Agricultural Market Viewpoint with Wandile Sihlobo

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

South Africa’s decision to ease possible maize imports from the U.S. is not necessarily bad. It is a “safety option” in recognition that our white maize supplies are tight. We also face strong demand from broader Southern Africa, whose maize production is down massively because of the drought earlier this year. Such imports will also depend on whether many American farmers planted white corn. Remember, the biggest white maize producers in the world are South Africa and Mexico. The U.S. and South Americans are big on yellow corn — which is for feed and industrial use. Still, with all the tight supply issues, we have continued to export maize to the Southern African region to stabilize food supplies. We forecast South Africa’s overall maize exports at 1.9 million tonnes through to April 2025 marketing year (about 1.2 million tonnes is white maize and 700k tonnes is yellow). Over a million tonnes have already been exported, mainly to the Southern Africa region. So, any possible imports from the U.S. will help ease the maize needs in the coastal areas, and some may be for reexports to the continent. We already have some yellow maize imports from Argentina which have helped our feed industry in the coastal regions massively. The possible imports would likely be at the end of December through to the first quarter of 2025. This will add downward pressure on maize prices, which have rallied in recent months, with white maize reaching record levels sometime last week. These challenges are for the near term. We remain optimistic about the new season as farmers continue to till the land across South Africa, and the weather prospects are encouraging. We hope the broader Southern Africa region plants its usual maize area. Yes, the La Nina rains are delayed by roughly a month. Still, I don't think we could call it off. The La Nina forecasts from various weather organizations remain active. Listen to the podcast for more insights. Richard Humphries, Sam Mkokeli and Amanda Murimba produced this podcast. Wandile Sihlobo website

The Southern African region has experienced agricultural trade friction in the past few years. Namibia and Botswana placed a ban on the imports of South African vegetables and citrus. Simply put, the rationale of both Namibia and Botswana was that the import ban ensures that their domestic producers are not exposed to the South African competition, thus having space to rebuild for self-sufficiency. With all these countries under the customs union, the Southern African Customs Union (SACU), such a policy reaction is outside the spirit of free trade. While South African fruit exports could be redirected to other markets worldwide, the vegetable industry had to bear the financial impact of the reduced regional demand. Beyond the trade breaching of the customs union spirit, Botswana and Namibia also have limitations regarding the land's potential to produce sufficient high-quality vegetable products. Thus, there have been various reports of food inflation challenges in these countries. Fortunately, South Africa did not react irresponsibly to the ban on its vegetable and citrus exports. The major objective should always be to enhance regional agricultural production and discourage the fragmentation these bans attempt. With a new administration under President Duma Boko, there is an opportunity to reverse the prohibitions of the previous administration and encourage stronger regional agricultural production and trade. The priority should be to ensure that the people of Botswana can access high-quality agriculture and food products. Listen to the podcast for more insights. Richard Humphries, Sam Mkokeli, and Amanda Murimba produce this podcast. Wandile Sihlobo website

While the 2023-24 mid-summer drought has been the central theme of the downbeat performance of South Africa's agriculture this year, we see a welcome positive change in the jobs data. Statistics South Africa data show that primary agriculture employment improved by 4% from the previous quarter to 935k jobs in the third quarter. However, from an annual perspective, the performance is weak, down 2% year-on-year. Still, the primary agricultural employment of 935k people is well above the long-term jobs of 799k. The poor annual performance mirrors the harsh summer season we are leaving behind. Some subsectors showing a quarterly increase in employment include livestock, horticulture, game hunting, and the production of organic fertilizers. Meanwhile, forestry and aquaculture recorded job losses from the year's second quarter. The Western Cape, Northern Cape, Eastern Cape, North West, Gauteng, and Limpopo showed significant quarterly job gains. The livestock and horticulture industry may have boosted the employment prospects in these provinces. Meanwhile, the Free State, KwaZulu-Natal and Mpumalanga showed job losses in the year's second quarter. The dominant types of agricultural activity in these provinces partly explain the job losses, especially in the Free State, primarily the grains and oilseed growing region. My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/ Richard Humphries and Sam Mkokeli produced this podcast. Wandile Sihlobo website