by Wandile Sihlobo | Feb 20, 2020 | Agricultural Trade
This note is a bit delayed. I had to attend a conference this morning. Here is a Twitter feed for those keen to see what went down.
Back to business!
It is Thursday – a grain trade day. The South African Grain Information Services (SAGIS) releases the country’s grain trade data for the week of 14th of February 2020 at midday. The data covers grain and wheat. To reiterate a point I made last week, although grain trade data are important for tracking the movement of commodities into and outside South Africa, they are rarely market moving. This is because of the week’s long lag in reporting. By the time we receive the numbers from SAGIS, the key grain market players are probably aware of the levels of sales.
Maize
South Africa is a net exporter of maize. In the week of 7th February 2020, South Africa’s 2019/20 marketing year maize exports amounted to 976 279 tonnes (both white and yellow maize). This equates to 74% of the export forecast for this season (compared to 71% the previous week), which is an estimated 1.32 million tonnes.
The leading markets include Botswana, Ethiopia, Mozambique, Namibia, Zimbabwe and Eswatini. Taiwan, Vietnam, Japan and South Korea, who are usually amongst the key buyers of South Africa’s maize have been oddly quiet in the 2019/20 marketing year. This could be because of favourable prices elsewhere.
But one could see them returning to the South African maize market in the 2020/21 marketing year which starts in May 2020. The new season for maize production is expected to improve by, at least, 11% y/y to 12.5 million tonnes (some analysts are forecasting 14.0 million tonnes). This would boost supplies available for exports, and subsequently, to exert downward pressure on domestic maize prices. This would thus improve its attractiveness to maize-importing nations.
Nonetheless, that’s all in the future. In the 2019/20 marketing year which ends in April 2020, we expect South Africa to import 525 000 tonnes of maize, all yellow maize, albeit being an exporter of over a million tonnes of maize in the same season. These imports will mainly be for the coastal provinces of the country. This is up from an estimated 171 622 tonnes in the 2018/19 marketing year. The country has thus far imported 463 859 tonnes of yellow maize. The key suppliers are Brazil and Argentina.
Wheat
As we’ve pointed out in the previous note, South Africa’s 2019/20 wheat imports could increase by 28% y/y to 1.8 million tonnes because of expected lower domestic harvest on the back of unfavourable weather conditions in the Western Cape. In the week of 7th February 2020, South Africa’s 2019/20 season amounted to 537 812 tonnes, which equates to 26% of the aforementioned seasonal import forecast.
Concluding remarks
Aside from the grain trade data, it’s a quiet day in South Africa’s agricultural market with no major data releases. Those in Gauteng province of South Africa gather today at Africa Agri Tech conference in Pretoria – an opportunity to listen to industry leaders and hear about on-farm technological developments.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Jul 27, 2019 | Agricultural Production
In her budget vote speech last week, Ms Thoko Didiza, the new minister of agriculture, land reform and rural development, noted that, among other things, she intends to expand SA’s agricultural footprint in export markets. This is a fitting message as the growth of the SA agricultural sector is generally export-driven. The country exports about 49% of its produce in value terms.
The profile of the exportable products is mixed, comprising horticultural products, wine, livestock and field crops. However, when the minister negotiates market access for agricultural products in the coming months and years, there will need to be a targeted approach for products that will have the most impact, not only in value terms, but also in terms of employment numbers.
On this end, the discussions in the recent past have largely been on prioritising horticultural products because they are generally labour intensive. Within the horticultural subsector, the market dynamics of citrus, table grapes, wine grapes, stone fruit and nuts, among others, are well documented, as these products have been the backbone of SA’s agricultural trade success.
The rarely discussed, yet exciting fruit, is the blueberry. The dearth of information about this berry is understandable because the blueberry industry is still at its budding stage in SA. The area planted to blueberry in 2017/2018 is estimated at only 1,600ha, according to data from the US agriculture department. But this has grown tremendously over the past few years. In 2012/2013, SA had only planted about 400ha of blueberries, but the area planted has since expanded four-fold.
Also encouraging to observe is that blueberry production is widely spread across SA, though the Western Cape dominates, producing two-thirds of SA’s blueberries. Trailing the Western Cape is Limpopo, accounting for 15% of production, then North West (10%), Gauteng (8%), Eastern Cape (4%), Free State (2%) and Mpumalanga (1%). This is according to data from the US department of agriculture.
The enormous increase in production over the past four years is export-driven, which is a common theme for many of SA’s agricultural products. SA exports about 70% of its blueberries, according to data from the Western Cape agriculture department. The EU accounts for about 90% of SA’s blueberry exports, and the rest is spread across Africa, Asia and the Middle East.
But the encouraging part of the blueberry expansion story is that it is labour intensive. Its expansion over the past four years has brought jobs, not only at the farm level but also to the downstream value chain. A recent paper by the Western Cape agriculture department’s economists, Louw Pienaar, Mzwanele Lingani and Philip Swart, shows that each hectare of blueberries planted results in the direct employment of 2.64 full-time equivalent workers, on average. This is the highest employment intensity among the major fruits grown in SA and far outpaces grapefruit, flowers, apples and pears, to name a few.
In terms of economic fortune, Pienaar, Lingani and Swart estimate that SA’s blueberry industry has significantly outperformed other fruit industries by growing its gross value of production from an estimated value of R15.8m in 2008 to R1.25bn in 2018.
So when we think of agricultural subsectors that can boost rural economic fortunes and job creation, it is important we not only focus on well-established industries, but also explore the small, yet promising industries such as blueberries and other so-called superfruits (nuts, berries, avocados, et cetera). These superfruits are enjoying strong demand in global markets as consumers opt for healthier diets.
When Didiza thinks of expanding market access for SA products, she should ensure her efforts prioritise the crops and fruits that will have the greatest impact on both economic fortune and labour participation. After all, it is the government’s responsibility to ensure that agriculture is central to boosting rural economic participation and job creation.
This essay was written for and first published on Business Day on 24 July 2019.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Jul 20, 2019 | Agricultural Production
I’ve previously presented the case for agriculture as one of the sectors that could boost rural economic growth and employment in South Africa. The sub-sector that has attracted attention in the recent past is horticulture because it is labour intensive. Within the horticultural subsector, the market dynamics of citrus, table grapes, wine grapes, stone fruit and nuts, amongst others, are well documented.
The rarely discussed, yet exciting fruit is blueberry. The dearth of information about this fruit is understandable because the blueberry industry is still at its budding stage in South Africa. The area planted to blueberry in 2017/18 is estimated at only 1 600 hectares. But this has grown tremendously over the past few years, as shown in Figure 1 below.
Figure 1: South Africa’s Area Planted to Blueberry
Source: SABPA, USDA
The production is widely spread across South Africa, although one province dominates – the Western Cape producing two-thirds of South Africa’s blueberries. Trailing the Western Cape is Limpopo, accounting for 15% of production, then North West (10%), Gauteng (8%), Eastern Cape (4%), Free State (2%) and Mpumalanga (1%). This is according to data from the U.S. Department of Agriculture (USDA).
The enormous increase in production that is illustrated in figure 1 is export-driven. South Africa exports roughly 70% of its blueberries, according to data from the Western Cape Department of Agriculture. The European Union accounts for roughly 90% of South Africa’s blueberry exports, the rest is spread across the African continent, Asa and the Middle-East.
Okay, why do I say blueberry is an exciting fruit?
Aside from being nutritious and tasty, blueberries are labour-intensive, which is precisely what is needed in South Africa. A recent paper by the Western Cape Department of Agriculture’s agricultural economists, Louw Pienaar, Mzwanele Lingani and Philip Swart shows that each hectare of blueberries planted results in the direct employment of 2.64 fulltime equivalent workers, on average. This is the highest employment intensity amongst the major fruits grown in South Africa, and it far outpaces grapefruit, flowers, apples and pears, to no name a few.
In terms of economic fortunes, Pienaar, Lingani and Swart estimate that South Africa’s blueberry industry has significantly outperformed other fruit industries by growing its gross value of production from an estimated value of R15.8 million in 2008 to R1.25 billion in 2018.
So, when we think of agricultural sub-sectors that can boost rural economic fortunes and job creation, let’s not only focus on well-established industries, but also explore the small, yet promising industries such as blueberries.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Jun 29, 2019 | Agricultural Trade
The expansion in most agricultural subsectors in South Africa has been export-driven, particularly in the horticultural sector. This sector is labour-intensive, and the expansion also brought jobs.
This somewhat compensated for the dwindling labour participation trend in other agricultural subsectors over the past few decades due to technology advancement and consolidation of farms. The gains in horticulture have largely been the reason South Africa’s agricultural jobs have been stable over the past decade, bringing the average number employed in the industry to 767,000 between 2008 and 2018.
Of late, a number of policymakers, including President Cyril Ramaphosa, have expressed a desire to see agriculture continuing to play a pivotal role in rural economic growth and job creation through increased production.
While boosting production is conceivable if the focus is not only on boosting productivity on active farms, but expands to areas that have under-utilised land – Eastern Cape, KwaZulu-Natal, and Limpopo, among others – there needs to be an equal effort in opening up new markets. This is something South Africa has done well over the past few years, but now we need to expand beyond the destinations where we currently participate.
To illustrate this point – in 2018, South Africa’s agricultural exports amounted to $10.6-billion, a record level. This was underpinned by increased exports of oranges, grapes, wine, maize, apples, wool, lemons, mandarins and pears, among other products. About two-thirds of these exports went to Africa and Europe.
Asia is also an important market for South Africa’s agricultural exports and accounted for a 25% export share in 2018. This is a region where South Africa can still push the button a bit more to expand its footprint.
Within Asia, the countries that have been purchased a large share of South Africa’s agricultural produce included China, Hong Kong, Vietnam, Japan, Malaysia, Singapore, Bangladesh, South Korea, and Taiwan.
India, whose agricultural imports have nearly doubled over the past decade – from $11.2 billion in 2009 to $21.2 billion in 2018 – is down on the list of Asian countries that import agricultural products from South Africa.
Yet, if one looks into Asia’s leading agricultural products importers, India is ranked second after China. The growth in India’s agricultural imports has, in part, been driven by population growth and rising incomes.
The products that underpinned this tremendous growth in India’s agricultural and food imports included palm oil, soybean oil, sunflower seeds, coconuts, cashew nuts, cotton, sugar, apples, dates, greasy wool, whiskey, coffee, and grapes.
Its leading agricultural suppliers over the past few years have consistently included Indonesia, Ukraine, the US, Argentina, Malaysia, Brazil, China, Australia, Singapore, and Afghanistan.
South Africa, although a key producer and exporter of some of the aforementioned products (namely greasy wool, sugar, apples and grapes), doesn’t feature even on the top 40 countries supplying agricultural products to India.
In 2018, South Africa was ranked the 46th largest supplier of agricultural products to India by value, accounting for a mere 0.3% of the $21.2- billion worth of India’s agricultural imports. The key agricultural products that South Africa exported to India were pears, dog and cat food, greasy wool, oranges, apples, maize seed for sowing, cotton, and mandarins.
It is time South Africa starts to explore possible ways of boosting its exports to India, especially as the two BRICS countries are increasingly becoming warm towards each other from a political and diplomatic point of view.
Agricultural business leaders are keen to participate in the Indian market, but for that to happen, the South African government will have to engage with its Indian counterpart to resolve existing non-tariff barriers that hinder participation, specifically for horticulture products. All this will be in the spirit of boosting South Africa’s agricultural economy. We need to have the same zeal for creating export markets as we do for boosting production across South Africa.
*Written for and first published on Daily Maverick on 27 June 2019.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
