SA agriculture exports showed resilience in 2022 despite headwinds
Despite various headwinds throughout the year, South Africa’s agriculture exports for 2022 did not decline as much as some feared. Data for the first eleven months of the year show exports at a cumulative US$11,9 billion, up by 3% from the same period in 2021.
Global grains production outlook gives hints about the price direction for SA
For a South African farmer or consumer, the key takeaway is that rice and maize prices will not soften notably this year, although they will likely be lower than the price levels we saw following Russia’s invasion of Ukraine, while wheat and soybean prices will likely soften notably.
A notable jump in SA food price inflation
While in some regions of the world, consumer food price inflation has started to cool off; South Africa sees the opposite. The data released this morning by Statistics South Africa shows that consumer food price inflation accelerated to 13,8% y/y in January 2023 from 12,7% in the previous month.
South African farmers should target China and India among the Brics
The main interest of SA agriculture and agribusiness within BRICS is to advance agricultural exports, specifically to China and India. These are countries that have relatively solid economic growth prospects and large populations (and therefore markets).
After a year of generally subdued global rice prices, this year started with a notable increase in prices from various origins. With South Africa being a net importer of rice, the worldwide surge of prices presents upside risks to consumer food price inflation.
Ride out temporary price swings
The SA government or its entities, such as the Competition Commission, should not react to these temporary price swings. Instead, they should continuously monitor key staple food markets to understand trends and police bad behavior if it shows in the future. For now, the SA grain markets are operating reasonably well.