by Wandile Sihlobo | Dec 13, 2019 | Food Security
As the year ends, I want to take a moment and reflect on South Africa’s standing on the global food security ladder.
As I have mentioned in the previous posts, food security is achieved when three objectives are met: (1) food is available; (2) food is accessible; and (3) food quality ensures appropriate nutritional uptake for all citizens at all times.
In 2019, South Africa ranked 48th most food-secure country out of 113 countries measured in The Economist Global Food Security Index, which is a few inches up from the previous year.
This was relatively good, compared to BRICS countries – Brazil, Russia, India and China. For example, although South Africa’ average income – as ranked in gross national income per capita of 2018 – was 25 spots behind Russia, 23 behind China and 19 behind Brazil, the country’s food security status was quite comparable to other BRICS countries – Brazil, Russia, India, and China. In the Food Security Index, South Africa has ranked 13 spots behind China, nine spots behind Brazil, six spots behind Russia, and 24 spots ahead of India.
What is worth reiterating is the fact that despite South Africa’s relatively lower average income compared to BRICS partners, the country still manages to punch above its weight in terms of food security. This is a testament to the country’s competitive agricultural sector, and its ability to supply food at a relatively lower cost and socio-economic initiatives.
Although the Food Security Index indicates South Africa is food secure, there are pockets of food insecurity within the country when you consider a household-level perspective. This speaks to the general inequality in the country, where some households are food secure, and a sizeable portion of other low-income households are not, primarily due to affordability. This scenario is more prevalent in Limpopo, KwaZulu-Natal and the Eastern Cape, according to Stats SA.
While there are a number of interventions that can assist in supporting households’ access to nutritious food, one form of intervention that can boost rural households’ income and therefore nutritious food, is job creation in the agricultural sector. There is anecdotal evidence in parts of the Eastern Cape that in areas where government and the private sector have collaborated in agricultural development, some level of success in terms of job creation could be achieved.
With agriculture having gained prominence as one of the sectors that could bring about rural economic development and job creation in South Africa, the government’s approach to realising this vision should be regionally focused. Meaning, the aforementioned provinces should be the key priority in resource allocation, as the frontiers of agricultural expansion. Such an approach not only makes sense in terms of reducing poverty but also in exploiting the potential of underutilised land, as well as targeting resources effectively.
Limpopo, KwaZulu-Natal and the Eastern Cape combined arguably have about 1.6 million to 1.8 million hectares of underutilised land which could be sustainably farmed for increased food security and livelihoods over the long term. This is according to a 2015 study by McKinsey Global Institute.
Admittedly, the current land governance system – communal land – has been cited as one of the hindrances in agricultural development in these provinces, as it hamstrings investment. Naturally, solving such matters can take a long time and land reform policy is still being debated across the country.
The near-term practical approach that could make a difference is structuring an innovative agricultural finance instrument – such as blended finance – which pulls in the capital and human capital from both private and public sectors.
In parts of the Eastern Cape, some agribusinesses are currently engaged in such arrangements with the provincial government and in areas where projects have been implemented, there has been some level of success. What is needed is designing programmes that are self-sustaining and viable where communities take ownership.
These are some of the approaches that are needed to boost household incomes and rural livelihoods in a manner that ensures nutritious foods are available in the near term and in the future. Meanwhile, broad developmental policies need to be put into operation.
*This essay included sections my Business Day column, which was published on 16 October 2019.
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by Wandile Sihlobo | Nov 21, 2019 | Food Security
Since the news that South Africa could be hit by yet another drought, a frequent topic of discussion has been its possible implications on South Africa’s food price inflation. This comes at a time when South Africa’s food price inflation has generally been subdued, having averaged 2.9% y/y in the first nine months of this year.
This is because of relatively lower meat, milk, eggs and cheese prices, amongst other products, which managed to overshadow the price increases of grain-related products over this period. The lower consumer demand has also played a part in this inflation development as consumer food price movements have not necessarily moved in conjunction with producer price inflation as has been the case in the past.
Although this year’s drought is a concern, current indications such as soil moisture, near-term weather forecasts and meat market dynamics, suggest that it might not be as intense as the 2015-16 drought, where South Africa’s food price inflation was at double-digit highs for some time. There are three major reasons for this.
First, over the past two weeks, there has been a general improvement in South Africa’s soil moisture content and that has allowed farmers to commence with summer crop plantings, specifically in Mpumalanga, Limpopo, KwaZulu-Natal, the eastern Free State and the Eastern Cape. Estimates from various farming groups and our conversations with farmers suggest that about a third of the expected maize hectares have now been planted, mainly in Mpumalanga and the eastern Free State. This, however, is way behind the optimal maize planting window for these provinces which is typically from 15 October to 15 November 2019. There is a risk of frost later in the season from planting beyond this date which impacts yields. Be that as it may, the plantings spurred by improved soil moisture might benefit from potential maize price increases in the near term.
Second, the near-term weather forecasts from wxmaps.org, a George Mason University-based weather forecast, show prospects of 16 and 60 millimetres of rainfall this week over the summer rainfall areas of South Africa. This is with the exception of the Eastern Cape which is expected to remain dry and warm throughout the week. This would generally further improve soil moisture and subsequently crop-growing conditions in areas that have started planting. As with the previous point, this would keep maize prices hovering around its current levels. On 14 November 2019, yellow and white maize prices traded around R2 637 per tonne and R2 692 per tonne, which is up by 8% y/y and 12% y/y, respectively.
Third, meat, which accounts for more than a third of South Africa’s food price inflation basket, could remain subdued in the near term. The possible marginal upticks will mainly be because of base effects. Last week, we highlighted another case of foot-and-mouth disease in the Molemole district of Limpopo. The consequence of this is likely to be a temporary ban on South Africa’s meat exports. Mozambique, Zimbabwe and eSwatini are some of the countries that have already placed a ban on South African livestock and its products imports. This could result in a slight increase in domestic meat supply and thereby keeping meat prices at fairly lower levels in the near term. This bodes well for consumer price inflation, but the same cannot be said for farmers.
Overall, I had initially estimated South Africa’s food price inflation for 2020 at 4.9% y/y and I will revisit this estimate at the end of January 2020 when there is concrete evidence about the actual summer crop area planted and weather outlook for the rest of the 2019/20 production season.
The main upside risk for food price inflation in 2020 is the weather. The outlook suggests that South Africa could receive below normal rainfall from the end of January 2020. This includes all regions, and is, therefore, a concern even for the western and central regions of South Africa, which in the near term could receive above-normal rainfall between November 2019 and January 2020, according to the South African Weather Service.
With that said, the food price inflation outlook is much better than during the 2015-16 drought years. Also, worth noting is that the global agricultural environment is likely to have minimal impact on South Africa’s food price inflation in the medium term. The main product that South Africa is exposed to the most is wheat, and there are large supplies of it in the world, keeping prices at comfortable levels. This is beneficial to the South African consumer.
Written for Agbiz.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Oct 16, 2019 | Food Security
As we commemorate World Food Day on 16 October 2019 in honour of the founding of the Food and Agriculture Organization of the United Nations (FAO) in 1945, we should take a moment to reflect on South Africa’s standing on the global food security ladder.
Food security is achieved when three objectives are met: (1) food is available; (2) food is accessible; and (3) food quality ensures appropriate nutritional uptake for all citizens at all times. In 2018, South Africa has ranked the 45th most food-secure country out of 113 countries measured in The Economist Global Food Security Index, which was a one point lower than the previous year.
This was relatively good, compared to BRICS countries – Brazil, Russia, India and China. For example, although South Africa’ average income – as ranked in gross national income per capita of 2018 – was 25 spots behind Russia, 23 behind China and 19 behind Brazil, the country’s food security status was quite comparable to other BRICS countries – Brazil, Russia, India, and China. In the Food Security Index, South Africa has ranked just 6 spots behind Brazil, 3 spots behind Russia, one spot ahead of China, and 31 spots ahead of India.
What is worth reiterating is the fact that despite South Africa’s relatively lower average income compared to BRICS partners, the country still manages to punch above its weight in terms of food security. This is a testament to the country’s competitive agricultural sector, and its ability to supply food at a relatively lower cost and socio-economic initiatives.
Although the Food Security Index indicates South Africa is food-secure, there are pockets of food insecurity within the country when you consider a household-level perspective. This speaks to the general inequality in the country, where some households are food secure, and a sizeable portion of other low-income households are not, primarily due to affordability. This scenario is more prevalent in Limpopo, KwaZulu Natal and the Eastern Cape, according to Stats SA.
While there are a number of interventions that can assist in supporting households’ access to nutritious food, one form of intervention that can boost rural households’ income and therefore nutritious food is job creation in the agricultural sector. There is anecdotal evidence in parts of the Eastern Cape that in areas where government and the private sector have collaborated in agricultural development, some level of success in terms of job creation could be achieved.
With agriculture having gained prominence as one of the sectors that could bring about rural economic development and job creation in South Africa, the government’s approach to realising this vision should be regionally focused. Meaning, the aforementioned provinces should be the key priority in resource allocation, as the frontiers of agricultural expansion. Such an approach not only makes sense in terms of reducing poverty but also in exploiting the potential of underutilised land, as well as targeting resources effectively.
Limpopo, KwaZulu Natal and the Eastern Cape combined arguably have about 1.6 million to 1.8 million hectares of underutilised land which could be sustainably farmed for increased food security and livelihoods over the long-term. This is according to a 2015 study by McKinsey Global Institute.
Admittedly, the current land governance system – communal land – has been cited as one of the hindrances in agricultural development in these provinces, as it hamstrings investment. Naturally, solving such matters can take a long time and land reform policy is still being debated across the country.
The near-term practical approach that could make a difference is structuring an innovative agricultural finance instrument – such as blended-finance – which pulls in the capital and human capital from both private and public sectors.
In parts of the Eastern Cape, some agribusinesses are currently engaged in such arrangements with the provincial government and in areas where projects have been implemented, there has been some level of success. What is needed is designing programmes that are self-sustaining and viable where communities take ownership.
These are some of the approaches that are needed to boost household incomes and rural livelihoods in a manner that ensures nutritious foods are available in the near term and in the future. Meanwhile, broad developmental policies need to be put into operation.
Written for and first published on Business Day on 16 October 2919.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Sep 18, 2019 | Food Security
I didn’t get to write a note on South Africa’s food price inflation data, which accelerated to 3.8% y/y in August 2019, from 3.0% y/y in July.
I was in Lichtenburg, North West sharing thoughts with farmers and agribusiness there. The mood was generally positive, but folks are concern about South Africa’s land reform policy direction and climate change (I will write something on these points in the coming days).
So, with limited time to write about food price inflation, I decided to record a short video sharing my thoughts on the data. You can access it here.
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by Wandile Sihlobo | Aug 29, 2019 | Food Security
If there was ever a time when incentives could help reduce the spread of animal disease, it is probably now in South Africa. Since April 2019 there have been 14 reported outbreaks of African swine fever in South Africa. All are in areas of the North West, Mpumalanga, Gauteng and Free State. These outbreaks were mainly among smallholder farmers. A few cases in wild boars have also been reported.
Local authorities responded by quarantining and controlling the movement of pigs in affected areas. But the industry remains concerned that farmers may give in to the temptation to rush the rest of the herd to the market when they realise that some of their pigs are dying because of African swine fever. This would present a risk of further spread of the disease (which spreads by contact). This leads us to the point of incentives for areas that have been affected by the disease.
While we understand that government finances are constrained, farmers should be incentivised to report the outbreaks so that the disease can be successfully controlled and avoid major devastation like what we now see in China and Vietnam. The incentives could take the form of government payments to farmers of a portion of the market value of pigs to be culled because of the disease, as provided for in the Animal Diseases Act.
While it is unclear what the costs of this exercise would be (I anticipate it won’t be much as it is mainly smallholder farmers affected thus far), the risk of the disease spreading to the commercial sector could have far bigger and costly implications for the South African pig industry.
Also, having observed that the most affected areas are the smallholder farmers in informal and rural areas, where pigs are for self-consumption and sales in informal markets, the disease could have social implications if pigs die or farmers are forced to cull their herds with no compensation.
Aside from incentives, increased education and awareness of African swine fever should also be prioritised, specifically among smallholder farmers. Hence, we were encouraged to learn over the weekend that Minister of Agriculture, Land Reform and Rural Development, Thoko Didiza, has set up a task team to urgently look into ways to curb the spread of the disease to other provinces.
From a human consumption side, there are no threats posed by consuming pork products for two reasons.
First, the spread has largely affected smallholder farmers whose produce does not end up in the retail chains. Second, even if the commercial sector was to be affected and not detected until the meat reaches consumers, African swine fever reportedly has no effect on humans, although consumption of affected pigs is not encouraged (I have briefly discussed the science side African swine fever here).
Moreover, combating African swine fever is key to improving South Africa’s self-sufficiency. South Africa is a net importer of pork meat of about 26,000 tonnes a year. This is a trend the country intends to change, but that requires tackling any disease that could derail the country from improving its pig production. The first point to start with is the present outbreak of African swine fever.
Written for and first published on the Daily Maverick on 26 August 2019.
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by Wandile Sihlobo | Aug 21, 2019 | Food Security
Since the start of the year, South Africa’s agricultural commodity prices have increased notably from levels seen over the same time in 2018, specifically grains and oilseeds. Under normal circumstances, one would expect the price increases in agricultural commodities to translate to higher consumer prices, with a lag of roughly three to six months (I have discussed the food price transmission mechanism story here). But consumer food inflation has been relatively contained this year for a number of reasons.
One of the key factors has been the lower meat prices in the earlier part of this year because of the ban on beef exports contained the headline food price inflation number at relatively comfortable levels. But the ban has now been lifted and meat prices are beginning to increase somewhat. (Other factors contributing to the meat price increase is the pork, which is influenced by lower production in Asia).
The price inflation of food categories such as grains (cereal and bread) have consistently accelerated since the start of the year. But I suspect the passthrough of prices we are seeing at farm levels (+30% y/y) has been soft this time around. Hence headline food price inflation slowed to 3.0% y/y in July 2019 from 3.2% in the previous month. (The cereals and bread price inflation were up by just 7.9% y/y in July. Remember, under normal circumstances, there is roughly 63% price transmission between the prices of white maize and retail maize meal, with a delay of three months).
The point I am trying to convey here is best captured by the chart below which illustrates the food producer price inflation (PPI) and consumer price inflation (CPI) — see Figure 1 below. Historically, there has always been a good co-movement in these trends, but we are now seeing a decoupling.
Figure 1: South Africa’s food producer and consumer price inflation
Source: Stats SA, Agbiz Research
My sense is that the retailers and food producers are finding a hard time passing the costs to consumers due to weak buying power. This speaks to a broader extraordinary economic difficulty that South Africa finds itself in today.
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by Wandile Sihlobo | Jul 5, 2019 | Food Security
My comments on the spreading of African Swine Fever in Asian countries have largely been on the market perspective – what the virus means for the global pork supply, consumer prices, etc. But I have noticed that some readers were concerned about the human health implication of this virus. Although I had, from time-to-time, heard from the folks in the pork industry and researchers that it poses no risk as best as I can tell from the evidence, I’m no expert on this matter.
So, I decided to ask Dr Peter Evans, a veterinarian and animal production specialist, to paint for us a basic picture of the African Swine Fever, guided by these questions:
- What is the African Swine Fever?
- Does it present any health risk to humans?
- How does it spread, specifically in South Africa?
Here are Peter’s viewpoints undiluted:
SALIENT FACTS: African Swine Fever
Written By: Dr Peter Evans.
Introduction
African Swine Fever (ASF) is a severe, highly contagious haemorrhagic disease of pigs, caused by a DNA virus for which there is no vaccine or treatment. ASF occurs in most Asian countries, Sub-saharan African countries, Sardinia, Eastern Europe and Belgium (Central Europe).
For many years the occurrence of African Swine Fever in the RSA was limited to a control zone in the Northern parts of South Africa (includes Limpopo Province, the northern area of North West province and Mpumalanga, roughly following a line of latitude running through Bela Bela). Unfortunately, isolated cases of ASF have occurred outside of the control zone, namely:
- 2012 in Western Mpumalanga /Eastern Gauteng;
- 2016 in North West Province, 2017/8 in Freestate / Northern Cape
- and in 2019 re-occurrence in Western Mpumalanga, Gauteng including the Eastern Freestate.
Primarily the cases were found in communal farming set-ups and some individual farmers who had bought pigs at auction yards. There have been no cases on commercial pig farms related to these mini-outbreaks.
Public Health
African Swine Fever does not affect humans at all. Meat from infected pigs will cause no harm or disease to humans.
All pigs are inspected at registered abattoirs and any animals showing signs of fever or other diseases will not be passed fit for human consumption.
Transmission /Epidemiology
Transmission of ASF to pigs in RSA is from warthogs in the control zone. The infection occurs either via tampans (soft ticks) which become infected when they feed on, especially young, warthogs who are infected with ASF virus and then pass it onto the next warthog or domestic pig at their next feed; or domestic pigs can become infected by being fed meat or offal from infected warthogs and/or other pigs that have died from ASF. The transmission cycle through wild pigs is commonly known as the sylvatic cycle.
In some parts of the world a “Domestic cycle” occurs where domestic pigs become carriers of the disease and become the reservoir. At present, there is no evidence that there is a domestic cycle within the borders of South Africa.
What is evident though in South Africa is that the “uncontrolled” movement of pigs including the trading through auctions is a major transmission risk.
ASF virus is resistant to a wide range of pH’s, resistant to freeze/thaw cycles and can remain infective for many months at room temperature. ASF virus in body fluids can only be inactivated if heated to 60°C for more than 30 minutes but in infected meat need to heat to 70°C for more than 30 minutes. The survivability of the ASF virus means that all tissue, fluids, faeces or any other fomites can easily transmit the disease long after all ASF infected pigs have died. Biosecurity and proper disinfection are required to prevent spreading the infection from an infected site to new sites.
Clinical findings
Acute disease is characterised by a short incubation period of 5-7 days followed by high fever and death within 7 to 10 days. Gross symptoms include loss of appetite, depression and recumbency. Often reddening of the skin and bleeding from nose or anus may be seen. Post mortem findings include haemorrhages in most organs including lymph nodes.
Mortality ranges from 30% for some less virulent genotypes to 100%. In outbreaks and especially where a domestic cycle does not exist generally mortalities are 100%.
Control and Prevention
Due to the persistence of the ASF virus, successful eradication procedures include culling, appropriate disposal of the carcasses and thorough decontamination (=cleaning and disinfection) of the infected premises.
All measures need to be taken to ensure that infection is not spread by contaminated clothing, vehicles or equipment.
References
- National Centre Biotechnology Information:
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5454416/
- Merck Veterinary Manual (10th Edition) Pages 645-647.
- World Organisation for Animal Health (OIE): –
http://www.oie.int/en/animal-health-in-the-world/animal-diseases/african-swine-fever/#A
- Penrith ML, Vosloo W: REVIEW OF AFRICAN SWINE FEVER: TRANSMISSION, SPREAD AND CONTROL
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by Wandile Sihlobo | Jun 3, 2019 | Food Security
While the discussion about the African swine fever has largely focused on China, the likes of Vietnam are also reeling from its effects. The Vietnamese authorities are now asking farmers to diversify away from pork to other livestock – a difficult task, I imagine, for a nation that is among the world’s top ten highest per capita pork consumers. But there is progress in this diversification approach. I hear that Vietnamese farmers are now switching to raise ducks, ostrich and chickens instead, with the hopes of substituting pork, and still providing affordable meat to consumers.
We are fortunate here in South Africa as we are still in good shape although there were few reports of African swine fever cases last month. In short, the first reported case was on a farm in North West earlier in April, and it affected specifically wild pigs. The outbreak was detected early, with good response from the government veterinarians. There was no threat to the South African pork industry nor consumers, as is still the case.
On 24 April 2019, the South African Pork Producers’ Organisation reported another diagnosis on a small farm in the Delmas area of Mpumalanga. The farm had about 180 pigs, mainly fattening pigs and a few sows bought from an auctioneer in the area. The farm was immediately quarantined, and there was no imminent threat to the industry, nor consumers.
The reduced pork supplies in a number of Asian countries have had a notable impact on global meat prices. Figure 1 below illustrates the FAO Meat Price Index which has been on an upward trend over the past few months.
Figure 1: Global Meat Price Index
Source: FAO, Agbiz Research
Given that there seems to be no end in sight to this African swine fever, my sense is that global meat prices are likely to remain at fairly higher levels in the near-to-medium term, and will somewhat spillover to the South African meat industry, particularly pork. In fact, this was already a feeling that I got from conversations with South African pork producers at a conference in Pietermaritzburg on 17 May 2019.
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