Agricultural Market Viewpoint with Wandile Sihlobo

Last week, the South African Agricultural Machinery Association released its monthly agricultural machinery sales report for March 2026.

To some observers of the South African agricultural sector, the report signalled a change from the long period of strong tractor and combine harvesters sales to a much slower pace. Tractor sales declined for the first time in 14 months, down 8% year-on-year, to 618 units. At the same time, combine harvester sales fell by 22% from March 2025 to 29 units.

While such a decline is not desirable, it is also not alarming, and we should be careful not to read too much into the state of the sector from a one-month slowdown in agricultural machinery sales.

Moreover, the March 2026 tractor and combine harvest sales levels remain well above the long-term averages. Therefore, the base effects are also another factor to consider when interpreting these data.

Indeed, the Middle East war and concerns about fuel prices have, to an extent, negatively impacted the sector, as reflected in the first-quarter results of the Agbiz/IDC Agribusiness Confidence Index (ACI).

Listen to the podcast for more information. Wandile Sihlobo website

In these times of conversations about the impact of high fuel and fertiliser prices on agriculture, the region of South Africa I find myself thinking about the most right now is the Western Cape.

The Western Cape produces much of our winter crops: half of South Africa’s winter wheat, and the majority of our barley, canola and oats. Planting of these crops begins at the end of this month.

Some farmers likely bought their fertiliser before the start of this war and benefited from better prices. But some may not have bought it then and will have to start planting at these higher fertiliser prices.

As I have said before, fertiliser accounts for 35% of South African grain farmers’ input costs, and fuel accounts for about 13%, meaning roughly half of the input cost component is exposed to the challenges posed by the ongoing war in the Middle East.

It is unclear how many farmers also managed to secure fuel before the recent hikes. But the core point is that South Africa is starting the 2026-27 winter crop season at a challenging time.

Things would have been better if the previous winter crop season in 2025-26 had been excellent. But it was not. Farmers across the Western Cape had to replant their crops twice or more. There was a snail infestation that attacked the seedlings.

Spraying and replanting meant farmers incurred even higher input costs than in normal seasons. What made things worse is that these commodities are traded on the global market, where their prices are determined.

Farmers don’t have the market power to pass on costs directly to consumers. Therefore, they were strained from the previous season. We are now starting the 2026-27 season from that back foot.

We will know how much area they intend to plant at the end of this month when the Crop Estimates Committee releases the farmers’ intentions-to-plant data.

As bleak as these views are, from a consumer perspective, there should be no cause for concern in the near term.

The world is awash with wheat, keeping prices under pressure. But the downside for farmers is that it weighs on their profitability, in a season when input costs are already higher due to the war.

For example, the International Grains Council forecasts 2025-26 global wheat production at a record 842 million tonnes, up 5% year-on-year. This is due to ample harvests in the EU, Russia, the U.S., Canada, Australia, Argentina, Ukraine, and Kazakhstan, among others.

It is partly these ample global supplies and lower global wheat prices that have led to calls to increase the domestic wheat import tariff.

The wheat import tariff exists to provide some level of protection for domestic wheat producers while ensuring that consumer welfare is not sacrificed in the process. The key is to find some level of balance. At this time, when farmers are under pressure, we will be thinking more about this at the policy level.

Ultimately, we are entering a stressful season for farmers, but consumers are getting a breather from ample global wheat supplies.

-Wandile Sihlobo

Presidential Envoy on Agriculture and Land Wandile Sihlobo website

When we consider exports in South Africa’s agriculture, we typically overlook the importance of the African continent. Such an approach is wrong; the continent is central to our agricultural export success so far. In 2025, South Africa’s agriculture exported a record US$15.1 billion, up 10% from a year ago. Nearly half of these exports went to the African continent.

Indeed, the continent’s prominence differs product by product. Still, there is no way we would have been able to enjoy this export success, where we are now ranked 32nd among global agricultural exporters and the only African country in the top 40, without the preferential access to the broader continent.

As we continue to work to access more of Asia, the Middle East, and various parts of the world, it's equally important to take a step back and acknowledge the value this continent has played in our agricultural success journey.

We discuss more in this podcast. Wandile Sihlobo website

South Africa's agricultural exports to the Middle East, worth US$1.3 billion in 2025, or 8% of overall agricultural exports, are at risk from this crisis.

Shipping costs are rising. Agricultural businesses that export to the Middle East will now be exploring whether other markets can absorb their products. South Africa's citrus, strawberry, and maize harvest seasons will soon begin across the country, and as the conflict in the Middle East drags on, trade interruptions will persist.

While the conflict will impose major costs on businesses, South Africa must remain focused on its long-term agricultural export growth strategy, which targets the Middle East as a key market. In times of peace and reconstruction, this region would be a key agricultural export market. We believe there remains room to increase exports in peacetime. Wandile Sihlobo website

South Africa indeed transports much of its agriculture and food products by road. For example, 80% of South African staple grain products are transported by road. We see similar volumes in other commodities.

Agricultural products are also processed in certain regions and then transported to various consumption points. This means that fuel price changes affect food prices through adjustments in distribution costs.

Still, such fuel price changes in some products take a while to be passed through. Therefore, any sudden worry or urge to adjust prices is something to watch closely.

There is still a lot we don’t know about this Middle Eastern war, including how long it will last. Indeed, all indications point to a potential notable increase in fuel prices this coming month.

Still, it is probably fair to assume that we won’t see a sudden jump in most food products, as there are various adjustments the many role-players have to make and time lags.

I typically don’t encourage unnecessary close monitoring of food price adjustments, but if we continue to see such headlines, it may be useful to pay attention to these things. We are already seeing worrying price increases in farm inputs in some regions of our country. Wandile Sihlobo website