The global economy continues to face steep challenges, shaped by the Russian invasion of Ukraine, a cost-of-living crisis caused by persistent and broadening inflation pressures, and the slowdown in China. The International Monetary Fund's (IMF) global growth forecast for this year is unchanged at 3.2 per cent, while our projection for next year is lowered to 2.7 per cent—0.2 percentage points lower than the July forecast. The 2023 slowdown will be broad-based, with countries accounting for about one-third of the global economy poised to contract this year or next. The three largest economies, the United States, China, and the euro area will continue to stall. Overall, this year’s shocks will re-open economic wounds that were only partially healed post-pandemic. In short, the worst is yet to come and, for many people, 2023 will feel like a recession. Read more in the linked IMF blog post.

BUSA and BLSA are deeply concerned about the ongoing strike by Transnet workers and the impact it is having not only on the logistics industry in this country in the short term, but also on supply chains and South Africa’s reputation in the longer run. There are no easy solutions on the table here – nor short-term fixes – given the financial state of Transnet’s balance sheet, higher levels of inflation, the fiscal constraints and the stresses that business are under in this challenging economic environment. BUSA and BLSA have pledged to work with government and Transnet where possible, to ensure continued limited operation of the ports where possible and similar contingency plans, to prevent overcrowding in some ports and to support Transnet’s security measures. Please click here to read the full statement.

One major challenge that emerged this past week that directly impacts South Africa's agriculture is labour-related tensions at Transnet. The logistics utility declared a force majeure at its port operations last week, citing an illegal strike. There is a risk that disruptions could escalate this week. The weekend papers cited statements by the representatives of the South African Transport and Allied Workers Union (Satawu) and the United National Transport Union (Untu) that workers are demanding a wage increase of a minimum of 10%, slightly down from the initial demand of 13,5%. However, this is still far from the current offer by Transnet at 4%. Against this, Satawu said over the weekend that it has served Transnet with a 48-hour notice that its members will be striking from today. Disruptions to the flow of goods to and from other countries could negatively impact South Africa’s food, fibre and beverages sector, depending on its duration. Agbiz chief economist Wandile Shilobo discusses this subject in the linked article.

I don’t know much about Kenya’s new president, William Ruto, but I already like his approach to agriculture. In the first week of October Ruto’s administration lifted the country's ban on the cultivation and importing of genetically modified (GM) white maize. Ruto, a scientist with a PhD, made this change in response to growing food insecurity in Kenya. The country has struggled with drought in the recent past and remains a net importer of maize. There will be an assessment of each GM trait by the Kenyan Biosafety Authority before actual imports and cultivation can occur. Assuming some of this scientific legwork has already been done, we could see imports start in the next few months. Just as well. In the 2022/2023 season Kenya needs to import a substantial volume of maize, estimated at about 700,000 tonnes. This is roughly unchanged from the previous season, which also posted poor domestic production. Read more in the linked article by Wandile Sihlobo, written for and first published in Business Day.

After a solid run since the start of the year, South Africa’s agricultural machinery sales painted a mixed picture in September 2022. For example, tractor sales were up by 4% year-on-year (y/y), with 777 units sold. Meanwhile, the combine harvester sales were at 17 units, down 19% from September 2021. Still, a monthly decline in the combine harvester sales does not change the fact that agricultural machinery sales have been on solid footing since the start of 2020. These strong sales over this period indicate a primary agricultural sector still in a reasonably better financial condition and continues to invest in movable assets. In the linked article, Wandile Sihlobo discusses the latest data. 

It is a legal requirement that grain and oilseeds should be inspected in terms of the Agricultural Product Standards Act. In other agricultural sectors inspection services are already applied. The law authorises the director-general of the Department of Agricultura, Land Reform and Rural Development to appoint a person or institution with knowledge of the agricultural product to do inspections on behalf of the department. The implementation of an efficient inspection service requires that such a service also meets industry expectations. Agbiz Grain general manager Wessel Lemmer discusses this subject in the linked article, first published in Landbouweekblad.

With the inaugural meeting of the South Africa – Saudi Arabia Joint Business Council now complete, the focus moves to the upcoming State visit by President Ramaphosa to Saudi Arabia on 15 and16 October 2022. The President will be accompanied by a business delegation comprising key sectors of the economy including agriculture. Agbiz has been invited to participate in the State visit and has assisted the Department of Trade, Industry and Commerce (dtic) in securing representatives of agri sectors with export potential. It is expected that the two countries will sign 20 MoUs during the visit, to facilitate greater trade, investment and technical cooperation. This offers the potential for increased export trade for SA firms across the agri value chain. Agbiz Fruit manager Wolfe Braude spoke to RSG Landbou about the potential of Saudi Arabia as an export market for South Africa. Please click here to listen to the interview.

On 4-5 October 2022, in the setting of Fruit Attraction, the World Citrus Organisation (WCO) brought together the citrus community at two separate events to discuss the latest developments for the sector. During the WCO Conference on October 4, the WCO welcomed citrus stakeholders to present its Strategy for 2022-2024, in addition to its new Citrus Statistical Book with the latest citrus sector market data. The following day, WCO’s Networking Event gathered the citrus community and offered a forum to discuss the latest market developments in an informal setting. The WCO is committed to providing a platform for dialogue and action for the global citrus sector. Read more in the linked article, first published on FreshPlaza.

The gauge for world food commodity prices declined for the sixth month in a row in September, with sharp drops in the quotations for vegetable oils more than offsetting higher cereal prices, according to a new report released today by the Food and Agriculture Organization of the United Nations (FAO). The FAO Food Price Index averaged 136.3 points in September, down 1.1 per cent from August while remaining 5.5 per cent higher than its value a year earlier. The Index tracks monthly changes in the international prices of a basket of commonly traded food commodities. The FAO Vegetable Oil Price Index drove the decline, decreasing by 6.6 per cent over the month to reach its lowest level since February 2021. International quotations for palm, soy, sunflower and rapeseed oils were all lower. Lingering heavy inventories of palm oil, coinciding with seasonally rising production in Southeast Asia, pushed palm oil prices down. Higher soy oil export availabilities in Argentina, increased sunflower oil supplies from the Black Sea region and lower crude oil prices also contributed to the drop in this subindex. Please click here to peruse.

The Minister of Agriculture, Land Reform and Rural Development, Thoko Didiza, has taken the decision to uplift the foot-and-mouth disaster management area (DMA) of the Free State, only allowing for farms unaffected by FMD to continue with their business. However, farms that tested positive for FMD, or are under suspicion for FMD, remain under quarantine. As promised before, monthly reviews will be conducted to assess the spread of the foot-and-mouth disease (FMD) outbreak in the affected provinces. The disease management areas in KwaZulu-Natal and Limpopo remain in place and they will be reviewed on a monthly basis. Read more in the linked foot-and-mouth outbreak and surveillance update report.

Post estimates that the South African sugar cane crop will grow by 7 per cent to 18.4 million metric tons (MT) in the 2022/23 market year (MY), up from 17.2 million MT in the 2021/22 MY. This is based on a return to normal weather conditions, an improvement in yields, and industry efforts to increase production, especially for small-scale farmers. Raw sugar production is expected to fall by 2 per cent to 2 million MT in the 2022/23 MY, due to a reduction in the quantity of cane delivered to mills, limited crushing capacity as a result of the closure of two sugar mills, and a decline in mill efficiencies. However, domestic sugar consumption will continue its strong growth and will rise by 2 per cent to 1.75 million MT in the 2022/23 MY, based on the growth in population and continued improvements in demand from the local industry. Sugar exports will increase by 1 per cent to 600,000 MT in the 2022/23 MY, from 595,000 MT in the 2021/22 MY, based on increased production and a slow start to global economic recovery. Read more in the linked report by the United States Department of Agriculture's Foreign Agricultural Service.

A few months ago, the International Cotton Advisory Committee (ICAC) warned that people needed to buckle themselves in for what was shaping to be a bumpy ride in the 2022/23 season.

Due to catastrophic flooding, Pakistan, the sixth largest cotton-producing country in the world, is expected to see its production decline by 21% from last season to reach 1 million tons. And the number could grow as the full extent of the damage is realised. Meanwhile, US growers faced the opposite type of adverse weather, drought, and it has destroyed the West Texas crop. The effects of Hurricane Ian also have caused damage to the crop in Georgia, the second-largest cotton-producing state in the country. Please click here to peruse.

This week's central talking point concerned the strike action by UNTU and SAWATU, the major unions at Transnet. Both unions issued the required 48-hour notices, officially communicating their intention to engage in industrial action after rejecting Transnet's wage offer. Further internal discussions were held, with parties failing to reach a consensus. After Transnet's improved wage offer was rejected, UNTU commenced their planned strike action shortly after midnight on Thursday (6 October), while the SATAWU members are likely to join the strike action shortly after midnight on Monday morning (10 October). As a result, our national ports have indicated that they will activate contingency plans to alleviate the strike's impacts and ensure that operations can continue as efficiently as possible. It is unclear what these contingency plans involve, but it is difficult to imagine what human resources will be deployed. Apart from this industrial action, port operations during the week were characterised, as usual, by equipment breakdowns and shortages, congestion, and adverse weather conditions. Please click here to access the latest BUSA Covid-19 Cargo Movement Update.

RMB announced the launch of the Agri Harvest Funding Platform (Agri Harvest), the first of its kind to provide a platform to facilitate funding for the agricultural sector in order to ensure a sustainable food supply to South Africans. Chris Alderson, Co-Head: Debt & Trade Solutions at RMB, said: “The liquidity constraints that took place at the Land Bank triggered funding concerns for many of the agricultural businesses and prompted RMB to find an alternative solution. The key to building out the platform was to bridge the funding gap between the farmer and the investor. We believe that the Agri Harvest Funding Platform will be a key enabler for the agricultural sector and with this sector being the bedrock of food security it is vital for the social-economic fabric of South Africa.” Read more in the linked RMB media statement.

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.