by Wandile Sihlobo | Oct 8, 2024 | Agricultural Environment and Natural Resource
Some often view the Eastern Cape’s economy through the lens of its auto industry, amongst other sectors. However, the province does well in agriculture — in various commodities, including dairy, wool, sheep farming, and citrus.
The Eastern Cape is also making encouraging inroads, boosting communal farmers’ output on wool and, soon, hopefully, in other value chains. The efforts for inclusive growth require a collaborative effort between the government and the private sector.
On October 7, 2024, with my colleagues at the Agricultural Business Chamber of South Africa, we met with multiple agribusinesses operating in the province for our members’ engagements sessions. One of the things I noticed in our engagements is the rising optimism about the outlook for the sector in the province and the upcoming 2024-25 season. This is important because, for some time, the province has been strained by animal disease and water challenges in some key agricultural regions.
But optimism is not without a deep appreciation of the challenges. The agribusinesses are concerned about various challenges, including poor-performing municipalities, deteriorating roads that increase transaction costs, animal disease issues, etc.
The political leadership of the Eastern Cape must realise that the province has great potential in agriculture and agritourism. And to unlock this potential, the provincial government and municipalities must do their part in improving roads, access to water, and water infrastructure, and addressing crime, in addition to issues that require the national Department of Agriculture’s intervention. I have recently discussed what the new leadership in the Department must consider in their policies, which would be beneficial to the Eastern Cape (read here).
However, for a more comprehensive discussion, I outlined the critical interventions that could unlock the Eastern Cape’s agricultural possibilities in my latest book, A Country of Two Agricultures. I hope you can get a copy and read it. It is available nationwide in all good bookstores and on eBook platforms.
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by Wandile Sihlobo | Oct 7, 2024 | Agricultural Environment and Natural Resource
In the cities, people are often divorced from the value chain of various products we use. Some usually think their exquisite leather handbag, shoes, jackets, or jerseys comes from their favourite clothing shops. They rarely picture sheep, goats, cattle, or ostrich being slaughtered for the leather to use in their bags.
Similarly, those who wear their nice cotton clothes or woollen jerseys rarely think of sheep or cotton fields when they shop for their favourite items. We don’t usually draw connections between the finished product and the supply chains — the real story of how supply chains work is not well told.
The farming industry is an integral part of the fashion industry.
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by Wandile Sihlobo | Oct 4, 2024 | Agricultural Environment and Natural Resource
Global food prices have risen slightly. This morning, the FAO released its Global Food Price Index results for September 2024, a measure of the monthly change in international prices of a basket of food commodities.
The Global Food Price Index showed a 3% increase from August to 124 points in September 2024. The monthly price increase was broad-based across all major commodities or sub-indices: meat, dairy, cereals, vegetable oils, and sugar.
There are varied reasons for price upticks in these products, mainly related to slightly tight supply in some, weather concerns in some, and strong demand in some products like dairy and meat.
The FAO’s Global Food Price Index is now 2% up from September 2023.
Still, the current reading of the Global Food Price Index is 22% below its peak of 160.3 points reached in March 2022.
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by Wandile Sihlobo | Sep 23, 2024 | Agricultural Environment and Natural Resource
In our recent comment on the impact of snowfall on South Africa’s agriculture, we emphasized that the focus should be on livestock – cattle, sheep, and goats. This is where harsh weather conditions would cause challenges, especially regarding feed supplies to sustain the animals.
Still, with the logistical challenges of the past few days, folks haven’t been able to assess the impact of the heavy snowfall fully.
We must also not forget logistics – particularly for dairy farmers who must move products out of facilities regularly. This is likely a challenge in the Midlands regions of KwaZulu-Natal and other farming entities’ logistics in this region.
We will also have to keep a close eye on communal farmers, where livestock is generally not in good health in some regions in winter because of reduced feed and dry grazing veld.
Still, we can’t give a view on the actual impact of this on agriculture so far. But we are following various updates from our friends on the ground.
Regarding crops, we are off-season in summer grain and oilseed. The planting will only start from mid-November. We are optimistic that the upcoming 2024-25 production season for maize, soybeans, sunflower seed, sorghum and other grains will be favourable.
In essence, the past weekend has been challenging for the sector, but we haven’t heard of significant losses. The aspects we highlight above are things to consider when reflecting on South Africa’s agriculture in the context of the current snowfall.
The authorities in Pretoria are also following the issues closely.
All the best to the great South African farmers!
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by Wandile Sihlobo | Sep 22, 2024 | Agricultural Environment and Natural Resource
We have had one of the challenging weekends in the regions of the Free State, Eastern Cape and KwaZulu Natal with the heavy snowfall. These are also agricultural-endowed provinces; thus, we typically worry about the impact on farming during natural disasters. The subsectors of agriculture that we continue to worry about are livestock – cattle, sheep, and goats. These harsh weather conditions are not ideal for the farming community.
However, it has not been possible to assess the impact of this snowfall in these regions. With travel restrictions and difficulty driving around, understanding the consequence of the snowfall on farming may take some time. But cattle, sheep, and goats are certainly the farming activities we must watch closely.
The communal areas, where livestock is generally not in good health in some regions in winter because of reduced feed and dry grazing veld, are a significant concern. The departments of agriculture in the affected provinces must pay closer attention and connect with farmers as soon as travel is permitted and the roads clear up. The type of support farmers will need will be clearer once the scale of the challenge is better understood.
Fortunately for summer crop farmers, the snowfall is when we are out of season. The summer grains and oilseed planting season only starts in mid-October in the country’s eastern regions and begins in mid-November in the western areas. By this time, we suspect the weather conditions would have normalized, and the snow may even help improve soil moisture ahead of the planting season.
In essence, as best as one can tell, at this point, our focus in agriculture should be on understanding the impact of snowfall on livestock. The summer crop regions are off-season and will begin with 2024-25 summer grains and oilseed planting in mid-October. The prospects for this upcoming season remain positive.
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by Wandile Sihlobo | Sep 11, 2024 | Agricultural Environment and Natural Resource
The drought that hit South Africa’s summer crops in February and March this year is starting to show on the economic indicators. After a robust expansion of 13.5% quarter-on-quarter (seasonally adjusted) in the first quarter of 2024, South Africa’s agricultural gross value added contracted by 2.1% in the second quarter.
These figures are not surprising. South Africa’s agriculture has gone through the severe effect of the El Niño-induced drought, which weighed on crop yield. For example, the country’s 2024-25 summer crop harvest is down 22% from the previous season, estimated at 1.69 million tonnes. This figure of a crop decline encompasses maize, sunflower seeds, soybeans, groundnuts, sorghum and dry beans.
But drought was not the only problem. We continue to struggle with the lingering effects of animal diseases such as avian influenza in poultry, African swine fever in the piggery industry and foot-and-mouth disease in cattle. Although we have not had a new outbreak of all these, certain Eastern Cape regions continue to battle with foot-and-mouth.
Considering that the livestock industry accounts for nearly half of South Africa’s agricultural gross value added, the lingering animal diseases (particularly foot-and-mouth disease) also add to the underperformance this quarter.
Before we received the macroeconomic data about this sector’s performance, the drought had already weighed on sentiment in the sector. For example, the Agbiz/IDC Agribusiness Confidence Index (ACI) remained depressed in the second quarter of 2024, reaching 38 points from 40 points in the previous quarter. This is the lowest level since 2009, at the time of the global financial crisis.
The effect of the mid-summer El Niño-induced on summer grains and oilseed production is one of the major factors that weighed on the sentiment. The drought coincided with the long-standing problems of inadequate road and rail infrastructure and inept municipal service delivery. This is in addition to the lingering effects of animal disease.
But the mid-summer drought did not severely affect the horticultural industry because it is under irrigation. Dam levels across South Africa had benefited from heavy rains at the end of 2023 and into the start of 2024 before the start of the mid-summer drought. These better dam levels and a more reliable energy supply catalysed the excellent production in the horticulture subsector.
In essence, we are now seeing the impact of the drought on the broader sectoral performance. The current downbeat mode may continue in the coming quarters, because of the generally limited activity in the fields in the third quarter of the year.
With that said, when one looks forward to 2025, there is optimism about the potential recovery. There are prospects of a La Niña weather event, which could bring much-needed rainfall across South Africa and the Southern Africa region, boosting agricultural production across all the subsectors.
Notably, the livestock industry is working with the government to resolve the animal disease problems. More robust surveillance and better management of outbreaks would help minimise the economic effect of future animal diseases on the sector’s fortunes.
Thus, we remain optimistic that South Africa’s agriculture may enter a recovery path in 2025.
This year’s underperformance is due to well-understood challenges currently being addressed (mainly animal diseases), and weather prospects are also looking promising for the year ahead.
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by Wandile Sihlobo | Sep 9, 2024 | Agricultural Environment and Natural Resource
South Africa’s agricultural growth in the first 30 years of the democratic era has been supported by, among other things, two pivotal interventions. The first was a deliberate and concerted strategy to invest in genetics for crops, horticulture and livestock, and the second was a strong push to expand export markets. As production continues to increase and capacity for expanding production remains available, these two levers must be accelerated.
The department of agriculture must support new ethical breeding techniques that the private sector presents occasionally, as they may be vital for continuous productivity improvement. More importantly, with climate change and the increasing frequency of extreme adverse weather conditions, improved seed cultivars that cope with such environments will become critical in supporting our agricultural system. Therefore, crop and livestock breeding should remain a priority policy area for SA as an anchor for food security and agricultural production progress.
Equally important is boosting exports to new frontiers while maintaining access to the existing markets in the EU, Africa and elsewhere. Admittedly, SA is the only African country in the top 40 global agricultural exporters, with an export value of $13.2bn in 2023 and ranked the 32nd largest agricultural exporter in the world. But accessibility to these markets is not guaranteed.
In an increasingly fragmented world and various recent incidents of non-tariff import barriers, paying particular attention to nurturing existing markets and opening new ones will be vital. SA already has experience of protectionism in the EU, with barriers in citrus, and in the SA Customs Union (Sacu), where Botswana and Namibia have targeted SA vegetables and citrus.
The trade issues are not purely economic but political, which means SA’s political leadership must take a clear stand and focus on retaining the existing markets through dialogue with the political leadership of the countries where we continue to experience challenges.
The departments of trade, industry & competition, and international relations & co-operation must be at the forefront of these efforts, supported by scientific insights from the department of agriculture.
On a positive note, international relations & co-operation minister Ronald Lamola has made it clear that diplomacy must be aligned with economic interests. While in the past his department may not have played a leading role in economic discussions, in today’s world, where geopolitical tension has spilt over into trade, this department should even be more prominent in promoting SA’s economic interests.
The Sacu issues should be the first test case. At the same time, the EU challenges are now part of the World Trade Organisation processes after SA formally lodged a case against the economic bloc.
Also important in the near term is the upcoming Brics+ summit in October, which will take place in Russia. While this grouping is not a trade bloc, using the structure to push more ambitious trade matters is vital. Agriculture is one of the SA economic sectors that would benefit from deeper trade relations with the other Brics+ countries. As things stand, SA agriculture has not benefited much from trade with this grouping.
Before adding other members at the 15th summit in Johannesburg in 2023, the original Brics countries accounted, on average, for just 8% of SA’s agricultural exports. For comparison, the UK alone accounts for roughly 7%.
From 2019 to 2022 the original Brics countries’ agricultural imports averaged $255bn a year, according to Trade Map data. China and India accounted for the bulk of these imports. Despite these sizeable agricultural import figures, intra-Brics agricultural trade remained relatively low.
Remarkably, the products these countries imported from the rest of world are similar to what some Brics countries, such as SA and Brazil, produce in surplus.
This year SA’s message in Russia should focus on building on the spirit of the 2023 Johannesburg summit, which promoted dialogue about deeper agricultural trade.
Written for and first published in the Business Day.
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by Wandile Sihlobo | Sep 6, 2024 | Agricultural Environment and Natural Resource
I am writing from the Midlands region of KwaZulu-Natal province of South Africa, having spent the day with the Animal Feed Manufacturers Association of South Africa and participating in their Annual General Meeting. I presented an address alongside the giant of the poultry industry, Mr Chris Schutte of Astral.
Animal Feed Manufacturers are the critical stakeholders of our livestock and poultry industry in South Africa – a subsector that makes up roughly half of our farming economy.
Drought, animal diseases, failing municipalities, stock theft, and higher feed prices are among the recent challenges that have confronted livestock and poultry producers. If we are to be successful in this industry in years ahead, as in the past, we must focus on resolving these challenges.
Most urgently we must tackle the cases of foot-and-mouth disease, avian influenza, African swine fever, and brucellosis that continue to emerge, leading to huge costs to farming businesses. The damage to the industry is vast in terms of loss of productive animals, earnings, and high-value export markets. The damage to confidence should also not be ignored, as the sector will struggle to attract investment if there is no clear strategy for addressing animal disease.
Fortunately, the leadership at the Department of Agriculture understands these challenges. They are working collaboratively with the industry to resolve the issues and ensure that South Africa continues to play an essential role in the export markets for red meat, dairy products and wool. The focus is on finding ways to efficiently control the spread of animal disease in future and minimize the damage to the industry.
In years of harsh foot-and-mouth disease, we lost export volumes. We are now in recovery mode, and the recent outbreaks in a few areas of the Eastern Cape raise worry. For example, in 2022, beef exports fell 16% year-on-year to 26 881 tonnes. We started to see a recovery in 2013, with beef exports up 3% year-on-year to 27 675 tonnes.
Even as the beef industry confronted these challenges, it had already resolved that widening the export market would catalyze its long-term growth. There was evidence pointing to the expansion of exports. For example, between 2017 and 2021, South Africa’s overall beef exports averaged 31 169 tonnes. This was notable progress as the beef exports had averaged 26 670 tonnes five years prior. The spread of animal diseases threatened this export growth.
As we progress with addressing the animal disease, the relentless focus should be on widening the export markets to the Middle East, Asia and parts of Europe. For example, the conversations with China about beef exports this week are appropriate as China is an important market for South Africa that has yet to grow, along with greater potential benefits in the likes of Saud Arabia.
We must also focus on improving the efficiency of the municipalities, reducing stock theft, improving roads and rail function, and the inefficiencies at the ports. These form an essential foundation for a thriving livestock and poultry sub-sector.
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