Agricultural Market Viewpoint with Wandile Sihlobo

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5 of 128

Helping a neighbor – SA continues to supply maize to Zimbabwe
Whenever I see challenges within South Africa's agriculture, Zimbabwe is the other country I think of as their challenges are often worse. Notably, South Africa typically has to shoulder Zimbabwe when there are challenges, specifically in staple grain production. Consider the 2023-24 production year, when Zimbabwe had a challenging season due to the mid-summer drought that affected Southern Africa. Zimbabwe's maize harvest fell nearly 60% to around 635 000 tonnes, the lowest since the 2015-16 production season when the country experienced a drought. Although a significant factor, the drought is not the only reason for the fall in Zimbabwe's maize harvest. The decline in fertilizer usage also contributed to poor yields. While fertilizer prices are down from the previous year, they remain well above the pre-COVID-19 levels, thus adding financial strain on farmers. Fertilizer makes up roughly a third of grain farmers' input costs. This significant decline in Zimbabwe's maize production led to a sharp increase in imports, and South Africa played an important role in supplying maize to Zimbabwe (at market prices). To understand how much maize Zimbabwe needs to import, consider its annual consumption of about two million tonnes. Therefore, with a harvest of 635 000 tonnes, the country needs at least a million tonnes in the 2024-25 marketing year, which ends in April 2025, to meet domestic needs (the 2024-25 marketing year corresponds with the 2023-24 production season). Of course, this is a significant increase from Zimbabwe's maize imports of 637 327 tonnes in the 2023-24 marketing year, all from South Africa. Between May 2024 and the first week of January 2025, South Africa exported 907 318 tonnes of maize to Zimbabwe. This is about 57% of South Africa's total maize exports to the world market during this period. Listen to the podcast for more insights. Richard Humphries, Sam Mkokeli and Amanda Murimba produce this podcast. Wandile Sihlobo website
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12:30
The troubling decline of the South African sorghum industry
Whenever one posts on social media about the challenges in the maize industry, I often see responses from people arguing that South Africans should consume more sorghum. They correctly highlight the nutritious value of the crop and its resilience in challenging climatic conditions. But with all these benefits, the sorghum industry has not taken off. The challenge is not that farmers refuse to plant it. It is due to weak demand for it – consumers are just not buying sorghum products in a way they do with other staple grains. The issue of weak demand partly gave farmers hope that the use of sorghum in biofuels would provide a much-needed market for farmers. But this venture also did not take off. Thus, sorghum production has continued to decline in South Africa. South African farmers planted 42 100 hectares of sorghum in the 2023-24 production season, down 75% from the area we planted in 1990-91. The production was 95 830 tonnes in 2023-24, down by 68% from 1990-91. This is a disappointing picture, and with the promise of the biofuel industry remaining bleak, we may continue to see small plantings. Listen to the podcast for more insights. Richard Humphries, Sam Mkokeli and Amanda Murimba produce this podcast. Wandile Sihlobo website
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12:54
South Africa's agriculture in 2024 and outlook for 2025
We can view 2024 in South Africa's agriculture as a "mixed" year. Indeed, the GDP figures will show a sharp contraction in South Africa's agricultural fortunes in 2024. But a deep dive will illuminate a more nuanced picture of mixed performance. For example, the field crops and livestock subsectors had their fair share of challenges, while the horticulture subsector had a relatively better year. First, the mid-summer drought led to a 23% decline in South Africa's 2023-24 summer grains and oilseeds to 15,40 million tonnes. Second, animal disease continued to be a major challenge for farmers. This is understandable because we have had various cases of foot-and-mouth disease in cattle, African swine fever in pigs, and avian influenza in poultry over the past three years. Third, there were also positive developments in South Africa's agriculture this year. One such positive development, which is not necessarily agriculture-specific, is the improvement in electricity supply. This positively contributed to the sector and partly to the robust horticulture production. For example, when one considers the dependence of South Africa's agriculture on horticulture, it is always worth highlighting that all of South Africa's horticulture – fruits and vegetables depends on irrigation that needs an adequate power supply. In crucial field crops, roughly 20% of maize, 15% of soybean, 34% of sugarcane, and nearly half of wheat are produced under irrigation. As we start 2025, the sector has renewed optimism regarding expected better rainfall and improvements in the animal disease control front. This year's focus should remain on the opening of export markets, improvement of the network industries, and improving municipality performance. Listen to the podcast for more insights. Richard Humphries, Sam Mkokeli, and Amanda Murimba produce this podcast. Wandile Sihlobo website
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12:27
SA sees robust agricultural exports
I am starting to believe that South Africa’s 2024 agricultural exports may reach a new record high and surpass the 2023 record level of US$13, 2 billion. The better prices and output in various fruits, red meat, wool, and wine will be the major driver of the improvement in exports this year. Already, South Africa's cumulative agricultural export value for the first three quarters of 2024 is up 4% from last year, at US$10,55 billion. The top exported products by value include citrus, nuts, maize, apples and pears, wine, fruit juices, sugar, dates, figs, avocados and mangos, berries, and grapes, amongst other products. While logistics infrastructure efficiency remains a primary concern for the farming sector, the ongoing collaboration between Transnet, private industry, and the various logistical organizations assists in ensuring the continuous flow of products, even if there are delays in specific periods. From a regional perspective, the African continent maintained the lion's share of South Africa's agricultural exports in the third quarter of 2024, accounting for 39% of the total value. As a collective, Asia and the Middle East were the second-largest agricultural markets, accounting for 25% of the share in overall agricultural exports in the third quarter of 2024. The EU was South Africa's third-largest agricultural market, with a share of 20%. The Americas region accounted for 6% of South Africa's agricultural exports in the year's third quarter. The rest of the world, including the United Kingdom, accounted for 10% of the exports. Listen to the podcast for more insights. Richard Humphries and Sam Mkokeli produce this podcast. Wandile Sihlobo website
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13:09
There is rising optimism in South Africa’s farming sector
We continue to observe the rising optimism in South Africa’s farming and agribusiness sectors. For example, the Agbiz/IDC Agribusiness Confidence Index (ACI), a sentiment indicator in the sector, increased by 10 points from Q3 to 58 in Q4. This is the second consecutive improvement, placing the ACI at its highest since Q2 2022. This level of the ACI implies that South African agribusinesses remain generally optimistic about business conditions in the country. This optimism is a result of a combination of factors, including favourable weather conditions, with expectations that La Niña rains will be supportive of the 2024-25 agricultural season. Moreover, the stable energy supply, improvements in port efficiency, and the better political climate following the formation of the Government of National Unity are some of the aspects the respondents cited as key factors underpinning their optimism. Listen to the podcast for more insights. Richard Humphries, Sam Mkokeli, and Amanda Murimba produce this podcast. Wandile Sihlobo website
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15:33