Agricultural Market Viewpoint with Wandile Sihlobo

After a challenging 2023-24 summer crop season, which saw South Africa's grains and oilseeds production falling by 24% year-on-year to 15,39 million tonnes, the recovery period may be in sight. The data released by the Crop Estimates Committee on October 29 shows that South African farmers intend to plant 4,47 million hectares of summer grains and oilseeds in the 2024-25 season. This is up mildly by 1% from the previous season. The planting intentions for white maize are at 1,58 million hectares (up 1% y/y), and yellow maize is at 1,06 million hectares (down 2% y/y). The overall maize planting intentions are at 2,64 million hectares (up 0,2% y/y), which aligns with the five-year average area. The planting intentions for soybeans are at 1,2 million hectares (up by 0,2% y/y), the largest area on record. The sunflower seed planting intention is 540k hectares (up 2,1% y/y), slightly below the average planting of 554k hectares. The planting intentions for groundnuts are 40k hectares (down 2,9% y/y), sorghum at 54k hectares (up 28% y/y), and dry beans at 45k hectares (up 14% y/y). We think there are three primary drivers of this optimism. Listen to the podcast for more insights. My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Richard Humphries, Sam Mkokeli, and Amanda Murimba produce this podcast. Wandile Sihlobo website

The past three years have been challenging for South Africa's livestock and poultry industry because of the spread of animal diseases. Throughout this period, we have had various cases of foot-and-mouth disease in cattle, African swine fever in pigs, and avian influenza in poultry. While animal disease outbreaks are not unique to South Africa and indeed common across the world, South Africa's challenges have intensified in the recent past. The cost of diseases in the livestock industry is felt through the loss of livestock and reduced exports to the world market in times of outbreaks. However, the county is now taking significant steps to control the spread of the disease. On October 25, 2024, the Department of Agriculture released even more positive news, which we believe will further support the recovery path of the industry. The Department announced that the "foot and mouth disease outbreak, which occurred during 2021-2022, has been successfully resolved in the North West, Free State, Gauteng, and Mpumalanga Provinces. These provinces, initially impacted by the outbreak, have now completed comprehensive testing of animals on quarantined farms. The results indicate that the foot and mouth disease virus is no longer present." My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ This podcast is produced by Richard Humphries, Sam Mkokeli and Amanda Murimba. Wandile Sihlobo website

I've been one of the people who have been vocal about the positive prospects for the 2024-25 agricultural season in South Africa, leaning of expected La Nina rains. I continue to remain optimistic about the upcoming season. But the reality is that we may have a late season. The good rains of the past few weeks have been scattered, and planting hasn't gained momentum in any meaningful way across the country. This has raised fears in the grains markets about another tough season, partly contributing to the surge in maize prices we continue to see on SAFEX. Of course, the fundamental driver of maize prices is that we have tight supplies because of the bad crop in the 2023-24 season. Still, I think it's too early to make a call as to whether the upcoming season will be tough. The prospect of La Nina is still active. In all likelihood, it may be a late season. Until we see a material change in the weather prospects, we will maintain our view of a possible better season. Another essential point to underscore is that even if we move from "La Nina" to "normal" weather conditions. Normal weather in the summer season does not translate to drought; it's normal rains. We have gotten so used to the cycle of moving between "La Nina" and "El Nino" that we no longer talk of a regular season. Still, I want to underscore that we are probably in for a late season. There are still convincing signs of La Nina. The planting has also not occurred in any meaningful way across South Africa. My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ This podcast is produced by Richard Humphries, Sam Mkokeli, and Amanda Murimba Wandile Sihlobo website

South Africa’s agriculture and agribusiness sectors have a broader responsibility for food security beyond our borders. The Southern Africa region leans heavily on South Africa for food supplies. This is clear from the observation of South Africa’s agricultural exports. The country exported about US$13,2 billion of agricultural and processed food products in 2023. Nearly 40% of these exports were for the African continent. Notably, roughly 90 cents in every dollar of South Africa’s agricultural exports to the African continent is from the Southern Africa region. Grains, fruits, vegetables, and selected beverages are typically high on South Africa’s list of agriculture and food exports to the Southern Africa region. Not all countries rely equally on South Africa’s agriculture and food industry. There are just seven dominant countries, namely, Botswana, Namibia, Mozambique, Zimbabwe, Lesotho, Eswatini, and Zambia, which accounted for 81% of South Africa’s agricultural exports to the African continent in 2023. In fact, over the past five years, these countries have accounted, on average, for 80% of South Africa’s agricultural exports to the African continent a year. My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ This podcast is produced by Richard Humphries, Sam Mkokeli and Amanda Murimba Wandile Sihlobo website

South Africa has an export-led agricultural sector, with exports having been a major catalyst in the sector’s growth over the past three decades. But rising geopolitical tensions have introduced new risks, leading to an increased need for the country to diversify its export agricultural markets. In this podcast, we argue that South Africa should expand market access to some key BRICS countries, such as China, India, Egypt, and Saudia Arabia. Other strategic export markets for South Africa's agricultural sector include South Korea, Japan, Vietnam, Taiwan, Mexico, the Philippines, and Bangladesh. Currently, the significant challenges in these markets are high import tariffs and phytosanitary barriers. Listen to the podcast for more. My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ This podcast is produced by Richard Humphries, Sam Mkokeli, Nelisiwe Tshabalala, and Amanda Murimba Wandile Sihlobo website

South Africa's agriculture is showing signs of improving optimism since the start of the Government of the National Unity (GNU), which has fueled confidence levels about the path forward. The Agbiz/IDC Agribusiness Confidence Index (ACI), a sentiment indicator about business conditions in the sector, has risen from its low levels in the second quarter of 2024. The ACI increased by 10 points to 48 in the third quarter. While the index remains below the neutral 50-point mark, the jump by 10 points is encouraging. It signals that things are moving in the right direction. A sustained lift in sentiment matters, especially over the long run, for fixed investment in the agriculture and agribusiness sectors. The ACI also serves as a leading indicator of agricultural growth prospects over time. We can thus expect slightly better farming output data for the third quarter of the year. Several factors underpin the improvement in sentiment. One of them is the better electricity supply in the country. South Africa's horticultural production – fruit, vegetables and floriculture – is under irrigation, requiring a sustainable energy supply. Furthermore, roughly a third of field crops are produced under irrigation, benefiting from improved energy supply. The livestock, poultry, and dairy industry are also among the major energy users in the sector. Aquaculture industries like abalone farms also require a sustainable energy supply to pump fresh water. Indeed, there has been a significant increase in renewables and other alternative energy sources, but the broad stability in the national energy supply has helped. Moreover, the fact that the 2024-25 summer season starts, at least for field crops and horticulture, with relatively better-priced input costs compared with the past season, is another reason to be optimistic. For example, in rands terms, most fertilizer product prices were down by roughly 10% year-on-year in September 2024 compared with the previous year. Since fertilizer accounts for approximately a third of the grain farmers' input costs in South Africa, such a price decline significantly improves farmers' finances. The prospects of a La Niña-induced rainfall in the 2024-25 summer season is another additional factor to be optimistic about the agricultural outlook in South Africa. The weather arguably matters more than other factors regarding the sector's performance. Listen to the podcast for more details. Podcast production by Richard Humphries, and Sam Mkokeli My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website

It is perhaps a reasonable choice to remain optimistic about the upcoming 2024-25 summer season in South Africa's agriculture. The global weather forecasters paint encouraging prospects of weather conditions. For example, the Australian Bureau of Meteorology and the International Research Institute for Climate and Society (IRI) at Columbia University continue to forecast La Niña occurrence. The Australian Bureau of Meteorology states, "The ENSO Outlook is at La Niña Watch, meaning there are some signs that a La Niña may form in the Pacific Ocean in 2024". Meanwhile, the IRI sees a strong likelihood of La Niña now through January 2025, and after that, it weakens as the weather normalizes. Overnight, the South African Weather Service (SAWS) also published a cautiously optimistic note. The SAWS stated that the "current predictions indicate the development of a La Niña state during the start of the summer season; however, there is still significant uncertainty in the predictions." The SAWS added that "it is advised to monitor the ENSO system during the start of the summer season, as it may change the rainfall outlook for the summer rainfall regions if and when the La Niña materializes. Current predictions focus on the early- and mid-summer seasons and indicate wetter conditions over the interior of the country. The northeastern parts, however, at this stage, indicate drier conditions extending through to the mid-summer period." What we draw from these statements is that (1) South Africa and indeed the Southern Africa region is out of an El Niño cycle, which typically brings drought and has had a devastating impact on agriculture in the 2023-24 summer season; (2) there is reason to be optimistic about the La Niña possibilities and favourable rains in the 2024-25 season (but must be mindful of the regions the SAWS suggests may be slightly dry for some time), and that (3) even if we are out of a La Niña cycle soon and in the "neutral" state, the agricultural conditions could still be favourable as the "neutral" state implies normal conditions. Listen to the podcast for more details. Podcast production by Richard Humphries, and Sam Mkokeli My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website

South Africa is on its eighth summer grain and oilseeds production forecast for the 2023-24 season. There are two more monthly reports to follow. Given that we are at the tail end of the season and will soon be in the optimal planting window for the 2024-25 production season from mid-October, we thought there would be no major revisions of the production figures at this late stage. But this has not been a typical season, and the lower producer deliveries we have been observing over the past few weeks are not only a function of on-farm storage but a poor harvest. Indeed, we struggled with a mid-summer drought in February and March, undermining crop yield potential in various regions. On October 26, South Africa's Crop Estimates Committee lowered again the 2023-24 summer grain and oilseeds production estimate by 2% from August to 15,45 million tonnes. The major downward revision was in maize, sunflower seed, and groundnut harvest. The 2023-24 summer grain and oilseeds harvest is now down 23% from the previous season. Listen to the podcast for more details. Podcast production by Richard Humphries and Sam Mkokeli My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website

South Africa's agricultural growth in the first thirty years of the democratic era has been supported, among other things, by two pivotal interventions. The first was a deliberate and concerted strategy to invest in genetics for crops, horticulture, and livestock. The second intervention was a strong push to expand export markets. As production continues to increase, and there remains capacity for expanding production, these two levers must be accelerated. The trade issues are not purely economic but political, which means that the South African political leadership must take a clear stand and focus on retaining the existing markets through dialogue with the political leadership of the countries where we continue to experience challenges. The Department of Trade Industry and Competition and the Department of International Relations and Cooperation must be at the forefront of these efforts, supported by scientific insights from the Department of Agriculture. Also very important in the near term is the upcoming BRICS+ summit in October, which will take place in the city of Kazan in Russia. While this grouping is not a trade bloc, utilizing the structure to push more ambitious trade matters is vital. The agricultural sector is one of the South African economic sectors that would benefit from deeper trade relations with the BRICS+ countries. As things stand, South African agriculture has not benefited much from trade with this grouping. Before adding other members to the 15th Summit in Johannesburg in 2023, the original BRICS countries accounted, on average, for just 8% of South Africa's agricultural exports. For comparison, the UK accounts for roughly 7% of South Africa's agricultural exports. Yet, between 2019 and 2022, the original BRICS countries' agricultural imports averaged US$255 billion annually, according to Trade Map data. China accounted for 71% of all the agricultural imports into the group, followed by India at 11%, Russia at 11%, Brazil at 4% and South Africa at 3%. Despite these sizeable agricultural import figures, the intra-BRICS agricultural trade remained relatively low. Remarkably, the products these countries imported include soybeans, beef, maize, berries, wheat, palm oil, poultry meat, cotton, barley, dairy products, pork, apricots and peaches, sugar, wool, sunflower seed, nuts, sorghum, goat meat, wine, grapes, bananas, avocados, mangos, guavas, and fruit juices, among other products. South Africa produces some of these products in abundance and has surplus export volumes. Thus, South Africa championed a need to deepen trade in the 2023 BRICS Summit. This year, the message going to Kazan should focus on building on the spirit of the 2023 Johannesburg Summit, which promoted the dialogue about deeper agricultural trade. This year, the message is even more urgent as the newly added BRICS+ members also present an opportunity for widening agricultural exports. The South African authorities should lobby for a more pragmatic approach beyond the high-level talk so that businesses can see the full benefit of BRICS+ engagements. Listen to the podcast for more details. Podcast production by Richard Humphries, and Sam Mkokeli My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website

By this time next month, the fields across the eastern regions of South Africa will likely be busy. Farmers will be tilling the land for the 2024-25 summer grains and oilseed production season in mid-October. It will be another month before the country's western regions start till the land, from mid-November. The variation in the optimal planting windows is mainly due to the differences in rainfall patterns. From now on through the season, the weather outlook will remain a primary focus for the agricultural stakeholders. We are, after all, emerging from a challenging 2023-24 summer grains and oilseed season that resulted in major crop losses. The latest figures from the Crop Estimates Committee show that the 2023-24 summer crop may have fallen as much as 22% from the previous season to 15,69 million tonnes. The 2024-25 season seems likely to be a recovery period. So far, global weather forecasters such as the International Research Institute for Climate and Society at Columbia Climate School (IRI) continue to indicate an optimistic outlook about rainfall prospects. For example, the IRI sees a possibility of La Niña occurrence from this month to April 2025. This weather event typically brings above-normal rainfall for South Africa and the entire Southern Africa region. The critical period for rainfall for South Africa's summer grains and oilseed is between October and the end of February the following year. This is a period between planting and pollination of the crop. The months after are essential, but the crop could still have decent yields even if there is less rain after the pollination. Listen to the podcast for more details. Podcast production by Richard Humphries, and Sam Mkokeli My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website

It is hard to discuss global agriculture without mentioning China. The country is a dominant player in exports and imports of agricultural products. In 2023, China was a leading agricultural importer, accounting for 11% of global agricultural imports. Trailing China was the US, Germany, Netherlands, the UK, France and Japan. Similarly, China played a notable role in exports, and it was the fifth-largest agricultural exporter in the world in 2023. The leading countries ahead of China were the US, Brazil, Netherlands, and Germany. Commentary on China trade is under spotlight again following the Forum on China–Africa Cooperation (FOCAC) taking place in early September. Some African countries used the opportunity to advocate for deeper trade, especially in agriculture. This is understandable in view of China's dominant role in global agriculture. According to Trade Map data, China spends just over US$200 billion a year on the imports of agricultural products. Few African countries benefit from these imports due to low productivity. The leading suppliers are Brazil, the US, Thailand, Australia, New Zealand, Indonesia, Canada, Vietnam, France, Russia, Argentina, Chile, Ukraine, the Netherlands, and Malaysia. The only African country that features in China's top 30 agricultural suppliers is South Africa, ranked 28 in 2023. Accounting for a mere 0,4% (US$979 million) in China's agricultural imports of US$218 billion in 2023, South Africa remains a negligible player in the Chinese agricultural market. Sudan and Zimbabwe are other African agricultural suppliers to China, and are ranked 33 and 34, respectively. The African continent has weak productivity and low agricultural output, which explains its underperformance in agricultural exports to China. The exceptions are South Africa and, to some extent, the Maghreb region. In light of this concerning picture, African leaders must, in future, prioritise agriculture trade in their deliberations with their Chinese counterparts. Crucially, technology cooperation and transfer must be uppermost in those conversations as Africa’s future productivity lies in deployment of technologies that can boost productivity. Examples of the use of such technologies include on-farm solutions like irrigation technologies, better seed cultivars, and significant infrastructure challenges such as roads and rail that much of the continent still needs. The absence of functioning infrastructure will always remain a headache, even if China were to open its agricultural markets for imports from most African countries. These interventions and possible deals would essentially entail loans for developing the African continent's infrastructure. We know a lot has been done in the past, and reviews of such engagements are mixed, but the problem remains – Africa needs better improvement in the network industries to support agriculture. Aside from this, African leaders must do their part to formalize land rights in their countries and miniminise arbitrary policy interventions, such as occasional blockage of exports by countries like Zambia. Such actions drive away private sector participation in Africa's agricultural market. Podcast production by Richard Humphries, and Sam Mkokeli My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website

After the sharp increase in the first quarter of 2024, South Africa's agricultural exports fell slightly on a year-on-year (y/y) basis in the second quarter. According to data from Trade Map, the country's agricultural exports were at US$3.37bn in the second quarter, a 0,1% decline relative to the same period last year. This comes after growth of 6% y/y in the first quarter of the year. The slight decrease in the second quarter reflects the moderation in the prices of some agricultural products and the decline in the volumes. The top exported products by value include citrus, apples and pears, maize, wine, dates, pineapples, avocados, sugar, grapes, fruit juices, nuts, and wool. Notably, while the value of the exports is down mildly from the second quarter of 2023, the efficiency at the ports this year was arguably much better than what the stakeholders experienced in 2023. This again shows that the decline in export value is largely due to lower prices of some commodities and a decline in volumes after a challenging domestic production environment, specifically in grains and oilseed. Listen to the podcast for more details. Podcast production by Richard Humphries, and Sam Mkokeli My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website

On various occasions, I have highlighted South Africa's agricultural sector's gains in the first three decades of democracy. The sector has more than doubled in value and volume terms. Better seed varieties in crops, vegetables, and fruits, as well as improved genetics in livestock and poultry, have, among other interventions, been the catalyst for output growth. The opening up of export markets over the years has also created a solid demand that today, we export roughly half of what we produce in value terms. Our agricultural exports amounted to a record US$13,2 billion in 2023. In appreciating this progress, some often ask about the black farmers' contribution. The data on this is shaky, but based on various industry research, we can state that black farmers account, on average, for around 10% of the commercial agricultural output. This gives one an indication of their contribution to exports. The matters of why black farmers account for this much produce thirty years in democracy and how we could build an even more inclusive agricultural sector are issues we discussed at length in our recent book, A Country of Two Agricultures. We encourage all caring South Africans to read the book. However, another critical discussion is the issue of gender dynamics in South Africa's agriculture. As a country, we should continue to improve this area. The data about the current state of women's participation is also shaky. Still, one can lean on a few indicators, such as the recent census of agricultural statistics from Statistics South Africa, to make a point. The census report found that we have about 40k commercial farm units in South Africa. To be super clear, the census only considers farmers registered for VAT (the threshold is a turnover of R1 million a year). Therefore, there are many more farmers not accounted for in this figure who are involved in commercial farming as their primary source of income and those who practice farming as a secondary source of income. Still, if we go with the 40k farming units, about 20% are owned or operated by women. However, we also know anecdotally that women's participation in the subsistence farming sector is perhaps much larger in various areas. In such cases, the question remains: what can we do to ensure mobility where women can progress to the commercial level if they aspire to do so? Another vital aspect is jobs, where women accounted for roughly a third of the 896k jobs in the second quarter of 2024. More could be done to improve women's participation, particularly in agro-processing. Let's all agree that agriculture, as an important sector of the economy, could still deliver more jobs and expand in underutilized land. This makes the gender discussion even more valuable. The South African government has about 2,5 million hectares of land acquired through the Pro-Acitive Land Acquisition Strategy. This land should be released to beneficiaries with title deeds and help boost inclusion in the sector and growth, such as growing the South African agricultural pie. In selecting the beneficiaries of the land, the government will have to be guided by the existing Beneficiary Selection and Land Allocation Policy. One important aspect of this policy that is less talked about is its focus on boosting women's participation in agriculture. It states that 50% of land redistributed must be transferred to (black) women. If we follow this approach as a country, along with ensuring that there are financial instruments to assist, perhaps we could improve in the coming years in racial and gender inclusiveness in the sector. There are many young women interested in agriculture that one sees online, and some even write to me enquiring about a range of agricultural matters. This means there is interest amongst women in joining agriculture and playing a meaningful role in addition to the gains we have made as a country. The policy environment is also supportive. Wandile Sihlobo website

The effects of the recent El Niño-induced mid-summer drought are starting to show in South Africa's agricultural jobs data. For example, the Quarterly Labour Force Survey data shows that employment in primary agriculture was down 5% quarter-on-quarter to 896k in the second quarter of 2024. From an annual basis perspective, the performance is also weak, although up 0,2% from the second quart of 2023. Still, the primary agricultural employment of 896k people remains well above the long-term jobs of 799k and generally reflects the harsh summer season we are leaving behind. Some subsectors showing a decline in employment include field crops, livestock, and forestry. The job performance in these subsectors is unsurprising as the mid-summer drought has notably impacted them, specifically field crops. Moreover, the livestock industry faces relatively higher feed costs and lingering animal disease, which all explain these subdued job data in the subsector. The Western Cape, Northern Cape, North West, and Gauteng are the provinces that showed significant quarterly job losses. Meanwhile, other provinces showed a mild improvement, which was insufficient to change the overall picture of a decline in employment in South Africa's agriculture. The Western and Northern Cape provinces do not have significant summer crop production, which means that the quarterly job losses in these particular provinces mirror the generally financially constrained environment in the farming businesses. The mid-summer drought primarily added pressures in the country's northern regions. Listen to the podcast for more details in other commodities. Podcast production by Richard Humphries, and Sam Mkokeli My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website

On August 10, we drove across the Swartland region of the Western Cape from the Karoo side of the Northern Cape. As we entered the Western Cape, I couldn't miss the excellent sight of the wheat fields from a distance. And yes, I appreciate that the Western Cape has received excessive rain recently; the picture certainly is not all rosy. Some fields have puddles of water, which may undermine the crop's growth potential. Our members in the area tell me that the southern regions of Swartland may be too wet, and the northern regions should do well. South Africa's Crop Estimates Committee will release the area planted estimate and first production forecast for this season's crop on August 28. We will know more about the production prospects then. What we know at the moment is that South Africa's preliminary area plantings for wheat are at 502k hectares, down by 7% from the 2023/24 season. This is the lowest area planting in seven years. The sharpest declines in area plantings are in the Free State and Limpopo. The Western and Northern Cape provinces show a minor decline in area plantings. Other provinces, which are relatively small producers, such as the Eastern Cape, KwaZulu-Natal and Mpumalanga, also show a mild decrease in area plantings. The major decline in winter wheat plantings in the Free State and Limpopo is unsurprising. The northern regions of South Africa experienced a harsh mid-summer drought, which led to significant crop losses. The farmers in some of these regions are under financial strain and, thus, understandably reluctant to increase the winter wheat plantings. Moreover, the wheat prices have moderated this year, down by roughly 5% year-on-year. Therefore, in an environment with reduced soil moisture because of the mid-summer drought, lower wheat prices, and some financial pressures, farmers are likely focused on utilising more area plantings for the 2024/25 summer crop plantings that start in October 2024. If weather conditions, particularly in the Western Cape, remain favourable for the rest of the season and we achieve a five-year average yield of 3,78 tonnes per hectare in the area of 502k hectares, then we could have a winter wheat harvest of 1.89-million tonnes. This would also be down 7% year-on-year and well below the five-year average winter wheat harvest of 2.02-million tonnes. Podcast production by Richard Humphries, and Sam Mkokeli My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website

South Africa's agriculture is part of the global agricultural market. Therefore, we must consistently pay attention to the production conditions of agricultural commodities globally as they impact our domestic prices and consumers. The world endured elevated food prices in the past few years for various reasons, ranging from drought in the major agricultural-producing regions of South America to the Black Sea wars. But in recent months, global agricultural prices and consumer food prices have softened. Food prices globally are roughly 25% less than the peak levels reached in March 2022, which was right after Russia invaded Ukraine and caused much disruption and panic in the agricultural markets. At the moment, the global agricultural observers are shifting their focus to the new production season, which is 2024/25, of grains and oilseeds. The production has recently started in the northern hemisphere, which is in the summer season. Farmers may begin tilling the land in the southern hemisphere around October 2024. Still, as early in the season as we are, and a lot yet to unfold, the International Grains Council (IGC) forecasts a decent harvest. For example, in their latest update, the IGC placed the 2024/25 global grains and oilseed production forecast at 2.3-billion tonnes, up mildly from the previous season. The stocks are expected to be healthy, around 582-million tonnes, although having declined somewhat from the 2023/24 season because of the expected increase in the industrial use of grains. We see an encouraging outlook if we consider the significant grains such as rice, wheat, maize and soybeans. For example, the IGC forecasts a 1% year-on-year increase in the 2024/25 global rice production to 528-million tonnes. This is based on an anticipated large crop in all the major rice-producing regions, such as India, Vietnam, Thailand, the US, China, Pakistan, Indonesia, Bangladesh and the Philippines. Subsequently, the stocks could also increase by 1% to 175-million tonnes. The production prospects for 2024/25 global soybeans are also positive, estimated at 415-million tonnes, up by 6% year-on-year. This is based on the expected large harvest in the US, Brazil, Argentina, India, and Paraguay. Still, given that nearly half of the production is by the southern hemisphere producers, specifically South America, we view these data as tentative until the start of the season in the region in about two months. Assuming the current estimates materialise, the 2024/25 global soybean stocks would lift by 16% year-on-year to 79-million tonnes. Such an increase in the harvest and supplies would add downward pressure on worldwide soybean prices, which is favourable for the animal feed industry. A less optimistic view is in the major grains such as wheat and maize, although their supplies will still remain at levels above average. For example, the IGC forecasts the 2024/25 global wheat production at 793-million tonnes, slightly lower than the 2023/24 season's crop of 804-million tonnes. This is due to the expected production declines in the EU, UK, Ukraine and Russia. These overly wet weather conditions in these countries during the season are the reason for the anticipated poor yields. With food and industrial use of wheat expected to remain strong, the IGC placed the 2024/25 global wheat stocks at 261-million tonnes, down 3% year-on-year. Be that as it may, international wheat prices have not reacted to these expectations and have remained on a moderating path in recent weeks, which is a welcome development from a consumer perspective. Listen to the podcast for more details in other commodities. Podcast production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website

South Africa's agricultural sector has various institutions, organizations and committees that all play specific roles in supporting the sector's growth and sustainability. One of the vital committees housed at the Department of Agriculture is the Crop Estimates Committee. This Committee benefits on skills, among others, from government, academia, and the private sector. Its main task is to provide production forecasts for winter and summer grains and oilseed. These data are crucial to understanding the country's food security conditions and often influence the market prices of grains and oilseeds in season. For each season, the Crop Estimates Committee typically releases about ten reports. From the fourth monthly report, there is generally some certainty about the expected crop. We are now at the tail end of the 2023/24 summer grains and oilseed season. This comprises white maize, yellow maize, sunflower seed, soybeans, groundnuts, sorghum and dry beans. Thus, the crop size estimates we have at hand are unlikely to change much and possibly represent an actual picture of the harvest. For example, in its sixth production estimate released on July 27, the Crop Estimates Committee placed South Africa's 2023/24 summer grains and oilseed harvest at 15,9 million tonnes. This is 0,5% less than last month. The monthly downward revisions are primarily in yellow maize, groundnuts and dry beans. The expected harvest of 15,9 million tonnes is down 21% year-on-year, signifying the sharp impact of the mid-summer drought on the grains and oilseed production. Maize A closer look at the data shows that white and yellow maize harvest could be 6,35 million tonnes (unchanged from last month) and 6,99 million tonnes (down 1% m/m). These revisions place the total maize production estimate at 13,34 million tonnes (down 0,53% m/m). When viewed annually, white maize harvest is down 26%, with yellow maize down 12% from the 2022/23 season. The disparity in the crop decline is due to regions where each crop variety is planted, with white maize predominantly in the western areas of South Africa while yellow maize is in the east. Moreover, yellow maize is typically planted a month earlier than white maize. Rainfall impacts these regions and timeframes differently, ultimately affecting the expected harvest sizes. The expected harvest of 13,34 million tonnes is down 19% from the 2022/23 season. This expected harvest will meet South Africa's annual maize consumption of roughly 12,00 million tonnes, leaving the country with approximately 1,40 million tonnes for exports (there is also support from the carryover stocks from the previous season). In this export forecast, about 840 000 tonnes will likely be white maize, with 600 000 tonnes likely to be yellow maize, according to data from the South African Grains and Oilseed Supply and Demand Estimates Committee. Still, the estimated exports of 1,40 million tonnes are down notably from 3,40 million tonnes in the previous season. With that said, maize prices will likely remain elevated for some time because of potentially tighter supplies later in the season and into the first quarter of 2025. The white maize prices are over 40% higher than the levels we saw a year ago, with the spot price closing at R5 490 per tonne on July 26, 2024. At the same time, yellow maize spot prices is about 10% up from a year ago, ending the week at R4 180 per tonne. The yellow maize prices have not increased much, as the supply risk could be manageable through imports. There are ample maize supplies (yellow) in the world market. The International Grains Council (IGC) forecasts the 2023/24 global maize harvest to be 1,2 billion tonnes, up 6% year-on-year. The prospects for the 2024/25 season are also positive. A majority of this expected global maize is yellow. The stocks are also robust, thus keeping the international yellow maize prices moderate. Wandile Sihlobo website

The start of July presented three challenges whose impact will become clearer in the weeks ahead. Firstly, in the northern regions of South Africa, particularly in Limpopo, the potato crop has suffered losses because of frost after an unusually cold spell in the region. The most affected crops are the ones planted from May onwards. The scale and impact of the damage at the national level are yet to be clear. However, rough estimates and anecdotes from various industry players suggest that we are unlikely to experience a national crisis regarding supplies. Still, the farmers in the affected regions will suffer financial losses. Secondly, the various regions of the Western Cape were affected by heavy storms. There are reports of infrastructure damage. Whether agricultural activities in the province experienced damage and what the degree of such damage could be remains unclear. We suspect the impact will mainly be on public infrastructure rather than agricultural activities. For this region, this is a busy citrus harvesting period, and the bad weather conditions have delayed activities in some fields. Moreover, the winter crop season (i.e., wheat, canola, barley and oats) is at its early stages, which would have also spared the fields from major damage, given there was no heavy erosion. Thirdly, in the Eastern Cape, the rains in the southern regions also slowed the citrus harvest. At this early stage, we have not heard of any damage to the harvest. The field and agricultural logistics activity should gain momentum during the week as weather conditions improve. But not all things are well in the province. Foot and mouth disease remains a challenge in the dairy industry. The dairy industry and government regulators are currently engaged in possible pathways to address this challenge in the province. Listen to the podcast for more information. Podcast production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website

After a challenging El Niño induced drought season in 2023/24 summer, South Africa’s agriculture may get a relief in the upcoming 2024/25 summer season. Early indications of weather prospects are encouraging, showing a firm likelihood of a La Niña occurrence. The International Research Institute for Climate Change and Society at Columbia University places the probability of a La Niña occurrence at over 50% between now and April 2025. Such weather events typically bring above-average rainfall across South Africa and the entire Southern region. There is hope that after a challenging 2023/24 summer production season, South Africa could transition into a favourable agricultural season, similar to what we experienced four seasons before the 2023/24 season. Given that South Africa had one of the most prolonged periods of La Niña induced rains, from the 2019/20 season to the 2022/23 season, the news of an end to the 2023/24 season El Niño is a welcome development. Listen to the podcast for more information. Podcast production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Wandile Sihlobo website

I view South Africa’s agricultural economic performance in the first half of 2024 as mixed. One can broadly categorise our farming economy into three subsectors: horticulture, livestock and field crops. Horticulture — fruits and vegetables — had a reasonably positive start to the year, benefiting from improved dam levels for irrigation and a stable electricity supply. All of South Africa’s fruit and vegetables are under irrigation.  The livestock industry is recovering after an intense period of animal diseases (although there remain cases of foot-and-mouth disease in some regions of the country). The better grazing veld due to early rains in the season and late rains in April have helped somewhat. The poultry industry is also recovering following an intense avian influenza spread at the end of 2023. Meanwhile, the field crops have suffered from the midsummer drought. For example, South Africa’s 2023/24 summer grains and oilseed harvest is estimated at 16.0 million tonnes, down by 20% year on year.  Considering the developments in these subsectors, it is unsurprising that South Africa’s agricultural gross value grew by 13.5% quarter on quarter (seasonally adjusted) in the first quarter of 2024. Indeed, the base effects also contributed to the robust performance as South Africa’s farming economy contracted in 2023. The trade figures were also strong in the first quarter, a signal for a better harvest of fruits and improvements in port performance.  Still, we worry that the poor harvest of summer grains and oilseed may suppress the figures for the third-quarter performance in the sector. Perhaps the slowdown may even show in the second-quarter figures when they become available.  Farming jobs Also worth noting is that employment in primary agriculture remained robust, increasing by 6% year on year to 941,000 in the first quarter of 2024. This is also up, by 2%, from the last quarter of 2023.  Admittedly, the significant drought damage has been concentrated on the summer grains and oilseed regions, not across all agricultural subsectors, which somewhat explains the resilience in job data. Moreover, there could also be a lag in fully accounting for agriculture’s financial pressures and the impact on employment after that.  Quite remarkably, the sentiment in the sector paints a contrasting picture of these economic realities. For example, the Agbiz/IDC Agribusiness Confidence Index remained depressed in the second quarter of 2024, reaching 38 points from 40 in the previous quarter. This is the lowest level since Q3 2009, which was the global financial crisis, and implies that agribusinesses remain downbeat about business conditions in the country.  Reviewing the survey respondents’ comments, we found that the midsummer El Niño-induced drought’s impact on summer grains and oilseed production was one of the major factors that weighed on the sentiment. The drought coincided with the long-standing challenges of inadequate road infrastructure and municipal service delivery. The lingering animal disease challenges and heightened geopolitical tensions are also the primary concerns for the sector. Moreover, while the farming community recognises the improvements in Transnet’s operations, they highlight the need for continuous work to address the inefficiencies of the ports and rail network.  The uncertainty about the formation of the government at the time of the survey may have added to the downbeat mood among the agribusinesses. This survey was conducted between 10 and 19 June, covering businesses operating in all agricultural subsectors across South Africa. The path ahead Looking ahead, we remain optimistic about South Africa’s agricultural conditions. The weather forecasters tell us that we have exited the El Niño drought period and are transitioning into a La Niña event, which typically brings rain. Such a weather outlook would boost agricultural production and performance in the sector.  Listen to the podcast for more information. Wandile Sihlobo website