The global inflation surge that abruptly ended decades of moderating price gains came at a unique confluence of crises: the global pandemic and Russia’s invasion of Ukraine. Now, economists must ask, What lessons does this era offer for monetary policy? We might begin with the lessons from the pandemic and war that are relevant for monetary policy, even if the world eventually moves back to an environment of low interest rates and low inflation. Most economists missed the inflation surge, and we need to understand why, and how monetary policy may have to change going forward. But some crisis effects—high inflation, supply chain disruptions, greater trade barriers—may persist much longer, or intensify. That could challenge macroeconomic stability around the world, especially in emerging markets. How can we avoid this? Read more in the linked blog post by Gita Gopinath, first deputy managing director of the International Monetary Fund.

After a 4-point decline in Q4 2022, the Agbiz/IDC Agribusiness Confidence Index (ACI) deteriorated further by 5 points in Q1 2023 to 44. The current reading is the lowest since Q2 2020 when Covid-19 lockdown restrictions were first implemented. Notably, the first quarter reading is below the neutral 50-point level, implying that agribusinesses are downbeat about business conditions. The persistent and intense episodes of load-shedding, higher input costs, rising protection in some export markets, rising interest rates, intensified geopolitical tensions which disrupted supply chains, and ongoing weaknesses in municipal service delivery, and network industries were again the key factors survey respondents cited as their primary concerns. This survey was conducted in the final two weeks of February, covering businesses operating in all agricultural subsectors across South Africa. Please click here to access the full Agbiz media statement.

The 2023 Summit for one of Agbiz's members, the Citrus Growers'' Association of Southern Africa (CGA), is currently underway in Gqeberha, Eastern Cape. The summit is well attended and graced by excellent speakers including the Minister of Agriculture, Land Reform and Rural Development, Thoko Didiza, Transnet CEO Portia Derby, and BFAP’s managing director Prof. Ferdi Meyer, amongst other excellent speakers. There is a great variety of themes covered, including export matters, essential interventions to boost growth in the sector, logistics and geopolitical matters, and their impact on citrus trade and agriculture. Agbiz chief economist Wandile Sihlobo delivered a presentation titled “Reflections on critical factors constraining growth and transformation in SA agriculture”. His inputs highlighted specific issues that require policy interventions to boost growth in the sector. He prefaced the inputs by reminding the congress, “Growth in agriculture is in general two to three times more effective at reducing poverty than an equivalent amount of growth generated outside agriculture.”. Wandile’s presentation is available on request. Wandile also chaired a session of black growers that showcased the success stories and talked about key issues that black growers face at ground level. In the linked article, Agbiz Fruit manager Wolfe Braude shares his experience of the CGA Citrus Summit.

Despite previously permitting water-use entitlements to be transferred, the Department of Water and Sanitation sent out a circular in 2018 stating that this practice would no longer be permitted as they did not believe that the Act allowed such a transfer. On the basis of two specific cases where commercial farmers had applied to transfer water-use entitlements to third parties and the applications were refused, the Constitutional Court was requested to pronounce itself on the interpretation of section 25(1) and (2) of the National Water Act of 1998. In the linked article, Agbiz head of Legal Intelligence Annelize Crosby discusses this subject.

Over the coming months, we will receive various data releases to help guide our thinking about South Africa’s agricultural growth prospects in 2023. The available soft insights suggest that near-term growth prospects of South Africa’s agricultural economy look weak after subdued growth of 0,3% y/y in 2022. For example, the livestock and poultry industries, which account for roughly half of the agricultural sector’s value, are under pressure amid relatively muted cattle and beef prices while farmers also continue to face higher input costs for maize and soybeans. The ongoing load-shedding is particularly challenging for the poultry industry, with the unreliable electricity supply causing significant production interruptions. As various energy solutions are explored in some farms, the financial costs will persist over the coming months. Similarly, the red meat industry faces an environment where the consumer is under pressure, and thus there is minimal room for upward price adjustments. Moreover, the tail-end effects of foot-and-mouth disease, which interrupted exports, persist, further weighing down demand as the country still cannot access some export markets. This is likely to be the reality for some farmers for much of the first half of this year. Read more in the linked article by Agbiz chief economist Wandile Sihlobo.

This past week the United States Department of Agriculture (USDA) released its monthly flagship report, the World Agricultural Supply and Demand Estimates report. This report provides insight into the global production conditions of the major grains and oilseeds. This latest update provided positive developments in wheat and rice production prospects for the 2022/23 season, while maize and soybean were revised down marginally from the February estimates. The USDA forecasts 2022/23 global wheat production at 788 million tonnes, up by 1% from February estimates and the previous season’s harvest. As with the earlier months, the ample harvest is on the back of expected large yields in Russia, the US, Canada, Kazakhstan, China, Australia, and the UK. However, because of strong consumption, the 2022/23 global wheat stocks are set to decline by 1% from the previous season to 267 million tonnes. In the linked article, Wandile Sihlobo discusses the latest data.

This past week Agbiz chief economist Wandile Sihlobo sat down with Eugene Willemsen. Eugene is the chief executive officer for Africa, Middle East and South Asia (AMESA) at PepsiCo. With a rich career spanning over 27 years in PepsiCo, Eugene has risen through the ranks to steer the AMESA region valued at $6.1B in annual net revenue (as of 2021) and supporting over 26,000 jobs across 74 markets.

We talked briefly about PepsiCo’s views on climate change, its programmes and work in Africa, and some exciting work PepsiCo is doing on food security programmes, regenerative agriculture, and support programmes for smallholder farmers. For more details, listen to this week’s podcast.

South Africa and Tanzania jointly held a business forum on 16 March 2023 on the margins of the state visit by President Samia Suluhu Hassan with the objective of providing South African and Tanzanian companies with a strategic platform to engage in bilateral trade and investment opportunities in both markets. The business forum primarily focused on promoting and facilitating economic exchanges in the following key sectors: agriculture, agro-processing, energy, manufacturing, and mining. The forum occurs in the context of the African Continental Free Trade Area (AfCFTA), which aims to remove most tariff and non-tariff trade barriers. South Africa’s agricultural exports to Tanzania are a key component of Tanzanian imports -- in the most traded categories, mainly wine and spirits (SA supplies 40% of the import market), some dairy (30% import market share), sugar, vegetable preparations (32% import market share), fruit (36% import market share), and cereals (11% import share). The largest overall South African exports are iron and steel, vehicles, machinery, fuels, chemicals, paper, and plastics. Key imports from Tanzania comprise coffee and tea, clothing, plastics, glassware, oilseeds, and grains. Please click here for more information.

One year after Russia’s invasion of Ukraine upended agricultural commodity markets, food prices remain elevated even after retreating from their record highs in early 2022. With two of the world’s largest exporters of wheat and other crucial crops entering a second year of war, many vulnerable countries still face heightened food insecurity. Fragile and conflict-affected states, home to 1 billion people, are at particular risk. Eleven straight monthly declines have pushed food prices down 19 percent from a peak last March, the Food and Agriculture Organization of the United Nations said Friday. Read more in the linked International Monetary Fund blog post.

Talks continue to extend a deal to allow grain shipments from Ukraine's Black Sea ports ahead of a deadline later this week, the United Nations and Turkey said on Tuesday, after Kyiv rejected a Russian push for a reduced 60-day renewal. Since Russia and Ukraine signed the UN-backed Black Sea Grain Initiative in Turkey on July 22, millions of tonnes of grain and other food products have been exported from Ukrainian ports, helping lower global food prices from record highs. Russia on Monday suggested allowing the deal to be renewed for 60 days, half the term of the previous renewal. The RIA news agency on Tuesday cited Russia's Deputy Foreign Minister Sergei Vershinin as saying Moscow had not yet received an official response from all parties to its proposal. Read more in the linked article first published on Reuters.

According to EastFruit analysts, the volume of apple imports to China in 2022 jumped by 40% and became the largest in the last three seasons and one of the largest ever. In total, 95 500 tonnes of fresh apples were imported, 27 000 tonnes more than in 2021. “China, being the world’s largest fresh apple exporter, is also a major importer. The main reason is that there are quite a lot of rich people in China who prefer imported goods. Therefore, China traditionally imports premium-quality apples for the high-price segment,” explains Andriy Yarmak, economist at the Investment Center of the Food and Agriculture Organization of the United Nations (FAO). New Zealand remained the leading supplier of apples to China in 2022, accounting for about 58% of supplies or 55 600 tonnes. Exports from New Zealand to China in 2022 increased by 43% or 17 000 tonnes. The second is South Africa, which took over this position from apple exporters from Chile in 2021. South Africa exported 17 200 tonnes of fresh apples to China in 2022, which is 40% more than a year earlier. The Chileans increased the supply of fresh apples to China by 1.5 times in a year to 11 500 tonnes. Read more in the linked article, first published on east-fruit.com.

Business Unity South Africa (BUSA) condemns the warnings of violence and looting by the Economic Freedom Fighters (EFF) against those businesses and South Africans who do not support its call for a national shutdown on 20 March 2023. The right to protest is protected in our constitution, as long as it does not infringe on the constitutional rights of other South Africans. Looting, violence, incitement, and intimidation are criminal acts that are not protected by the Constitution and should be prosecuted to the full extent of the law. The EFF warning of the looting of businesses, shops, factories, and other service providers - if they do not stop operations in support of the national shutdown - is a complete disregard for the constitutional rights of others. Law enforcement agencies must protect the rights of all South Africans. Read more in the linked BUSA statement.

A meeting to explore formalising the use of high cube containers to meet international trends and avoid insurance issues has still not been held between the National Department of Transport (NDoT), Transnet Freight Rail (TFR) and the Road Freight Association (RFA). The RFA told Freight News in October 2022, that the task team had not convened for a year, leaving road freight professionals in a difficult position. The three bodies are on a task team representing stakeholders who are seeking a resolution. The RFA confirmed to Freight News this week that there had still been no movement, and 17 months had now passed without any progress on dealing with the high cube challenge. Read more in the linked article first published on freightnews.co.za.

Tropical Cyclone Freddy is still active in the Mozambique Channel and has been present in the channel and Mozambique now for almost two weeks (since 23 February). It is also the longest-living tropical cyclone in recorded history according to the WMO, with a lifespan exceeding one month already. The presence of this system in the Mozambique Channel is an indication of recent large-scale atmospheric circulation already moving into a state that is more El Niño-like than what dominated for most of the last three years. Such large-scale unfavourable conditions are represented by a high-pressure system located over the interior of the southern African subcontinent, centered roughly over Botswana and northern Namibia. While some thundershowers are expected over the interior during the next few days, the general absence of a deep layer of tropical moisture in the vicinity of South Africa, due to the largely anti-cyclonic flow in the atmosphere, will negatively impact the rainfall potential of thundershowers over the interior. Read more in the latest edition of Cumulus, published by AgriSeker.

Port operations this week were as usual impacted by adverse weather, frequent equipment breakdowns and shortages, power outages, delays, and congestion. The congestion at Cape Town has worsened in the last seven days, with poor weather adding to the delays resulting in average berthing delays exceeding the 12-day mark. To date, a total of 14 vessels have omitted the Cape Town Port in 2023, with the latest vessels for March being (1) the APL Charleston, (2) Maersk Sheerness, and (3) CMA CGM Lebu. Additionally, in the wake of the proposed national shutdown on 20 March 2023, the Port of Richards Bay has issued its contingency plans to ensure that waterside and landside operations flow as effectively and efficiently as possible. The tug situation in the Eastern Cape is creating cause for concern across the industry as both the Port of Port Elizabeth and the Port of Ngqura are operating with one tug each. Furthermore, intermittent cable theft on several rail lines persisted this week, and as a result, rail operations remain largely inefficient, with the most substantial delays this week spanning up to 12 hours. Read more in the latest BUSA Covid-19 Cargo Movement Update.

The South African table grape industry (SATI) has further reduced its export prediction following a lower-than-expected harvest in the biggest growing region, the Hex River Valley.

“We anticipate that overall harvest volumes will be approximately 18.2 per cent lower than the volume recorded in the 2021/22 season and will also be 11.4 per cent lower than the original estimate,” said SATI. Growers in the Hex River Valley have also now indicated that they will be concluding their harvest earlier this year compared with last season when it ran into April. “The revised crop indicates that a total of approximately 63.6m cartons (4.5kg equivalent) will be inspected for export, with the upper limit projected at 103 per cent and the lower limit projected at 97 per cent of this figure,” the industry body stated. Read more in the linked article, first published on fruitnet.com.

The official opening of Africa Agri Tech (AAT) 2023 was marked by the induction of the first person into South African agriculture’s inaugural Hall of Fame. The recipient was Dr Faffa Malan, a large-animal veterinarian and former manager of the Ruminant Veterinary Association of South Africa. He was praised for his many years of dedicated service to the industry and commended on making a huge, positive impact on emerging farmers, with whom he has interacted and advised for many years. He was presented with a commemorative plaque by Willem Kleyn, trade marketing manager at Elanco Animal Health. Dr John Purchase, the former CEO of Agbiz has been appointed custodian of the newly instituted SA Agriculture Hall of Fame. Read more in the linked AAT newsletter.

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