In the second quarter of 2023, about 894 000 people were employed in South Africa’s primary agriculture, up 1% q/q and 2% y/y. This is the highest farm employment level since the last quarter of 2016 and is well above the long-term agricultural employment of 780 000.
The persistent load-shedding, rising protectionism in key export markets, rising interest rates, intensified geopolitical tensions, ongoing weakness of municipality service delivery and network industries (water, rail and ports) and deterioration of rural roads remain a significant threat to the sustainability of South African agriculture.
South Africa’s July 2023 tractor sales were the sharpest annual decline this year, down 15,4% y/y, with 660 units. The combine harvester sales were down by 11% y/y, with 32 units sold.
The recent USDA’s World Agricultural Supply and Demand Estimates presented a comforting picture of global food price direction and the risks we outlined in India, Russia and weather aspects in South America will need consistent monitoring. All else being equal, the world is far better than last season regarding food supplies.
With everything happening in global agriculture, one positive thing for South Africa is that the production conditions have been quite favourable, and we have decent grain supplies for domestic consumption and exports.
The weather outlook is clearly a downside risk to production for the upcoming summer crop season, although not severe for the reasons we have outlined above. These include the better soil moisture following a rare consecutive four years of heavy rains.