by Wandile Sihlobo | Jun 23, 2019 | Africa Focus
The subject of — maize needs — this year will not only dominate headlines in Zimbabwe and Mozambique. Kenya too has a problem. The country’s maize production could fall by 10% year-on-year to 3.6 million tonnes in 2019, according to data from the United States Department of Agriculture (USDA).
You see, Kenya utilizes about 4.7 million tonnes a year, so this already tells us that there will be a need for massive imports this year. Even worse, the opening stocks, which in some instances provide a cushion when maize production is low, were quite thin at the start of the year, at about 416 00 tonnes.
As a result, Kenya may need to import about 1.0 million tonnes of maize this year (2019/20) in order to fulfil its annual needs. This will be the largest volume since 2017 when Kenya imported about 1.4 million tonnes. In those years, the countries that came in to help Kenya included Mexico, South Africa, Uganda, Zambia and Ukraine.
Similarly to what I discussed in the previous post regarding Zimbabwe, this year around, it is unclear where Kenya will get the maize supplies as the likes of South Africa and Zambia, who were suppliers in the past seasons, will have tight supplies due to lower domestic production in 2018/19 production season. South Africa could have about 1.1 million tonnes for exports, but this will largely be destined for Botswana, Namibia, Lesotho and Eswatini.
Another important factor is that Kenya will likely be looking for white maize which is scarcer globally. Outside of the Southern African region, the only reliable white maize supplier could be Mexico, with about a million tonnes of maize for the export market in the 2019/20 marketing year, according to data from the USDA. Aside from white maize, Kenya can import yellow maize from Brazil, Argentina, Ukraine and the U.S., amongst others.
This is indeed a difficult year for Kenya, and maize needs will for sure dominate the headlines in some corners of the country in the coming months. In fact, at the start of this month, World-Grain.com ran an article titled — Kenya facing maize shortage crisis.
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by Wandile Sihlobo | Jun 22, 2019 | Africa Focus
The subject of maize needs will soon dominate the headlines in Zimbabwe and, to a certain extent, Mozambique. These two countries are set to record poor maize harvests due to droughts which delayed plantings at the start of the 2019 season, and when it finally rained, it rather became excessive, as was witnessed during Cyclone Idai at the start of the year.
The United States Department of Agriculture (USDA) forecast Zimbabwe’s 2019 maize production at 800 000 tonnes, down by 53% from the previous year. This is not even half of what Zimbabwe consumes a year, which is roughly 2.0 million tonnes. So, there will surely be large volumes of imports throughout the 2019/20 period.
At least, the authorities have grasped the urgency of the situation. The Zimbabwean Grain Marketing Board has recently issued a tender to buy 750 000 tonnes of maize, which will be the largest volume since 2016 when the country imported 1.4 million tonnes.
It is unclear, however, where Zimbabwe will get the maize supplies from as the likes of South Africa and Zambia, who are typically the region’s maize exporters, are expected to have tight supplies due to lower production in the 2018/19 production season. South Africa could have about 1.1 million tonnes for exports, but this will largely be destined for Botswana, Namibia, Lesotho and Eswatini.
The other important factor is that Zimbabwe will possibly be looking for white maize, which means that outside of the Southern Africa region, the reliable white maize supplier could be Mexico, which will have about a million tonnes of maize for export markets in the 2019/20 marketing year, according to data from the USDA. Aside from white maize, there are a number of countries that can supply the region, with the most likely ones being Brazil, Argentina, Ukraine and the United States.
In the case of Mozambique, the 2018/19 maize harvest could fall by 27% year-on-year to 1.8 million tonnes, which will be slightly lower than the annual consumption of 2.1 million tonnes. As a result, the imports could amount to 200 000 tonnes, which is double the typical import volume. In the past, South Africa, Malawi and Mexico were the key suppliers of maize to Mozambique, but this year, things are unclear for similar reasons as the Zimbabwe situation.
For maize producers and users in South Africa, these factors will most likely add upward pressure on prices in the coming months when the demand from Zimbabwe and Zambia intensifies, especially in the case of white maize. The key driver of domestic maize prices in the past couple of weeks has largely been the spillover from higher Chicago maize prices which were underpinned by delayed plantings on the back of excessively wet weather conditions.
On June 18, 2019, domestic yellow and white maize spot prices were each at R2 834 per tonne, which is respectively, 33% and 39% higher than the corresponding period last year, and roughly at levels seen at the start of the year. The prices could cool off from these levels if crop conditions improve in the U.S. Midwest, but that could soon be offset by effects of the imminent Southern Africa region’s maize demand.
*Written for and first published on the Daily Maverick on 19 June 2019.
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by Wandile Sihlobo | Jun 19, 2019 | Africa Focus
One of the challenging aspects when utilising agricultural production data for a number of countries from various sources is a possibility of misaligning the production years. I fell into this trap in a note on 18 June 2019 via Agbiz. I indicated that the United States Department of Agriculture (USDA) pegged Zimbabwe’s 2018/19 maize production at 1.7 million tonnes, down by 21% from the previous season. From a South African perspective, the 2018/19 production season would represent the 2019 calendar year, which is the approach we took with Zimbabwe’s data.
Fortunately, I was quickly corrected by the USDA, which indicated to us that they calculate the rest of SADC countries’ maize production estimates differently from South Africa. In other words, the 2019 calendar year is represented as 2019/20 production year for the SADC countries, aside from South Africa which is represented as 2018/19.
This means that maize production conditions in Zimbabwe are far worse than I reported yesterday. The USDA forecasts Zimbabwe’s 2019/20 maize production at 800 000 tonnes, down by 53% from the previous year, as shown in Figure 1 below. This is the result of both reduction in area planted, and expectations of poor yields on the back of drier weather conditions at the start of the season, and damages caused by Cyclone Idai earlier this year. For context, Zimbabwe consumes about 2.0 million tonnes a year.
Figure 1: Zimbabwe’s maize production
Source: United States Department of Agriculture, Agbiz Research
Against this backdrop, the Zimbabwean Grain Marketing Board issued a tender to buy 750 000 tonnes of maize, which will be the largest volume since 2016 when the country imported 1.4 million tonnes. It is unclear, however, where Zimbabwe will get the maize supplies as the likes of South Africa and Zambia, who are typically the region’s maize exporters, will have tight supplies due to lower production in 2018/19 production season. South Africa could have about 1.1 million tonnes for exports, but this will largely be destined for Botswana, Namibia, Lesotho and Eswatini.
The other important factor is that Zimbabwe will possibly be looking for white maize, which means that outside of the Southern Africa region, the reliable white maize supplier could be Mexico, with about a million tonnes of maize for the export market in the 2019/20 marketing year, according to data from the USDA. Aside from white maize, Zimbabwe can import yellow maize from Brazil, Argentina, Ukraine and the U.S., amongst others.
It is indeed a tough year over there in Zimbabwe. The country’s Statistical Agency recently indicated that the month-on-month food and non-alcoholic beverages price inflation rate stood at 17.63% in May 2019, gaining 9.78 percentage points on the April 2019 rate of 7.85%.
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by Wandile Sihlobo | May 5, 2019 | Africa Focus
Chocolate can certainly get one some brownie points, and no way is this truer than in Ivory Coast which in 2018 reported the largest agricultural trade balance in value terms in Africa, an amount of US$5.1 billion.
The West African nation exported a higher value of agricultural products than it imports, a situation that is rare in a continent of predominantly net food importers. Trailing Ivory Coast was South Africa with a positive trade balance of US$3.9 billion – something I have discussed in a separate piece.
To be clear though, this is not to suggest that Ivory Coast somehow has higher agricultural exports than South Africa – no, it doesn’t. Its agricultural exports were valued US$7.0 billion in 2018 — according to data from Trade Map — which is 33% lower than what South Africa exported. But the trade balance was boosted by the fact that Ivory Coast imported US$1.8 billion worth of agricultural products, compared to South Africa’s agricultural imports of US$6.7 billion in 2018. Hence, the Ivory Coast had a larger agricultural trade balance compared to South Africa.
Now, what exactly is this West Africa nation agricultural exports aside from cocoa and cocoa products (their largest agricultural export product)?
The other products are edible fruits, cotton, animal and vegetable fats, coffee, tea, and tobacco, amongst other products. The leading buyers of these products include the Netherlands, Vietnam, United States, France, Germany, India, and Belgium. Thus it is unsurprising some of the aforementioned countries are amongst the leading producers of chocolate, of which Ivory Coast is a leading producer of its central ingredient — cocoa.
From an import perspective, Ivory Coast mainly imports rice, wheat, crude palm oil, onions, beef, pork products, milk and oil cake (meal for animal feed), amongst other products.
Besides the “brownie points” of having the largest agricultural trade balance in Africa in 2018, agriculture plays an important role in Ivory Coast’s economy. The sector makes up about 21% of the country’s GDP and employs about 48% of its working population.
Given the aforementioned figures, one of the aspects that Ivory Coast’s government might have to consider in the coming years is boosting the country’s agro-processing so that some of the exportable raw agricultural commodities can be processed within the country. This would not only boost the economy, but also employment and ensure that some people transition from primary agriculture to manufacturing jobs which might have better pay, and boost living standards.
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by Wandile Sihlobo | May 1, 2019 | Africa Focus
There has been a revolution in the Kenyan avocado export market, characterized by enormous growth over the past three years. After remaining a relatively small exporter of avocado for a prolonged period, Kenya has now overtaken South Africa to be the leading exporter of avocado in the continent and the seventh largest in the world.
To be clear though, this is not because South Africa is faltering, but Kenya is finally doing what it should have been doing for a long period. Although Kenya has consistently been the continent’s leading producer of avocados, accounting for a nearly 30% share, which is twice the volume produced by South Africa, its export activity was generally marginal. It was only in 2016, when they started to catch up with the likes of South Africa, by generating export revenues of US$64 million from only US$8 million in 2001, according to data from Trade Map.
In the week of 26 April 2019, Kenya took its avocado export drive to new heights by signing a Memorandum of Understanding on sanitary and phytosanitary measures to enable the export of the product to China. This is a big deal because China is an important and growing market in the global avocado sphere ranked as the ninth largest importer in 2018.
China’s avocado imports grew from 4 tonnes in 2008 to 43 859 tonnes in 2018, according to data from the Trade Map. If growth continues over the coming years, Kenya stands to benefit from it. The countries that currently supply a large share of avocados to China are Peru, Mexico, Chile and New Zealand.
Now, China will join the list of Kenya’s avocado export destinations, which include the United Arab Emirates, the Netherlands, France, Saudi Arabia, and the United Kingdom, amongst others.
This brings me to the point of South Africa, which has largely been exporting its avocados to the same countries. Given the new developments in Kenya, perhaps, South Africa should follow the same path and explore the possibility of opening a door for its avocados to China. After all, the growth of South Africa’s avocado market is generally export-led.
Between the 1994/95 and 2016/17 production seasons, South Africa’s avocado output grew by 72% to 77 508 tonnes, according to data from the Department of Agriculture, Forestry and Fisheries. This was underpinned by growing demand from the domestic and global markets. In the period between 1994/95 and 2016/17, South Africa exported, on average, about two-thirds of its avocado output.
South Africa’s leading markets are somewhat an expanded list of Kenya’s avocado destinations. These are the Netherlands, the United Kingdom, Spain, Russia, the United Arab Emirates, Portugal, Russia, Namibia, Turkey, Saudi Arabia and France, which collectively accounted for 97% of South Africa’s avocado exports in 2017 and 2018.
While these markets have served South Africa well over the past couple of years, it would be useful for South Africa to also explore the Chinese market given its enormous growth potential. Moreover, as plantings continue to increase across South Africa, with industry players suggesting that about 1 500 hectares will be added to the current hectarage of 17 500 hectares each year over the next five years, new markets will be needed for the added supply. As a result, market discovery should be allotted the requisite urgency and attention; and it should dovetail with South Africa’s government policy ambition of achieving export-led growth in agriculture.
*Written for and first published on Business Day on 30 April 2019.
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by Wandile Sihlobo | Apr 15, 2019 | Africa Focus
As a buildup on the post, I published last week about Zimbabwe’s intention to compensate white farmers who lost land under former President Robert Mugabe’s land reform approach in the early 2000s, this morning’s Business Day published further details on this matter.
The article essentially says that the Zimbabwean government will give priority to elderly white farmers when it starts with the compensation process. The government has set aside US$17.5 million in this year’s budget to make initial compensation.
The timing of this compensation process might seem a bit odd given that the government has recently indicated that it needs US$613 million in aid from local and foreign donors to cover food imports and help with a humanitarian crisis following a severe drought and a cyclone that battered the east of the country, but it is essential for boosting credibility and confidence on the government’s reform agenda.
In the long run, if credibility and confidence are improved, Zimbabwe could begin to receive investments, and maybe a rethink of sanctions by other countries, and subsequently the much-needed economic growth, and job creation.
At the moment, President Emmerson Mnangagwa’s focus on the agricultural sector as far as land reform developments are concerned is a right approach, not only because that’s the sector that was at the centre of land reform in the early 2000s, but because of the sector’s large share contribution to GDP, and also in employment. So, any improvement in Zimbabwe’s agricultural investments and production would have far-reaching positive spin-offs in the near term. In the long run, however, the country would have to explore growth-stimulating policies in other sectors of the economy.
Overall, as I said in my previous post, anything that is reconciliatory in Zimbabwe is a step in the right direction to rebuilding the country. I will be watching the land reform developments with great interest in the coming months.
Let me close off by noting that I have briefly reflected on the approach the country took in a Compendium of essays on Land Reform in South Africa, co-authored by Professor Johann Kirsten of Stellenbosch University. You can access the full collection here.
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by Wandile Sihlobo | Apr 10, 2019 | Africa Focus, General Comments
I spent the better part of yesterday at the International Trade Commission of South Africa (ITAC) where I moonlight as a Commissioner focusing on trade matters. In the midst of all that, I missed some interesting news on Zimbabwe’s land reform story.
Reuters, an international news organisation, ran an article titled — Zimbabwe to start paying white farmers compensation after April. This article essentially says that Zimbabwean government has set aside US$17.5 million in this year’s budget to make initial compensation to white farmers who lost land under former president Robert Mugabe’s land reform approach in the early 2000s.
But the payments won’t be for all farmers at this stage, it will be targeted to those in financial distress, while full compensation will be paid later. You can access the full article here.
From my end – anything that is reconciliatory is a step in the right direction to rebuilding the country. But I won’t dwell much on the Zimbabwean land reform story. I have briefly reflected on the approach the country took in a Compendium of essays on Land Reform in South Africa, co-authored by Professor Johann Kirsten of Stellenbosch University. You can access the full collection here.
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by Wandile Sihlobo | Mar 30, 2019 | Africa Focus, Agricultural Environment and Natural Resource, Agricultural Labour Market, Agricultural Production, Agricultural Trade, Food Security, General Comments, Land Reform
It is hard to get a clear picture of crop conditions in Zimbabwe after Cyclone Idai. But reports from a number of media outlets who have people on the ground paint a concerning picture. This afternoon, Al Jazeera came out with a headline — Cyclone Idai destroys Zimbabwe farms, deepening food crisis — telling readers that the damage caused by the cyclone could lead to Zimbabwe importing 900 000 tonnes of maize in 2019/20 in order to fulfil its domestic needs.
In addition, the United States Agency for International Development also released a note with a headline – Effects of Cyclone Idai negatively affect livelihoods decreasing food access in parts of Zimbabwe. This echoed the same message as the Al Jazeera story, although not specifying the volume of possible maize imports for the year.
Also today, NewsDay, a Zimbabwean newspaper, citing the country’s Lands and Agriculture ministry permanent secretary, Ringson Chitsiko, indicated that current stocks of maize and small grains at the Zimbabwe Grain Marketing Board stand at 832 156 tonnes, and at the current monthly drawdown rate of 120 000 tonnes, the available grain is sufficient to last about seven months. This sounded a bit ambitious compared to what we have been gathering over the past few month. Nonetheless, the same article noted the prevalence of food insecurity in some parts of Zimbabwe, which could increase following the cyclone.
To recap — before the cyclone, Bulawayo24, a Zimbabwean newspaper, citing Zimbabwe Commercial Farmers Union, indicated that Zimbabwe’s maize production could amount to 900 000 tonnes in 2018/19 production season. This is well below the International Grains Council estimate of 1.2 million tonnes.
Now, given that Zimbabwe’s maize carryover stock of roughly 458 000 tonnes from the 2018/19 marketing year might not be sufficient to boost its maize supplies in the 2019/20 marketing year, the country could remain a net importer of maize (2019/20 marketing year corresponds with 2018/19 production season).
If we account for the fact that Zimbabwe’s maize consumption typically varies between 1.8 million and 2.0 million tonnes, then maize imports for the 2019/20 marketing year were most likely going to amount to 700 000 tonnes. But this was before the crop damage by the cyclone that occurred this month.
At this point, I have no idea how much maize Zimbabwe will need, but the 900 000 tonnes cited by Al Jazeera is starting to look believable.
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