by Wandile Sihlobo | Sep 1, 2020 | Daily Notes
The reports of a potential La Niña event during the coming summer months presents mixed fortunes for Southern and East Africa’s agriculture. For parts of East Africa, the La Niña weather event typically correlates with below-average rainfall in the months between December and February, while Southern Africa experiences wetter conditions over the same period. What makes this concerning for East Africa is that this is a period just before the start of the summer grains planting, which occurs in February of each year. Therefore, a La Niña event would raise the risk of yet another poor agricultural harvest for countries in this region.
In the 2019/20 season, major grain-producing and consuming countries in East Africa, especially Kenya and Ethiopia, had mixed fortunes. The United States Department of Agriculture (USDA) estimated Kenya’s 2019/20 maize production at 3.4 million tonnes, down by 11% y/y on the back of unfavourable weather conditions at the start of the season. With Kenya’s annual maize consumption at about 4.8 million tonnes, it implies that the country could require imports of about 1.4 million tonnes within the 2020/21 marketing year, which is still underway. This was a second consecutive season of large maize imports, as the previous season’s imports amounted to 900 000 tonnes. The prospects of a La Niña event means that Kenya could remain a net importer of maize for a third consecutive year.
By comparison, however, Ethiopia might have a fairly good maize season in 2019/20, despite the constant threat of locust invasions. The country’s 2019/20 maize production is estimated at a record of 8.6 million tonnes, up by just 1% y/y, according to data from the USDA. This will be sufficient to cover domestic annual consumption needs. Other countries in the region such as Tanzania and Uganda are projected to have roughly balanced supplies for the year. The challenge, however, could be in the upcoming 2020/21 production season.
With Southern Africa experiencing inverse weather conditions to East Africa, as previously noted, forecasts appear somewhat positive. The Australian Bureau of Meteorology’s increased the probability of La Niña to 70% — roughly three times the normal likelihood – which could lead to increased moisture and potentially higher yields in the 2020/21 production season (see Exhibit 1).
Already in the 2019/20 production season, South Africa and Zambia had bumper harvests in major crops and various horticultural produce. These countries collectively have surpluses of over two million tonnes of maize, which are sufficient to offset maize shortfalls across both Southern and East African countries in the 2020/21 marketing year, primarily for Kenya and Zimbabwe.
Aside from the climatic conditions, there are two additional risk factors for East and Southern Africa’s agricultural sector. First, desert locust swarms still pose a serious threat in Ethiopia, Kenya, Somalia, South Sudan and Sudan, and could stall the agricultural recovery if not effectively controlled. At the end of August 2020, aerial control operations using biopesticides were underway across East Africa. The progress of these control operations over the coming months will be critical determinants of the success of the next season which begins in February 2021. The weather will also have an impact on the locust spread.
Second, the COVID-19 pandemic remains a major risk for agriculture in several countries, specifically the impact of containment measures amongst smallholder farmers and informal markets, which thrive on the movement of people. With an exception of South Africa, the official numbers of the COVID-19 infections remain relatively low in some African countries. It is unclear whether the infections will remain under control in the coming months or if there is going to be a second wave, as we have witnessed in various countries.
In the event of a renewed surge in infections, especially during the planting period, which is from October in Southern Africa and from February in East Africa, there could be disruptions to field activities. Disruptions could emanate from government regulations and containment measures, such as lockdowns and other strict social distancing measures.
With highly mechanized farm sectors are likely to be less affected by containment measures, South Africa appears to be the only country in Southern and Eastern Africa with significant parts of the agricultural economy with a level of mechanization that might not be disrupted by social distancing regulations. This implies that agricultural sectors across the region are at a higher risk. The same is true for informal agriculture and food markets, which are occupy a dominant share in various African countries.
Ultimately, climate and pandemic risks could weigh on agricultural output and farm profitability in the 2020/21 season, and in turn the livelihoods of those who are directly and indirectly dependent on the sector. That said, the climate and the prognosis of the pandemic in the coming months remain highly uncertain. Therefore, these risks warrant close monitoring in the weeks and months ahead.
Exhibit 1: La Niña prospects
Source: Australian Bureau of Meteorology
Note: My good friend, Dr Tinashe Kapuya, contributed to this Morning Note. Dr Kapuya is an agricultural economist and currently leads Value Chain analytics division at the Bureau for Food and Agricultural Policy (BFAP).
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Dec 21, 2019 | Agricultural Production
Essay by Wandile Sihlobo and Tinashe Kapuya
There are preliminary indications that Southern Africa could face yet another year of poor rains, which will inevitably lead to lower agricultural output. A recent report from the Group on Earth Observations Global Agricultural Monitoring Initiative (GEOGLAM) indicates a high probability of below-normal rainfall in Southern Africa between December 2019 and February 2020.
Figure 1: December 2019 to February 2020 Seasonal Rainfall Outlook
Source: GEOGLAM
The potential for a poor output in agriculture across the region brings into question the need for forward planning, which is key to mitigate the effects of food insecurity.
To this end, there is first a need to improve the timeliness and quality of agricultural conditions data across the Southern Africa region, especially for maize, which is a key staple crop. Unfortunately, this remains a challenge for most African countries with the exception of Zambia and South Africa who frequently release data on agricultural conditions and expected crops harvest.
What we currently know is that the maize planting season began across the region in mid-October and some countries in November 2019, and the process has thus far disappointed because of dryness in various countries, notably; Namibia to Mozambique, and southwards from Zambia through South Africa. These countries have already experienced a double-digit decline in maize production in the 2018/19 production season, leaving Zimbabwe and Mozambique as net importers of maize and other agricultural products. As a result, the forecasts of another drought have raised fears that there might not be a recovery in general agriculture production that many had hoped for going into the 2019/20 season.
But the dearth of timely data also increases prospects of a slow response from policymakers, the private sector and various non-governmental institutions which operate within the food industry in Southern Africa.
Although we are yet to know how crop conditions will materialize over the coming months, as well as the potential size of import needs thereof, early and timely confirmations of a poor harvest would be critical for planning and implementation of mitigation interventions. It is best to be warned about the impacts of below-normal rainfall rather than acting when it is too late.
This then raises two important questions for consideration;
- Where is Southern Africa going to find the white maize supplies?
- Does the Southern Africa region have the infrastructure to move potentially required maize imports efficiently?
First, Africa’s maize exporters in normal rainfall seasons include South Africa, Zambia and Tanzania. But in the 2019/20 production season, these countries could experience similar weather conditions as the rest of the Southern Africa region. This means their ability to export maize is limited. The focus should, therefore, be to import from countries outside the African continent. To this end, the only country that can potentially supply white maize is Mexico but it is unclear if there are sufficient supplies there that could serve the whole Southern Africa region (depending on maize needs which will be clear early 2020). Therefore, depending on how crop conditions will be by the end of January 2020, the Southern Africa region might have to encourage US farmers to increase their typically small hectares of white maize and produce for the Southern Africa market. The same message could be passed to the Mexican farmers. It might be too late to encourage South American farmers as they typically plant around the same time as Southern Africa.
Second, the infrastructure might not be the main challenge, especially if the maize and other agricultural import needs are detected ahead of time to allow for planning of flow of imports. South Africa and other coastal countries such as Mozambique have in the past managed to handle large volumes of agricultural imports and thus, there is not a lot of concern about this point if needs are determined on time.
Policy considerations
We will have a better sense of crop conditions and the potential size of maize imports in the coming months. In the meantime, policymakers can consider the following options as ways of easing food insecurity concerns within Southern Africa:
- Encourage white maize production under irrigation where possible in various countries
- Temporarily ease restrictions on imports of genetically modified (GM) white maize (this applies to the whole Southern Africa, with the exception of South Africa which has no restrictions).
- Capacitate local government institutions to improve the quality of information about agricultural conditions and flow of grain to market players.
- Collaborate with the private sector to ensure that required maize is sourced from various parts of the world timeously. This collaboration should include easing regulations on imports in countries where such exists.
Sihlobo is chief economist of the Agricultural Business Chamber of South Africa (Agbiz). Kapuya leads value chain research at the Bureau for Research and Food Policy (BFAP).
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Oct 10, 2019 | Africa Focus
Although the past few months have been a struggle to secure grain supplies for Southern and East Africa, other parts of the world are in better shape and could help offset the shortfall. No indicator spells this out as clearly as the Food and Agricultural Organization of the United Nations’ (FAO) Global Grains Price Index which averaged 158 points in September 2019, down by 4% year-on-year because of large global supplies.
The International Grains Council (IGC) forecasts 2019/20 global grains production at 2.2 billion tonnes, which is 1% higher than the previous season. This is boosted by increased wheat and rice production, which have overshadowed the decline in the maize and soybean harvest.
At the start of the 2019/20 production season, an increase in grain production seemed like a pipe dream because of excessively wet weather conditions and delayed plantings in the US. In addition, when planting finally happened, there were fears of potentially poor yields. While these tough production conditions are what has resulted in a decline in global maize and soybean production, now estimated at 1.1 billion tonnes and 342 million tonnes, down by 3% and 6% from the 2018/19 season, respectively, the magnitude of a decline is not as huge as initially feared.
The improved weather conditions over the past few months and also the use of higher-yielding and short-period growing varieties of seeds are amongst the factors that lessened the impact of late plantings and wet conditions on US maize and soybean producing areas.
Global wheat production, which fell notably in 2018/19 season, recovered by 4% year-on-year to 764 million tonnes in 2019/20 season – the largest harvest ever. There is a notable improvement in production in all the major wheat-producing countries, with the exception of Kazakhstan, whose harvest is set to fall by 18% from the 2018/19 season. This increased wheat supply, and the decline in prices thereafter, drew back some users who had switched to maize in the previous season because of higher prices. The 2019/20 global wheat consumption is now estimated at 757 million tonnes, up by 3% year-on-year, according to data from IGC.
Despite the increase in consumption, global wheat prices are still under pressure, down by 15% year-on-year on 03 October 2019, trading at US$206 per tonne. A more comprehensive picture of the overall global grain price dynamics is illustrated by the aforementioned Global Grains Price Index.
The African continent, as a net importer of wheat, will benefit from the current lower prices. IGC forecasts Africa’s 2019/20 wheat imports at 51 million tonnes, up by 5% from the previous season. The leading importers include Algeria, Egypt, Morocco, Nigeria, Tunisia, Kenya, Ethiopia, Sudan and South Africa.
From a South African perspective, the increase in global wheat production comes at a time when it’s much needed. South Africa’s 2019/20 wheat imports could amount to 1.6 million tonnes, up by 14% from the 2018/19 season (which ended in September 2019) because of the expected poor domestic wheat harvest.
While this is beneficial for South African consumers in the near term, it also means that South African farmers might not be compensated for lower production by an increase in prices.
South Africa is a net importer of wheat, which means prices are already at import parity levels, and its movements there will largely be directed by developments in the global wheat market rather than domestic factors.
Regarding the entire Southern and East Africa region, Kenya, Mozambique and Zimbabwe are the countries that are expected to import notable volumes of grains in the 2019/20 marketing year.
Estimated maize imports for these countries collectively will be at least 2 million tonnes. Imports thus far have largely been from Tanzania and South Africa. There are reports of ships that have left Mexico heading to Mozambique, but at this point, it is unclear how much maize will be there. In addition, wheat imports for the above-mentioned three countries could amount to 3 million tonnes.
The upside is that the grains shortfall in Southern and East Africa occurs in a season where there are generally large global supplies to cushion the countries in need. It will, however, be tough to source white maize imports. Outside of the African continent, Mexico is the only key producer. Meanwhile, wheat will largely be available in the global market.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Sep 6, 2019 | Agricultural Production
This has not been a good year for southern Africa’s agricultural economy. The drought that started in October 2018 in some countries in the region and continued into 2019 has led to a double-digit decline in crop harvests. Take Kenya, SA, Zimbabwe and Zambia: maize production in the 2018/2019 production season fell year on year by 20%, 12%, 53% and 16% respectively, according to the latest estimates from the International Grains Council.
But there is cause for hope for southern Africa’s 2020 agricultural performance. The news out of Luanda (Angola), where the 23rd Southern African Regional Climate Forum convened a meeting with Southern African Development Community meteorologists, points to a potential improvement in rainfall in the 2019/2020 production season.
If we zoom in on SA, the forum’s message concurs with the forecast of the local weather service, which indicated on August 30 that the central and eastern parts of SA could receive above-normal rainfall between November 2019 and January 2020. The weather outlook for the northwestern regions of SA are still unclear at this point, but I think there could be normal showers. It is quite rare to find a season where the northeastern parts of SA experience above-normal rainfall while the northwestern areas are dry, hence my optimism that the overall summer crop growing areas could receive sufficient rains in the 2019/2020 production season.
The summer grains and oilseed planting season is due to start about mid-October in the eastern parts of SA, but I believe there could be a delay of one or two weeks as some areas have lower soil moisture. Rainfall typically starts in November. Summer crop plantings in the northwestern areas should start on time, not only because of showers expected but due to generally improved soil moisture after the late 2019 summer rainfall and cool winter, which preserved it in some areas.
In the 2018/2019 production season SA’s major summer crops — maize, soybeans and sunflower seeds — were down year on year by 12%, 21% and 24% to 11.02-million tons, 1.17-million tons and 680,940 tons respectively. Assuming good weather conditions there could be a notable upswing from these levels. The International Grains Council’s recently updated preliminary estimates for SA’s 2019/2020 maize production are up at 12.8-million tons, which would be 16% higher than the current season and slightly above the five-year average production of 12.3-million tons.
This would be a welcome development, not only for the summer crop farmers but also livestock farmers and agribusinesses. The livestock sector could benefit through potentially lower feed prices when the harvest increases. At the end of August 2019, SA’s yellow and white maize prices were up 15% and 22% respectively from the corresponding period last year because of the lower harvests in the 2018/2019 production season. The agribusinesses could benefit in various ways, from improved grain volumes for storage, and through lower prices in entities that use maize and other summer crops as inputs.
The optimistic outlook for SA’s agricultural economy does not only rely on the potential recovery of summer crop production but also on winter crops and the horticultural sector. The Western Cape, a key horticulture province in the country, received good rainfall in the past few weeks. This has improved soil moisture and water levels in dams. The province is set to receive additional rainfall, all of which is conducive to a good horticulture harvest in 2020, which will ultimately boost SA’s agricultural economic fortunes.
For the broader southern Africa region, improvement in rainfall would be a catalyst in breaking the cycle of food insecurity afflicting the likes of Zimbabwe. Most importantly, the agricultural sector still plays a huge role in the economy and labour market in a number of countries in Southern Africa, so an improvement in output would have much wider positive spin-offs. Farmers will have to closely monitor weather developments in the coming weeks and months, as the optimistic picture I’ve painted is still dependent on good rainfall.
This essay was written for and first published on Business Day on 04 September 2019.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
