners in further developments of the farms. The proper recording and confirmation of land rights will encourage individual entrepreneurs to invest in their farmland and thereby trigger the commercialization and growth of the agricultural sector. There are examples of technologies that various countries could use such as the use of drones in India, and aerial photography in Rwanda. This would also help change the troubling statistics which highlight that roughly 90% of rural land in Africa is not formally documented.
From a biotechnology perspective, and to date, South Africa is the only country in sub-Saharan Africa that has embraced the use and potential of biotechnology. This is primarily through South Africa being the only country that has adopted the use of genetically engineered cotton, maize and soybean seeds, joining the likes of the United States, Brazil and Argentina, amongst others. In these countries, the use of the genetically engineered seeds has seen lower insecticide use, more environmentally friendly tillage practises and crop yields improvement over the years, as illustrated in a research paper by agricultural economists, Graham Brookes and Peter Barfoot.
There is also compelling evidence of the increase in yields within the sub-Saharan Africa region. Consider South Africa, which produces about 16% of sub-Saharan Africa maize, according to the International Grains Council, utilising a relatively small area of an average of 2.5 million hectares since 2010. In contrast, countries such as Nigeria planted 6.5 million hectares in the same production season but only harvested 11.0 million tonnes of maize, which equates to 15% of the sub-Saharan region’s maize output. Irrigation has only been an added factor in South Africa, but not to a large extent as only 10% of the country’s maize is irrigated, with 90% being rainfed as in the other sub-Saharan Africa countries.
South Africa began planting genetically engineered maize seeds in the 2001/02 season. Before its introduction, average maize yields were around 2.4 tonnes per hectare, and that has now increased to an average of 5.9 tonnes per hectare as of the 2019/20 production season. Meanwhile, the sub-Saharan Africa region’s maize yields remain negligible, averaging below 2.0 tonnes per hectare. While yields are also influenced by improved germplasm (enabled by non-GM biotechnology), improved low and no-till production methods (facilitated through herbicide-tolerant GM technology), other benefits include labour savings, reduced insecticide use, and improved weed and pest control. These labour-saving benefits, also for small-scale livelihood farmers, were also observed in a research study in the KwaZulu Natal province of South Africa.
With agriculture currently making up an estimated 23% of the sub-Saharan Africa economies, while some remain net importers of food and agricultural products, a concerted focus on this sector as part of an economic recovery plan for the region is justified. This would also have positive spin-offs to curb the growing hunger in the region, specifically in countries such as Zimbabwe. Other countries like Kenya and Nigeria that are increasingly field-testing genetically engineered crops should accelerate the process, and when it meets their scientific standards, should embark on commercialisation as part of the recovery process from the economic slump caused by the pandemic. Each country will have their domestic regulatory process which safeguards consumers and farmers, but these need not be too prohibitive to the extent of disadvantaging the very same farmers it is intended to protect. A case in point is Zimbabwe, where the importation of the genetically engineered maize has recently been permitted, yet, planting by domestic farmers remains prohibited.
In sum, African governments should have a fresh relook at agriculture, which involves embracing technology (information technology, mechanical and biotechnology) and also private-sector partnerships. There needs to be also confidence in the citizenry to manage their land parcels. This will involve the granting of tradable long-term leases in various African countries. And in the case of better seeds, the evidence from South Africa is there for many countries to observe and learn.
The blog post draws from my article recently published on Econ3x3 and also The Conversation.
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by Wandile Sihlobo | Dec 3, 2020 | Africa Focus
The Covid-19 pandemic presents an opportunity for African governments to relook agriculture as part of the economic recovery plan. A new approach should embrace technology (information technology, mechanical and biotechnology) and private-sector partnerships, as well as the improvement in land governance through the extension of land rights or long-term, tradeable leases. South Africa presents some examples, particularly on technological advancement, which African countries can emulate.
Click here to read my recent article published by Econ3x3.
by Wandile Sihlobo | May 26, 2020 | Africa Focus
Since the pandemic started several countries have adopted restrictive trade policy approaches such as export bans and export quotas. The justification for such policies was consumer-focused, as the countries needed to ensure domestic food security during this pandemic. Fortunately, when International Grains Council data showed ample global grain supplies in the 2019/20 and prospects for a larger crop in the 2020/21 production season; countries such as Russia, Cambodia and Vietnam, amongst others, reversed these protectionist policies. These countries had intended to restrict their wheat and rice trade.
Unfortunately, on the African continent, we continue to witness restrictive trade policy, although the policies are producer focused instead of consumer-focused as has been the case in other continents. Consider Namibia, where the country’s Agronomic Board recently announced that there will be a suspension of imports of maize and millet from 01 June 2020 until the domestic harvest has been absorbed by domestic millers. The Namibian authorities expect this ban to be in place at least until November 2020, which is a period they expect the domestic supplies to last. The rationale provided is that the policy will ensure that domestic farmers have a market for their produce, which will support them during this pandemic.
But I can’t stop to wonder if this policy is practical if one seriously considers Namibia’s maize market as an example. Maize is one of the major staple crops in the country, although largely dependent on imports. Over the past five seasons, Namibia’s maize production averaged 59 000 tonnes, according to data from the United States Department of Agriculture. This is a small fraction against their average annual maize consumption needs of 216 000 tonnes. The difference is usually imported, which is the volume the Namibian Agronomic Board wants to put a temporary stop on. The policy appears to be heavily producer focused at the expense of the consumers that could benefit from competitively priced imports.
With maize import needs of about 72% of Namibia’s annual maize consumption, placing a temporary ban on imports is not an informed policy option, especially during the pandemic where the objective of the governments should be to get the most affordable food to the citizens. Such affordable food, in the absence of trade barriers, could be a reality this year.
South Africa, which is a major maize supplier to Namibia is expecting its second-biggest maize harvest on record, about 15.2 million tonnes, according to data from the Crop Estimates Committee. This means as soon as the harvest process gains momentum around mid-June 2020, South Africa’s maize prices will likely fall to levels below R2 600 per tonne for both white and yellow maize, where they are currently hovering around. Such potential price declines would be beneficial to the Namibian consumers. The Agricultural Business Chamber of South Africa (Agbiz) currently estimates that South Africa could have about 2.7 million tonnes of maize for the export market, up by 90% y/y.
From a Namibian farmers’ perspective, the government is attempting to provide support through trade policy, but that will most likely yield very limited success. There is no certainty that the domestic maize harvest will be of acceptable quality to attract millers. Also, as best as one can tell from Namibia’s aforementioned maize production data, the country has not been self-sufficient in maize production for over the past two decades. Therefore, to boost local maize production and global competitiveness, the interventions would have to be through increased investment in higher-yielding seeds, irrigation, expansion of planting, and various more efficient farming techniques, rather than a temporary ban on imports, which the Namibian Agronomic Board is currently pursuing. These interventions are long-term and could be part of the post-COVID recovery strategy for Namibia’s agricultural sector. In the near-term, the focus should be to ensure that the citizens receive the most affordable and high-quality staple food possible. If this means imported, as is usually the case, that should be permitted.
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by Wandile Sihlobo | Apr 30, 2020 | Africa Focus
This essay first appeared on Business Day, April 28, 2020
Global food and agricultural supply chains are taking strain from disruptions caused by the Covid-19 pandemic. This is the case whether one looks at meat or grain supply chains.
First, the US, Brazil and Canada, which accounted for nearly a third of global meat and edible offal exports in 2019, have closed some of their meat processing plants over the past few days in response to the spread of Covid-19 among employees. In the US and Canada, the major closures are beef and pork processing plants, while in Brazil the closures are of poultry-related plants. Given these countries’ significant combined contribution to global meat exports of 28%, if the plant closures spread and they remain closed for a prolonged period there could be a global meat shortage and a potential uptick in prices.
Fortunately for SA, from a beef perspective, it is a net exporter. Hence the closures of certain plants in top exporting countries present minimal risks from a food security perspective. However, when it comes to pork SA remains a net importer of mainly ribs from Europe. These imports accounted for roughly 6% of domestic consumption in 2019. Similarly, about 20% of domestic poultry consumption is imported, mainly from Brazil, the US and EU, according to Trade Map data. This essentially means that if the disruptions to meat processors in the US and Brazil persist and spill over to the global market, SA will be affected, particularly when it comes to poultry imports.
Second, wheat continues to be plagued by the spectre of export limitations. In March Russia placed an export quota of 7-million tonnes of wheat in the three months to June to protect its domestic supply during the pandemic before the July harvest of its new crop. This quota has now been reached, and it is unclear if the country will issue a new quota for the remaining months leading to July.
Russia is the world’s leading wheat exporter, accounting for 19% of global wheat exports in the 2019/2020 season. On average, exports account for 45% of Russia’s wheat production of 77-million tonnes. With the International Grains Council forecasting a 9% year-on-year increase in Russia’s wheat production in 2020/2021, I doubt further wheat export restrictions will be announced post-July 2020. Nonetheless, the policy direction Russia takes will have implications for SA, which imports half of its annual wheat consumption, with Russia among the leading suppliers.
Third, looking further afield to the rest of Africa, there are rising concerns over food insecurity in 2020. These stem from unfavourable weather conditions, which has negatively affected agriculture in various countries and spreading locust swarms.
Zimbabwe suffered from drought and floods in 2019, and the production of staple crops fell more than half. Agriculture in Zimbabwe also started the 2020 production season on the back foot due to unfavourable weather. The International Grains Council forecasts the country’s 2019/2020 maize production at 800,000 tonnes, which is less than half of what it needs to satisfy annual consumption of 2-million tonnes. In East Africa, as locusts continue to spread Kenya, Somalia and Uganda could experience crop losses.
It is important that the disruptions to meat supply chains in the US, Brazil and Canada are monitored, but I don’t foresee an immediate threat to SA’s supplies. This is because of the country’s relatively lower dependence on imports of meat. In the case of wheat, Russia is a big enough wheat market to warrant policy attention. On the rest of the continent, the lingering challenge of food insecurity has only been accentuated by the Covid-19 pandemic.
To mitigate societal risk, food insecurity should be on the front burner when the continent mobilises resources from the public purse and multinational and developmental institutions.
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by Wandile Sihlobo | Apr 24, 2020 | Africa Focus
The COVID-19 pandemic will exacerbate an already dire situation of food shortage in some African countries. Professor Mzukisi Qobo (Head of Wits School of Governance, University of Witwatersrand), Isaah Mhlanga (Chief Economist at Alexander Forbes) and I have an essay out this morning which discusses this matter. You can access it here.
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by Wandile Sihlobo | Feb 8, 2020 | Africa Focus
Necessity is the mother of invention, and this rings true in Zimbabwe where the government is reformulating policy. The Zimbabwe government has for years maintained a ban on the importation or growing of genetically modified (GM) maize, but the current food shortages in the country have forced the government to change its policy stance. The ban on GM maize imports was lifted on the 31st of January 2020 as the country seeks to improve local supplies following yet another poor harvest season.
Zimbabwe’s maize production fell by 53% y/y in the 2018/19 production season to 800 000 tonnes, according to data from the United States Department of Agriculture. This was far below the country’s annual maize consumption of between 1.8 and 2.0 million tonnes. Therefore, the country had to import at least a million tonnes of maize in order to meet the local supply requirements.
But the dearth of timely and credible data has made it a challenge to track the maize importation activity into Zimbabwe. Observing from reports of food shortages at the beginning of the year, I am inclined to believe that the country was unable to import the required maize volume for the 2019/20 marketing year (this corresponds with the 2018/19 production season which was a drought year).
Zimbabwe imported 100 000 tonnes of maize from Tanzania in 2019, according to Japhet Hasunga, Tanzania’s Agriculture Minister, and 79 283 tonnes from South Africa between May 2019 and January 2020, according to data from the South African Grain Information Services. This data supports my view that Zimbabwe has thus far imported less than the required maize quantities to meet consumption requirements. The slow pace of imports might have been caused by fiscal constraints on the back of the country’s ongoing macroeconomic crisis. The stringent regulations on the importation of GM maize might have also contributed to the slow pace of imports.
South Africa had about 1.2 million tonnes of maize available for export markets in the 2019/20 marketing year which ends in April 2020, however, roughly 80% of its maize is produced from GM seeds. This means that South Africa was inhibited from supplying the Zimbabwean market under its stringent GM policy. This is evident from South Africa’s maize exports data; the country exported 900 585 tonnes of maize between May 2019 and January 2020. But Zimbabwe imported only a 9% share of this total volume. With international humanitarian organizations such as the World Food Programme actively assisting Zimbabwe to avert the current food crisis, the lifting of the GM maize import ban could accelerate maize import activity into Zimbabwe in the coming months. The maize might originate from South Africa and other leading maize exporting countries such as the United States, Brazil, Mexico and Russia, amongst others, who have in the past exported maize to Zimbabwe.
The challenge for countries aside from South Africa and Mexico is that they are not major white maize producers, which is the preferred maize variant across Southern Africa. Hence, the recent GM policy change will benefit maize exporters from South Africa and Mexico in the near term. Moreover, Zimbabwe’s maize deficit might not end in May 2020, which would have marked the end of their harvesting period. The country’s 2019/20 maize production season started on a bad footing because of delayed rainfall. The plantings were delayed and so far, the area planted and the expected maize harvest in the 2019/20 production season remains unclear but on the lower end.
Fortunately for Zimbabwean consumers, neighbouring South Africa and other major maize producing countries are expected to remain maize exporters in the 2020/21 marketing year (this corresponds with the 2019/20 production season). The locust infestation in East Africa could limit surpluses from that region, but overall global maize exports remain awash. For instance, at the Agricultural Business Chamber of South Africa (Agbiz), we estimate that South Africa could see its maize harvest improving by at least 11% from the 2018/19 season, reaching 12.5 million tonnes. Here we’ve applied the preliminary maize planting data of 2.5 million hectares (up 10% y/y), at an average yield of 5.0 tonnes per hectare, which is plausible with current soil moisture.
This means South Africa could have over a million tonnes for export markets in the 2020/21 marketing year, which starts in May 2020. Part of these supplies will help ease pressure on Zimbabwean consumers, and trade should be more free-flowing now with the GM ban having been lifted.
These measures could assist in the near term. In the long run, the Zimbabwean authorities should consider legalizing the growing of GM maize in order for domestic farmers to produce higher yields such as South Africa, Brazil, United States and other GM growing countries. The ultimate beneficiaries of such a policy shift would be consumers, as an increase in Zimbabwe’s maize production would lead to relatively lower prices. Moreover, in seasons of unfavourable weather conditions, GM crops wouldn’t be as badly affected as the conventional seeds that are currently grown in Zimbabwe. Indeed, necessity is the mother of invention.
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by Wandile Sihlobo | Feb 4, 2020 | Africa Focus, Agricultural Production
The South African Crop Estimates Committee has revised down further its estimate for the country’s 2019/20 wheat harvest to 1.5 million tonnes. This is 20% lower than the previous season.
The downward revision is mainly on the back of poor harvest in parts of the Free State, Limpopo, Northern Cape and Western Cape. All is because of lower yields on the back of unfavourably dry weather conditions over the past few months, not the decline in area plantings. The area planted to wheat in 2019/20 production season is 7% higher than the previous season, at 540 000 hectares.
This will result in an increase in wheat imports within the 2019/20 marketing year in order to supplement the domestic consumption needs. We think South Africa’s 2019/20 wheat imports could increase by 33% y/y to 1.8 million tonnes.
Fortunately, there are large supplies in the global market. The International Grains Council forecasts the 2019/20 global wheat harvest at 761 million tonnes, up by 3% y/y. This has also kept global prices at softer levels, which should be beneficial to importing nations such as South Africa. In the week of the 31st of January 2020, global wheat price (U.S. Hard Red Winter Wheat) was down 4% y/y, trading around US$232 per tonne.
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