The 2022 edition of the BFAP South African Baseline, presenting an outlook of agricultural production, consumption, prices and trade in South Africa for the period 2022 to 2031, was released last week. The 2022 edition, generated by the Bureau for Food and Agricultural Policy's (BFAP) integrated modelling system, presents an outlook of the agricultural industry in South Africa for the period 2022 to 2031 and unravels the balance between short-term tactical responses with long-term development goals to inform policy and investment decisions. According to the report, agriculture had been the top-performing sector since the start of the Covid-19 pandemic, and more recently the Russia-Ukraine war, growing at 13,4% in 2021 and 8,3% in 2021. Growth was expected to slow down to 5% in 2022, due to spiralling input costs, consumer spending being under pressure, and the normalisation of commodity prices, and would “remain conservative” in the medium- to long-term unless biosecurity, logistical and market challenges were addressed. Please click here to download the publication published by BFAP.

Agbiz welcomes the decision of the People’s Republic of China to once again accept wool exports from South Africa. The decision is a welcome development within the context of an increasingly volatile environment for international trade. When South Africa relinquished its foot-and-mouth disease (FMD-) free status in 2019, a protocol was agreed upon with the People’s Republic of China to mitigate any chance of contamination by registered warehouses following the time/heat inactivation protocol. Exports were once again halted when an FMD outbreak was detected in the northern provinces of South Africa in 2022. Roughly 80% of South Africa’s wool exports are destined for the People’s Republic of China, thereby threatening the sustainability of an industry that supports 8000 commercial farmers and 40 000 communal farmers. The protocol was put in place precisely to ensure consistent supply in the wool trade when biosecurity is under threat and these measures needed to be trusted to mitigate any risks posed by the FMD outbreak. The announcement that trade will once again take place under this protocol provides a much-needed boost to the industry. Agbiz and the wool industry worked closely with colleagues in government in reaching out to their Chinese counterparts. Our thanks go out to colleagues in the Departments of Agriculture, Land Reform and Rural Development, Trade Industry and Competition as well as International Relations and Cooperation. 

We've spent the past week on the road with various Agbiz members and other role players in the agricultural sector. In most of our discussions, there was consistency in the themes and sets of issues that emerged. The need for the expansion of the export markets and much-needed effort to regain the existing ones, such as the EU, the need for improvements in logistics – roads, rail and ports, the need for agricultural finance, particularly developmental finance or flexible finance products for the new entrant farmers and the need to build trust, accountability, as well as monitoring and evaluation of various sector plans. These were the major issues that agricultural sector role players highlighted. These are also some of the themes that have dominated a lot of our recent publications. Agbiz chief economist Wandile Sihlobo discusses these issues in the linked article.

While the 2021/22 production season started on a rough footing of excessive rains, various subsectors of agriculture managed to recover when the rains slowed. We saw this recovery in the decent yields in horticulture, grains, sunflower seed and even record yields in soybeans. The primary agricultural jobs data also reflect the vibrancy of the sector. In the second quarter of this year, there were 874 000 people in primary agriculture, up by 1% year-on-year (and up 3% quarter-on-quarter). Notably, this is well above the long-term agricultural employment of 780 000. The increased farm activity during the harvesting process of some vegetables, fruits and field crops necessitated increased employment during the quarter. The subsectors that shaved jobs during this period were livestock and aquaculture (fish farms and hatcheries). The decline in employment in the livestock is understandable as the subsector faces the spread of foot-and-mouth disease, which has led to a temporary suspension of exports and numerous business activities, thus weighing on farmers' finances. Moreover, the higher feed costs are an additional challenge for the livestock industry. Wandile Sihlobo discusses the latest data in the linked article.

The higher agricultural commodity prices we’ve observed in the months since Russia invaded Ukraine continue to filter into the food price inflation data. Moreover, the higher fuel price inflation since the start of the war is an additional cost driver of food prices. The data released this morning by Statistics South Africa show that in July 2022, the consumer food price inflation accelerated by 10,1% y/y, from 9,0% y/y in the previous month. This is the fastest pace since January 2017, which was a drought period in agriculture where costs were driven by higher agricultural commodity prices. The higher global grains and oilseed prices for much of the first half of this year have been the drivers of the costs of “bread and cereals” and “oils and fats” in the consumer food price inflation basket. These are also products with a relatively higher weighting within the food basket. For example, within the food basket, the key products are meat (35%); bread and cereals (21%); milk, cheese and eggs (17%); vegetables (8%); sugar, sweets and desserts (4%); oils and fats (3%); and fruit (2%). In the linked article, Wandile Sihlobo elaborates on the latest food inflation data.

We continue to be surprised by the solid agricultural machinery sales, which have remained robust in the first seven months of 2022. The data released by the South African Agricultural Machinery Association this past week show that in July 2022, tractor sales were up by 32% year-on-year (y/y), with 662 units sold. Combine harvester sales were at 36 units, significantly up from eight units sold in the same month a year ago. The generally healthy sales are a welcome development, as they indicate a primary agricultural sector still in a reasonably better financial condition and continues to invest in movable assets. This builds upon the solid momentum of the past two years. When farmers have a good year, allied industries benefit from spending the financial gains or the produce of the farming businesses. Read more in the linked article by Wandile Sihlobo.

South Africa's agricultural export activity would likely soften this year from the 2021 record of US$12,4 billion. Lower production of key crops, animal disease spread and changes in phytosanitary regulations in key markets such as the EU will all weigh on export activity this year. The changes in export volumes and values might not show in this year's first half but will likely reflect in the second half of this year. In this week's podcast, Wandile Sihlobo unpacks South Africa's agricultural trade and the expectations of export activity in 2022. Please click here to listen to the podcast.

SAGIS, the South African Grain Information Service,

publishes the producer deliveries of maize per grade every week. The verified monthly figure gives a good indication of the grade composition of the white and yellow maize harvest on a national basis. The latest report spans over 13 weeks from 30 April to 29 July 2022. All the commercial storage structures are obliged to hand in weekly production delivery figures. This makes the information about the grading of the national harvest more readily available. Agbiz Grain general manager Wessel Lemmer discusses this subject in the linked article, written for and first published in Landbouweekblad.

Record high food prices have triggered a global crisis that will drive millions more into extreme poverty, magnifying hunger and malnutrition while threatening to erase hard-won gains in development. The war in Ukraine, supply chain disruptions, and the continued economic fallout of the Covid-19 pandemic are reversing years of development gains and pushing food prices to all-time highs. Rising food prices have a greater impact on people in low- and middle-income countries since they spend a larger share of their income on food than people in high-income countries. The linked brief looks at rising food insecurity and World Bank responses to date. 

Social instability is emerging as a critical risk undermining the sustainability of rural enterprises. This manifests in destructive protest action, national ‘shutdowns’ and vandalism in rural areas and disruption of the logistic networks on which our businesses rely. As part of its rural rejuvenation initiative, Agbiz will be hosting a workshop focused on solutions to buffer against these risks. The programme will include industry leaders sharing their experience in building networks within the communities where they operate and the possible steps that can be taken to mitigate risks. The workshop will be held in person on 2 September 2022 at 10th Floor by Summit (previously known as The Venue), Summit Place, Menlyn Menlyn Maine. Please click here to view the programme and follow this link to register.

In a media statement, Hortgro has announced that India's government has approved in-transit cold treatment for South African apple and pear exports to India. The advantage of the cold treatment of the products in transit is that better quality and fresher fruit arrive at the destination country. This change in the process allows shippers to increase the length of the season and consumers to get fresher fruit. Speaking about the development, Jacques du Preez, Hortgro’s general manager for trade and markets, said: “We welcome the Government of India’s decision as it allows us to ship quality fruit from South Africa to India in a short span of time. We would like to thank the Department of Agriculture, Land Reform and Rural Development (DALRRD) and the South African High Commission team in India. “With the in-transit cold treatment procedure, I believe the suppliers and the Indian importers both stand to benefit as the transit time reduces considerably. South African apples and pears have received a phenomenal response from Indian consumers, and we believe that the volume will rise significantly due to this announcement.” Since the beginning of 2022, South Africa has exported more than 2.5 million boxes of apples and pears to India, and the demand is increasing year on year. Apple varieties such as Royal Gala, Bigbucks, and Top Red have remained favourites, while for pears, Packhams, Vermont Beauty, and Forelle have ruled over consumer palettes.

By the end of week 32, Summer Citrus from South Africa (SCSA) has gone through almost 70 per cent of its planned citrus shipments for the season. This accounts for 10 conventional vessels and containers on deck in Philadelphia along with about 17,000 pallets shipped in containers to New York and Savannah, GA. Despite some challenges of unforeseen delays with some vessels, Summer Citrus from South Africa has been able to stick to its original shipping plan. Almost half of the citrus fruit basket is represented by Easy Peelers while Navels make up 44 percent of total shipment. The remaining six percent are Star Ruby grapefruit and Cara-Cara oranges. Summer Citrus from South Africa will continue with weekly conventional arrivals until the 2nd or 3rd week of October with supplemental containers in between. Read more in the linked article, first published on FreshPlaza.

A report on the trends in respect of unprocessed milk purchases by the South African Milk Processors Organisation (Sampro) has been released. It is based on the results of surveys by Milk SA which involves a sample consisting of firms which are collectively responsible for more than 85 per cent of the total unprocessed milk purchases in South Africa. The average contribution to the total unprocessed milk purchases of the sample group in the three-month period from March to May 2022, is 88.42 per cent. In the previous two three-month periods the percentages were 88.53 per cent and 88.87 per cent. This report was compiled by the Office of Sampro and forms part of the Industry Information Project of Sampro. The purpose of the project is to make market signals available to members and other interested parties. Please click here to peruse.

The Citrus Growers' Association of Southern Africa, shares the latest news in the citrus industry in its weekly update - From the desk of the CEO. Please click here to peruse

This special edition Fresh Quarterly focuses on some of the presentations held at the Hortgro Technical Symposium 2022. Please click here for the latest edition.