by Wandile Sihlobo | Dec 2, 2024 | Agricultural Trade
On 25 November, the Pretoria office of the US department of agriculture (USDA) published a report on South Africa’s maize market. It highlighted the difficulty caused by the recent mid-summer drought, which led to a 23% decline in maize production to 12,72 million tonnes. South Africa was not alone in this experience; Zimbabwe lost roughly 60% of its maize harvest, while Zambia lost half of its crop. Malawi, Mozambique and others also experienced significant crop losses. This meant the Southern Africa region would require maize imports to meet its annual needs.
The US department report speculated that:
“South Africa could import approximately 800,000 metric tons of corn in the marketing year (May 2024 – April 2025)”.
This line confused some, with people asking whether South Africa had sufficient maize supplies. This is a fair question, especially if one considers that maize prices, in recent months, have surged, with white maize trading at about R6 300 a tonne and yellow maize at more than R4 000 a tonne. Such price levels would support the view of those worried about maize supplies in South Africa.
The reality is that South Africa does not have a problem like other Southern African countries. South Africa’s maize harvest of 12.72 million tonnes is well above the annual needs of 11.8 million. Moreover, South Africa had large stocks of more than two million tonnes from the last season, further boosting the supplies this year. This ultimately meant that although the supplies were tight, South Africa continued to export maize to the Southern African region to stabilise food supplies.
South Africa’s overall maize exports are estimated by industry stakeholders at 1.9 million tonnes through the April 2025 marketing year (about 1.2 million tonnes is white maize, and 700k tonnes is yellow). More than a million tonnes has been exported, mainly to Southern Africa.
Therefore, if possible maize imports materialise from the US, this would perhaps be for easing supplies for the Southern African region. The news does not necessarily imply a maize shortage in South Africa.
One must also appreciate that the US generally does not produce white maize in any significant volume for export. Therefore, such maize would have been planted on contract for particular buyers. It is possible that such maize could be a few consignments for the coastal regions while South Africa ramps up exports to the broader Southern Africa region.
Also worth noting is that the US produces quite different biotech maize events; thus, there was a need for the government to ensure that their possible cultivars for imports are aligned with South Africa.
Regardless of whether the US maize imports materialise, South Africa will probably remain a net exporter of maize in the 2024-25 marketing year, which is likely to be just under two million tonnes.
Any possible imports will be far less, and maize will serve the broader Southern Africa region and the coastal areas of South Africa. For example, coastal regions will continue to import small volumes of yellow maize for animal feed because of price advantages. We have recently seen the imports of yellow maize from Argentina through Cape Town. South Africa’s 2024-25 maize imports currently stand at 331 000 tonnes.
South Africa’s farmers are continuing to till the land, and the weather prospects are encouraging. The La Niña rains are delayed by roughly a month, but the forecasts from various weather organisations promise a recovery.
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by Wandile Sihlobo | Nov 24, 2024 | Agricultural Trade
Geopolitical tensions and restrictive trade policies constitute a significant risk factor in global agriculture. There has been an escalation of trade tensions since 2018 when the US introduced import tariffs on Chinese products, and China retaliated with import tariffs on agricultural products. In the years after, trade disruptions intensified with Russia invading Ukraine.
The recent escalation of tensions in the Middle East have made for an even more geopolitically fragmented world. These events have created an environment where more and more countries are looking inward in terms of trade policies, and others prefer “friendshoring”, which relies more on countries they have geopolitical alliances with or in the same trade bloc.
With President Donald Trump’s return to office and his statement regarding import tariffs to a range of countries, and more specifically on China, we believe that trade fragmentation may be a big theme in the next few years.
Amid all the uncertainty, agriculture trade is at risk. In 2018, when President Donald Trump imposed tariffs on China, US soybean and maize farmers and pork producers were amongst the most negatively affected. China switched some orders to Brazil and Argentina, which became some of the significant soybean suppliers in China.
President Trump has indicated in his campaign trail that the US may impose up to 20% tariff on all imports and 60% on goods from China. We don’t know how China would react to such tariffs. However, if China retaliates as it did the last time, the US soybean and maize farmers and pork producers would again be negatively affected.
We could see this through disruptions in global grains and oilseed prices. The US is a significant producer, and when its grain market activity is disrupted, the impact tends to be felt globally. Moreover, US farmers could also start exploring other export markets that they have not been as present in to hedge against China’s risks.
Still, avoiding China on any global agricultural product will be hard. China is a dominant player in the export and import of agricultural products. In 2023, China was a leading agricultural importer, accounting for 11% of global agricultural imports. The US, Germany, Netherlands, the UK, France and Japan were trailing China.
According to Trade Map data, China spends just over US$200 billion a year on the imports of agricultural products. The US is the second largest agricultural supplier to China after Brazil. Other suppliers include Thailand, Australia, New Zealand, Indonesia, Canada, Vietnam, France, Russia, Argentina, Chile, Ukraine, the Netherlands, and Malaysia. Indeed, if one looks at China’s agricultural imports, the top products include oilseeds, meat, grains, fruits and nuts, cotton, beverages and spirits, sugar, wool, and vegetables. The US has significant exposure to oilseeds and meat.
Similarly, China is a major exporter of agricultural products, and it was the fifth-largest agricultural exporter in the world in 2023. The leading countries ahead of China were the US, Brazil, Netherlands, and Germany.
Implications
This means that global agricultural trade has one additional factor that increases uncertainty. South African farmers must closely follow the formal trade policy developments in the US beyond President Trump’s campaign promises.
If he follows through with the promises of high import tariffs on China, and China retaliates, then there will be volatility in the global oilseeds and grain prices. US farmers will likely feel more pressure than other regions. The South American farmers stand to benefit as an alternative source for China to procure soybeans.
South Africa is a small player in global grains and has undoubtedly not been a participant in the US grains and oilseed markets. The only risk is when the US farmers divert their products to South Africa’s traditional markets in the Far East, further recreating more competition and downward price pressures. This, too, is something we will have to monitor closely.
We remain convinced that there is a minimal direct impact on South Africa. Whether the US imposes any other import tariffs that could directly affect the South African farming community remains to be seen. At the moment, we are inclined to believe the risks may still be minimal.
Beyond the US, the trade fragmentation further solidifies the view we have previously shared that South Africa must work to diversify its agricultural export markets. In a fragmented world like today, an export-oriented sector should spend more time and resources on broadening export markets and diversifying the risk.
South Africa’s agriculture growth hinges on the country’s success in creating as many export markets as possible. In addition to retaining the existing export markets, BRICS remain one such avenue.
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by Wandile Sihlobo | Oct 23, 2024 | Agricultural Trade
This past week, the leaders of the BRICS Business Council from all member countries met in Moscow, Russia, for the annual meeting. The BRICS Business Council’s workflow is based on working groups covering vital economic sectors.
One such working group is agribusiness, which comprises all matters related to agriculture, food, fibre, and beverages. This year’s discussions were built on themes discussed in 2023 at the Johannesburg BRICS Summit. One of these was the need to deepen agricultural trade amongst BRICS countries. This is an important and relevant theme for South Africa, which has an export-led agricultural sector.
South Africa’s agricultural exports to BRICS remain marginal, about 8% of the country’s overall exports to the world. The significant challenges are the higher import tariffs and the phytosanitary barriers. This is to be expected as BRICS is not a formal trade bloc. Thus, in this year’s conference, South Africa pushed for lowering the import tariffs and for the BRICS member countries to address the non-tariff barriers so that intra-BRICS agricultural trade can improve.
The expanded BRICS is a vital agricultural market, accounting for nearly half of global agricultural trade. Thus, the export-led agricultural sectors, such as South Africa, must push to expand exports to the region. Notably, the export-driven agenda aligns with South Africa’s domestic policy of expanding production. There must be a market for the product that South Africa will produce, and BRICS is a suitable place.
Today, the political leaders of BRICS countries are meeting in Kazan, Russia. South Africa’s political leaders’ message should build on the themes of the Business Council; for agriculture, exports are the primary concern.
Notably, the drive for BRICS agricultural exports is not at the expense of the existing agricultural export markets such as the African continent, EU, Middle, Americas and Asia. South Africa must maintain warm relations with these countries while pushing for broader agricultural access in various BRICS countries.
I have written an expanded view that you can read here.
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by Wandile Sihlobo | Oct 20, 2024 | Agricultural Trade
This is one of those blog posts that I will regularly update when we receive new data. This week, I want to highlight that South Africa continues to export maize to the Southern Africa region. Most of these exports are white maize, a staple for the area. The major producers of white maize globally are South Africa and Mexico.
In times of drought, there are always fears that the major maize producers may not have sufficient supplies for the region or may limit exports. We are certainly in a season where Southern African countries have lost most of their harvest and now require imports. For example, Zambia lost 50% of its maize crop; Zimbabwe lost 60%. There were also significant crop losses in Malawi, Lesotho, and the broader region.
South Africa was not insulated from this devastating drought. However, the crop losses were relatively better because of the improved seed varieties South Africa uses and the better input application, which supported the crop in some regions of the country. Still, South Africa’s maize production is down 22% from last season’s expected harvest of 12,8 million tonnes.
But this decline in harvest doesn’t mean South Africa will suddenly trim exports. We maintain an open market policy.
We believe the expected harvest and carryover stocks from last season will meet South Africa’s annual maize consumption of just under 12,00 million tonnes. This will still leave the country with a sizable volume for export markets.
Thus, South Africa continues to export maize. The country exported 57k tonnes of maize on October 11, 2024. Of this volume, 47% was exported to Zimbabwe and the balance to the neighbouring African countries.
This puts South Africa’s total maize exports in the 2024-25 marketing year at 1,03 million tonnes out of the expected 1,90 million tonnes (down from 3,44 million tonnes in the 2023-24 marketing year because of the mid-summer drought).
This means, roughly 900k tonnes is yet to be exported.
Yes, while South Africa will likely remain the net exporter of maize in the 2024-25 marketing year, the coastal regions will import small volumes of yellow maize for animal feed because of price advantage. We have recently seen the imports of yellow maize from Argentina through Cape Town. South Africa’s 2024-25 maize imports currently stand at 230k tonnes.
The imports for the year (2024-25 marketing year) could rise to 350k tonnes. Brazil is another potential supplier of yellow maize to South Africa. Notably, after accounting for these potential imports, South Africa will likely remain a net maize exporter.
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by Wandile Sihlobo | Oct 13, 2024 | Agricultural Trade
While South Africa’s maize production is down 22% from the last season because of the tough mid-summer drought to an expected harvest of 12,8 million tonnes, we continue to export maize to the Southern African region.
The expected harvest, combined with large carryover stock from the last season, has made South Africa comfortable about maize supplies.
For example, in the week of October 4, South Africa exported 42k tonnes of maize. Of this volume, 52% was exported to Zimbabwe, 17% to Botswana, 17% to Namibia, and the balance to the neighbouring African countries.
This placed South Africa’s total maize exports in the 2024-25 marketing year at 971k tonnes out of the expected 1,90 million tonnes (down from 3,44 million tonnes in the 2023-24 marketing year because of the mid-summer drought).
Moreover, while South Africa will likely remain the net exporter of maize in the 2024-25 marketing year, the coastal regions will import small volumes of yellow maize for animal feed because of price advantage.
We have recently seen the imports of yellow maize from Argentina through Cape Town. South Africa’s 2024-25 maize imports currently stand at 221k tonnes.
The 2024-25 marketing year started on May 1 2024, and will end by April 2025.
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by Wandile Sihlobo | Oct 6, 2024 | Agricultural Trade
Does South Africa’s agriculture have any future in global markets in the face of deepening geopolitical frictions among major economies? It all depends on what the country’s leaders do to prepare for an uncertain future.
Success is not guaranteed. It is a product of the combination of a clear reading of today’s trends and how these will shape the future of global markets, how they envision South Africa’s place in this fast-changing global economic order, the choice of policy actions, and daring speed. What made us successful yesterday may not be adequate for the challenges ahead.
South Africa stands at a crossroads where a bold, export-driven strategy is no longer optional but essential. As the global trade landscape shifts, with nations forging ahead through plurilateral deals and free trade agreements, the urgency for South Africa to secure its place in an uncertain global economy has never been greater.
We cannot afford complacency nor expect fortune to favour us without action. Already, half of South Africa’s agricultural production by value is exported — a testament to our potential.
But to power ahead and secure our prosperity for the long term, we must not only protect our existing agricultural markets but aggressively seek out new opportunities in Asia, the Middle East, and beyond. An overhaul of our trade approach is vital, especially in agriculture, to stay competitive and be attuned to the evolving global economy.
South Africa has enjoyed great fortunes in the past precisely because it worked hard to sustain the competitiveness of its agriculture and corner vital international markets. South Africa is the only African country in the top 40 global agricultural exporters, ranked 32nd in 2023.
Imagine how far we could go if we were to put more effort into honing a robust global competitiveness strategy and diversify our trade relations through well-considered free trade agreements and plurilateral deals. Currently, the African continent accounts for 40% of South Africa’s agricultural exports, with the EU making up nearly 20% and the UK making up about 7%. These impressive numbers represent the efforts we made in the past.
Yet, we cannot be complacent if we want to sustain our edge. There is nothing currently that we are doing on the global front that suggests we are inventing a better future. This requires that we are bullish, deliberate, and do things differently.
That geopolitics are driving global trade fragmentation and thus threatening the export success we have enjoyed is a cold reality we must face head-on – not with ideology but pragmatism. This is true for all the export sectors of the economy.
For its part, the South African agricultural sector should have a refreshed trade strategy, which will guide the country’s posture with various regions, especially to broaden the footprint in Asia and the Middle East. Our trade strategy should be let loose on all pillars – free trade agreements, plurilateral engagements, and multilateral trade front.
Domestic growth strategies must be complemented by a relentless focus on widening our export markets. We cannot do the same things we have been doing in the past and expect different, better results, especially in light of the ongoing shifts in a global economy marked by geopolitical uncertainties.
We need to immediately refresh and implementation of the Agriculture and Agro-processing Master Plan, which proposes plans for various commodities and interests and seeks to achieve export growth. The value add of the strategy would be core principles and guidelines that could guide engagements of the country’s representatives in the various regions.
This would also bring a sense of urgency and coherence to South Africa’s seriousness in strengthening its export-led growth in agriculture. This is even more urgent today than in the past, particularly in the changing geopolitical environment that necessitates South Africa to engage with the world in a way that ensures the sustainability of domestic export-led industries. Agriculture is one such industry, and we push for this approach to trade.
Written for and first published in the Business Day.
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by Wandile Sihlobo | Oct 5, 2024 | Agricultural Trade
While South Africa’s maize production is down 22% from the last season because of the tough mid-summer drought to an expected harvest of 12,8 million tonnes, we continue to export maize to the Southern African region.
The expected harvest, combined with large carryover stock from the last season, has made South Africa comfortable about maize supplies.
For example, in the week of September 27, South Africa exported 38k tonnes of maize. Of this volume, 54% was exported to Zimbabwe, 17% to Botswana, 15% to Namibia, and the balance to the neighbouring African countries.
Last week’s maize exports placed South Africa’s total maize exports in the 2024-25 marketing year at 929k tonnes out of the expected 1,90 million tonnes (down from 3,44 million tonnes in the 2023-24 marketing year because of the mid-summer drought).
The 2024-25 marketing year started on May 1 2024, and will end by April 2025.
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by Wandile Sihlobo | Jul 12, 2024 | Agricultural Trade
The Kingdom of Saudi Arabia has not featured prominently in South Africa’s beef export markets in the past, with only small volumes last exported in the early 2000s. The renewed access to this market since the start of 2024 is critical to South Africa’s ambition to expand beef exports. The Saudi beef market is sizable, with annual imports worth around US$647 million.
About 62% of the Saudi beef imports were frozen beef, while 38% were chilled or fresh beef imports. Some leading suppliers to Saudi Arabia include Brazil, Australia, Pakistan, The US, New Zealand, and Canada.
Beyond beef, the Saudi meat market is large, with all meat imports valued, on average, at US$1,9 billion annually over the past five years. This means over time, as South Africa increases its production in other meat value chains, Saudi Arabia could remain a strategic country for growing exports.
This positive news of export market development provides some relief when the South African beef industry has faced a challenging operational environment for several reasons. One of the significant challenges was the rise in feed prices since 2020, especially for maize and soybeans.
The rise in animal feed prices coincided with a worsening financial strain on consumers due to the COVID-19 pandemic’s damaging effects. Thus, we saw a decline in the demand for red meat products as consumers opted for relatively cheaper forms of protein.
Moreover, the spread of foot-and-mouth disease to six of South Africa’s nine provinces for the first time in history was another challenge for the industry. This brought temporary bans in specific export markets, extending to auctions and livestock movement, mainly cattle, for some time in 2022.
Fortunately, the feed prices have now softened somewhat. This is in response to large domestic maize and soybean harvests and the easing of global grain prices (irrespective of lingering worries about the Black Sea Grain Deal).
Therefore, opening beef export opportunities to the Kingdom of Saudi Arabia adds to this improving operational environment in the future.
Despite the foot-and-mouth disease challenge, South African beef exports did not collapse. Some markets remained open, although with strict controls. This is evident in South Africa’s beef exports for 2022, which amounted to 28 422 tonnes (albeit down 12% from 2021). This is only mildly below the ten-year average.
Overall, the broadening of South Africa’s beef export markets is a welcome development and shows the possibilities the country could achieve through collaboration and aligned interests between the government and private sector.
These efforts of opening key markets such as the Kingdom of Saudi Arabia should extend to other commodities, mainly fruits and wine, that are eager to expand the export markets while retaining the existing markets in the EU, the African continent, Asia and the Americas, amongst other regions. Addressing the daily challenges at the ports, roads, and municipalities is equally essential for the success of this export initiative.
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