Earlier this week, an update report on the work of Operation Vulindlela for the first quarter of 2022 was released. The quarterly report outlines the progress made by Operation Vulindlela and the departments responsible for these reforms. Operation Vulindlela is a joint initiative of the Presidency and National Treasury to accelerate the implementation of structural reforms and support economic recovery. It aims to modernise and transform network industries, including electricity, water, transport and digital communications. While the responsible government departments and entities drive these reforms, Operation Vulindlela monitors and identifies challenges and blockages. Where needed, it facilitates technical support to departments. The update report is linked here. In a media statement, Business Unity South Africa (BUSA) commented: "Business has supported the work of Operation Vulindlela, and we consider this to be a successful bilateral arrangement between government and business to enable progress and implementation. We believe Operation Vulindlela has done excellent work. We note the reforms marked as 'completed' and also note the excellent work done by Operation Vulindlela in this." Please click here for the BUSA statement.

Today, 12 May 2022, Ms Thoko Didiza, the Minister of Agriculture, Land Reform and Rural Development (DALRRD), will deliver the budget vote speech for our sector and finalise the Agriculture and Agro-processing Master Plan’s first phase. We hope that the budget allocations will focus on the interventions identified by social partners in the master plan that are likely to have a profound impact on inclusive growth. Despite the commodity boom providing additional revenue to the state, the sector realises that state resources are constrained. The focus must hence be on the quality over quantity of spending and the master plan identifies several areas where modest spending could yield great benefits. In the linked article, Agbiz CEO Theo Boshoff details Agbiz's expectations of the department's budget vote speech.

Steve Jobs famously said that one can only connect the dots backwards. We connect the dots on government’s economic policy since 2018. The dots tell us what has been done, not what will be done nor what has been promised. They help us to distinguish between daily headlines and longer-term trends. A stable macro-economic framework is one of the five key pillars of growth. (See, for example, the report from the International Growth Commission on which Trevor Manuel also served.) This simply means sustainable fiscal policies (reasonable deficits and debt) and sound monetary policy (curbing inflation). Read more in the linked article by JP Landman, political and trend analyst.

The Agricultural Business Chamber of South Africa (Agbiz) enjoys a position of thought leadership in a range of policy forums. On 05 May 2022, Agbiz was invited by the Academy of Science of South Africa (ASSAf) to help illuminate the impact of the Russia-Ukraine war on South Africa’s agriculture and food supplies and to make comments about the effects of the KZN devastating rains also on the sector. The purpose of the ASSAf colloquium, moderated by Prof Jonathan Jansen, is to create a forum where the Academy bring together prominent scientists/scholars and leading experts from the business community to deliberate on a matter of shared significance. Agbiz chief economist, Wandile Sihlobo, was joined by Professors Nicola Viegi and Heinrich Bohlmann of the University of Pretoria in this session. The recording for it is available here. Please get in touch with the Agbiz office if you are interested in the presentation slides. For background reading, the linked article can also assist.

The debate about rising global inflation and increases in interest rates is hugely relevant for South Africa’s agriculture and agribusiness sectors. In 2020, when major central banks, including the South African Reserve Bank, lowered interest rates to record lows in response to the pandemic economic damage, the farming sector saw significant reductions in debt servicing costs. This was a welcome development for a sector that had outstanding debt of R191 billion in 20201. However, the rise in interest rates now comes at an even trickier time for the farming sector, where input costs such as fertiliser and animal feed remain elevated and are likely to stay at a higher level for some time. The increases in input costs are partly the result of the Russia-Ukraine war, which has limited fertiliser production and exports from Russia. Before the war, Russia was the world’s leading exporter of fertiliser, accounting for about 14% of global exports. Agbiz chief economist Wandile Sihlobo elaborates on this topic in the linked article.

The world has been in a period of surging food prices for several reasons. These include drought in South America and Indonesia, rising demand for grains and oilseeds in China, and, more recently, the disruption of the global grains and oilseeds exports following the Russia-Ukraine war. In March 2022, the FAO Global Food Price Index rose to a record level since its inception, illustrating the price increases observed across the world's major agricultural producing and exporting regions. This challenge of rising food prices is unlikely to change in the medium term as general grains and oilseeds supplies remain constrained, and the higher fertiliser prices have increased uncertainty about the potential harvest in the 2022/23 production season. With that said, this past week, the FAO Global Food Price Index eased from the all-time high level of March 2022, declining by 1% to 159 points. Still, this is up by 30% from the corresponding period last year. Read more in the linked article by Wandile Sihlobo.

South Africa's agricultural machinery market remained robust in the first four months of 2022. The data released by the South African Agricultural Machinery Association this afternoon show that in April 2022, tractor and combine harvester sales were up, marginally, by 0,3% year-on-year (y/y) and 2,0% y/y, with 559 units and 44 units sold, respectively. Monthly, however, tractor sales, in particular, are softening, while the opposite is true for combine harvesters. The generally healthy sales are welcome developments, as they indicate a primary agricultural sector that is still in a better financial condition and continues to invest in movable assets. We, however, believe that the monthly decline in tractor sales could start a break from the two years of a positive trend. Wandile Sihlobo discusses the latest data in the linked article.

Last year the African Continental Free Trade Area (AfCFTA) started officially, establishing a free trade area between 54 African countries. The policy framework is still under implementation as all countries need to agree on trading laws. In January, the block announced it will remove tariffs on around 87% of 6 000 products, the majority being food and agricultural items. This is seen as a crucial step to boosting growth and fostering more intra-African trade in the food industry. Wandile Sihlobo discussed the impact of the AfCFTA and what is needed next during a CNN interview. Please click here to watch the interview.

The theft of grain is a problem in South Africa, especially during times when commodity prices are high. Criminals are eyeing the grain, not just when it is transported or off-loaded, but could also attack the logistical systems of grain storers. In an interview with PretoriaFM, Agbiz Grain general manager Wessel Lemmer explained the measures grain handlers have in place to protect grain. Please click here to listen to the interview.

The World Economic Forum’s new report, Fostering Effective Energy Transition 2022, says energy transition must address the challenges to environmental sustainability, energy security and energy justice and affordability. The pace of energy transition needs to be supercharged, as demonstrated by the recent spike in fuel prices, challenges to energy security, and the slow progress on climate action. Shaping a balanced and effective energy transition is possible but requires new collaboration at supply and demand levels. Please click here to read the full report or watch the launch webinar of the report here.

The war in Ukraine and sanctions on Russia are causing substantial economic spillovers, notably for energy. Oil prices have climbed, but increases have largely been contained thanks to spare production capacity in some countries and strategic petroleum reserves in others. Brent crude, the global oil benchmark, rose to a seven-year high of around $100 before the invasion sent it surging to more than $130. It has since pared gains amid pandemic lockdowns in China, the biggest oil importer, that may weigh on economic growth there. For some, rising oil prices may echo the 1970s, when geopolitical tensions also caused fossil fuel prices to spike. Memories of the high inflation and slow growth that followed—known as stagflation—have fueled concerns about a possible repeat. Importantly, though, times have changed. Read more in the linked IMF blog post.

Port bottlenecks that have increased supply-chain congestion because of the war in Ukraine and lockdowns in China may be showing signs of easing, according to one of the world’s biggest shipping companies. Currently, the number of ships waiting outside of the ports in Los Angeles and Long Beach has been reduced to less than 40, from more than 100 earlier this year, said Cheng Cheng-mount, chairman of Taiwan-based Yang Ming Marine Transport Corp. The waiting time for ships at Shanghai ports is two or three days, compared with 10 to 14 days at the US ports.“I think this is a good sign that the port congestion has been easing” in the US, Cheng said in an interview on Tuesday. “We foresee in the second half, everything will become smooth. All the difficulties will be easier.” Read more in the linked article, first published on Daily Maverick.

Lancewood dairy farm is among 40 dairy farms where South Africa's first internationally certified carbon programme for the agricultural sector - known as AgriCarbon - is being piloted by Climate Neutral Group (CNG) to help curb greenhouse gas emissions. Dairy farms have borne the brunt of criticism from environmentalists in the agriculture sector for releasing large quantities of methane and nitrogen that drive climate change. Lancewood has, for example, more than halved its nitrogen use per hectare per year in 2022 from 2018, according to research consultancy Trace & Save. Read more in the linked article, first published on Reuters.

The fight against swarms of locusts across the Eastern Cape continues as the insects move from the Sarah Baartman region to Amathole. The locust swarms that have damaged and devoured thousands of hectares of grazing in the Karoo and parts of the Sarah Baartman area have now moved into the Amathole district. Several villages and towns have been hit by the locust infestation, including Somerset East, Pearston, Paterson, Adelaide, Bedford, Fort Beaufort, Riebeeck East, Makhanda, Alice, Hogsback and Keiskammahoek. According to entomologist Dr Roger Price, the locust plague in parts of the Northern and Western Cape and Karoo is by far the biggest outbreak in 25 years. Read more in the linked article, first published on Daily Maverick.

The Department of Agriculture, Land Reform and Rural Development (DALRRD) welcomes the announcement by the United Nations (UN) General Assembly that it has (on the 29 March 2022) adopted the resolution proclaiming 12 May as the annual International Day of Plant Health (IDPH). The Department views this as a positive step toward addressing the issue of global hunger as plant pests and diseases cause massive crop losses and leave millions without sufficient food supply. The day is a key legacy of the International Year of Plant Health (IYPH), which was marked in 2020–2021. This important and lasting IYPH legacy will allow all relevant stakeholders to continue with the effort of increasing public awareness of the importance of plant health. South Africa joins countries in the world to celebrate plant health as part of recognising the importance of plants to human health; animal health; environmental care and biodiversity; and socioeconomic, agricultural and rural development. Read more in the linked DALRRD media statement.

The United States Embassy in Pretoria has a vacancy for an agricultural marketing specialist. The agricultural marketing specialist (entry-level specialist) is responsible for representing the US Department of Agriculture (USDA) Foreign Agricultural Service (FAS) in Southern Africa. The incumbent facilitates linkages between US exporters and host country importers, identifies marketing practices to increase trade opportunities, and resolves market access issues affecting US agricultural products; develops and maintains a broad range of industry and government stakeholder contacts (working-to-mid levels) to gain cooperation on substantive agricultural matters; analyses and drafts reports on agricultural commodities, market developments, and market policy. Implements and evaluates various planned projects and activities, including market promotional and trade development programmes. Please click here for more information.

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