One would think every effort would be made in South Africa for fit-for-purpose, well-planned and relatively low-cost agricultural infrastructure investments to be efficiently executed with speed, leading to the creation of thousands of jobs and a much-needed boost in economic activity. But in the South African case, this is seldom the approach to development. We sit in endless rounds of meetings, forums and policy discussions where the need to expand irrigation agriculture to support export growth and jobs is mentioned, in line with the National Development Plan (NDP). Yet most such discussions do not lead to implementation. Read more in the linked article by Louw Pienaar, a senior agricultural economist at BFAP, and Wandile Sihlobo, chief economist at Agbiz, first published in Business Day.

Treasury did the best it could in this month’s Medium-Term Budget Policy Statement. Half the revenue windfall was used for fiscal consolidation and the other half on spending increases. But real cuts to expenditure are still pending, and cabinet backing is yet to be negotiated. Achieving consolidation next year will be even harder as the commodity boom wanes and election politics wax. But as Prof. Michael Sachs, adjunct professor at the University of the Witwatersrand, points out in the linked article, notwithstanding an improved fiscal position, the country’s finances remain under serious pressure.

“Localisation will raise costs, reduce competitiveness and domestic competition. It is an anti-export strategy and the wrong priority for South Africa.” So said Ann Bernstein, executive director of the Centre for Development and Enterprise, at the release of a new report - The Siren Song of Localisation. “Significant stakeholders in the economy – government, business and organised labour – have endorsed some version of the idea that localisation is essential for economic growth in South Africa,” Bernstein said. “But the strategy is misguided.” The report notes that proponents of localisation see it as a driver of economic growth because demand for imported goods is redirected to local firms making the same products. Please click here to peruse.

The South African Property Owners Association (SAPOA) has indicated that the cost of the unrest is estimated to exceed R20bn in KwaZulu-Natal and the overall impact on the national GDP will be R50 billion. Over 200 shopping malls were targeted and 1 787 retail stores were impacted and damaged. SAPOA estimated that rebuilding the malls that were impacted may take up to two years depending on the size of the mall and the extent of damages. Please click here to view the results of a survey conducted by SAPOA on the impact of the 2021 riots and looting.

Earlier in the year, SARS published draft amendments to the Diesel Fuel Tax Refund System for public comments. The draft amendments seek to introduce a refund system separate from VAT where diesel is used in vehicles that do not travel on public roads. The rebate, therefore, excludes several levies associated with road travel such as the Road Accident Fund. The proposal seeks to amend the rules under section 75 of the Act to provide for electronic registrations and profiling of diesel refund users and the submission of returns under a separate diesel refund administration. Agbiz participated in an industry consultation in October wherein SARS expanded on the details relating to logbooks, recordkeeping, enforcement and also gave an update on the processes underway to amend the legislation. The presentation delivered by SARS is linked here. 

South Africa's agricultural machinery sales have been robust for over a year now. In October 2021, the tractor sales of 856 units, up by 4% y/y, were the highest monthly volume since October 2014. Meanwhile, the combine harvester sales of 45 units, up by 73% y/y, were the highest monthly sale since March 2014. This placed the total tractor sales for the first 10 months of this year at 6 238 units, up by 25% y/y. The combine harvester sales increased by 37% y/y over the same period, with 242 units sold. Wandile Sihlobo discusses the latest data in the linked article.

The need to expand South Africa's agricultural export markets beyond the current reach, along with concerns about logistical interruptions, were the two major running themes in various interactions we had with agribusinesses last month. China, Japan, India, Saudi Arabia, and Bangladesh are some of the markets that agribusinesses are interested in expanding their presence. This is because of the growing population and generally better economic conditions that support the demand for high-value agriculture, food, and beverage products. For the near term, the destruction and criminality destroying Transnet infrastructure was a key focus. This is mainly because South Africa's agricultural and agribusiness sector is export-oriented. Wandile Sihlobo discusses this subject in the linked article.

At the start of every agricultural production season, one of the major concerns for farmers is weather conditions over the course of the season and how these will affect yield. But for the 2021/22 season, another important concern that has been on farmers’ radars since the start of the season has been the rising input costs, which is the price of fertilizers and agrochemicals. These input products prices are largely driven by supply constraints in key fertilizer-producing countries such as China, India, the US, Russia and Canada. Rising shipping costs, oil and gas prices have also been contributing factors, with firmer global demand from an expanding agricultural sector. This has been the case for farmers in the Northern Hemisphere for some time but also more recently for farmers in the Southern Hemisphere. On average, the prices of fertilizers were up by over 50% in September 2021 compared to the corresponding period a year ago. Meanwhile, the agrochemicals had risen by over 30% over the same period. Read more in the linked blog post, written by Wandile Sihlobo.

As you are aware, the sector is faced with a wide variety of challenges, including uncertainty in domestic agricultural policy, biosecurity, climate change and agricultural finance. Therefore, it is essential to analyse and determine the confidence levels in the agribusiness sector, and we do this through the Agbiz/IDC Agribusiness Confidence Index. Decision-makers from within the agricultural sector and Stats SA, SA Reserve Bank, National Treasury, etc., are close observers of this index. Kindly respond to the Agbiz/IDC Agribusiness Confidence Index survey for the last quarter of 2021 and submit your response on/or before Monday, 22 November 2021, electronically by clicking on this link. 

The total storage capacity for grains and oilseeds in Europe amounts to 359 million tons, a study commissioned by the European Commission found in 2017. The storage capacity has increased by 20% from 2005 to 2015. In the same period, the production of crops increased by 11% from 312 million tonnes to 346 million tons. The increase in storage capacity was, therefore, more than the increase in production. The growth in South African production and export of grain requires sufficient storage capacity. New capacity must be erected without state support, writes Agbiz Grain general manager Wessel Lemmer, in the linked article, first published in Landbouweekblad.

As part of expanding access to the Covid-19 vaccination and taking vaccines to the people, the Gauteng Provincial Government has made it easier for workers to receive the jab at their place of employment. Workplace vaccinations are provided to institutions that have 50 or more workers that are yet to get the jab. This will also include health education to provide clarity on any related issues the workers might have. This is far easier than the original route and has been put in place to try and encourage as many people as possible to vaccinate as part of the SA effort. Please click here for more information.

Agricultural global value chains grew rapidly after WWII, transforming the nature of agri-food production worldwide. Still, little is known about how taking part in these chains changes the structure of an economy. This column constructs a panel dataset from 155 countries for the period from 1991 to 2015, examining the effect that participation had on each country’s structural transformation and uncovering evidence that runs counter to conventional wisdom: modern agrarian economies are leapfrogging the manufacturing sector to develop their agriculture and service sectors through participation in agricultural global value chains. Read more in the linked article, first published on voxeu.org.

International prices of all major cereals increased month on month in October. Wheat prices led the increase, with prices of rice, barley and maize also up. In East Africa, prices of coarse grains followed mixed trends in October and were generally higher than one year ago, with exceptionally high levels still prevailing in the Sudan and South Sudan. Prices were well above their year-earlier levels also in Uganda and Somalia, due to reduced availabilities, and in Ethiopia, mainly due to macroeconomic difficulties and conflict-related trade disruptions in some areas. In West Africa, prices of coarse grains decreased seasonally in October for the second consecutive month. However, prices were still significantly above their year-earlier values across the subregion, particularly in central Sahel and Lake Chad Basin, where increased conflicts continued to disrupt agricultural livelihoods, trade and markets. Read more in the linked Food Price Monitoring and Analysis (FPMA) Bulletin, published by the FAO.

Food inflation for October 2021 was recorded at 6.7% whilst food and NAB inflation came in at 6.1%, showing a slight moderation from September levels, where these two categories were recorded at 7% and 6.6% respectively. Most of the key factors driving inflation over the past months are still in play. For instance, although meat inflation has moderated to 9.1%, the growth in prices and its expenditure share in the CPI food basket still make it the largest driver of inflation over the past month. Market stakeholders are however reporting that producers are continuing with herd rebuilding, which constrains calf supply for feedlots. This, along with high input costs in the form of feed, has resulted in lower slaughter numbers, which in turn kept retail prices for meat at elevated levels compared to 2020. September 2021 slaughterings are around 3% lower compared to the corresponding time in 2020. The linked BFAP report gives an overview of food inflation dynamics, its associated causes and the cost of basic healthy eating for October 2021.

Public Enterprises Minister Pravin Gordhan said the R130 billion in concessional finance offered to South Africa by developed countries during the COP26 climate summit was just that – an offer, not a deal. Gordhan said the offer now had to be looked at and further negotiations must take place. He has also made it clear that the money will not go towards dealing with Eskom’s R450 billion debt mountain or turning the faltering power utility around. Answering questions in the National Assembly, Gordhan told MPs that the R130 billion was linked to three government projects: Eskom’s just energy transition project, a green hydrogen project and getting the automotive industry to be able to produce electric cars. Read more in the linked article, first published on msn.com.

In celebration of a number of Agbiz members who celebrated their 100 years of existence, an annual Agbiz Centenary Bursary Fund was established. The primary objective of the bursary is to promote master's, or PhD level research in agribusiness related fields and Agbiz certainly is proud to be associated with and supporting the set research of Agbiz Centenary Bursary holders. The annual bursary of R39 000

is available to a South African student registered for a master’s or PhD degree in either agricultural economics or agribusiness management-related fields, at any recognised South African university in 2022. Terms and conditions apply. Applications for the 2022 bursary, complete with a completed application form and the required documentation, should reach Agbiz via email or mail before 5 December 2021. Please click here for more information.

Onderstepoort Biological Products SOC Ltd (OBP) is aware of the growing concerns relating to the current shortage and unavailability of the African horse sickness (AHS) vaccine. OBP’s facilities and equipment strategy, which comprises short, medium, and long-term repairs, augmentation and replacements, is currently underway. In this regard, scheduled short-term repairs and maintenance are ongoing. The breakdown in some of our equipment has resulted in an interruption in the production of certain products, including the African horse sickness vaccine. Contingency plans are being implemented and closely monitored to ensure that production outputs meet the demand. The company wishes to reassure the equine industry that all efforts are being made to ensure that the vaccine is available early in December 2021. Read more in the linked OBP media statement.

"The introduction of the sugar tax in 2018 was a terrible mistake for several reasons and should be scrapped. Rather than taxing sugar, we need to ensure people are educated about the importance of a balanced diet, and to ensure that they can afford healthier foods like vegetables and proteins," says the SA Canegrowers Association. "Baseless attacks on the sugar industry will not bring the country any closer to a solution for obesity-related illnesses or reduce the burden on our healthcare system." Read more in the linked article, first published on Daily Maverick.

After two years of almost constant lockdown and uncertainty, the agri gap year (first for South Africa) offers prospective students the freedom of an agricultural setting and the opportunity to build a solid foundation for the future. The agri gap year offers a solution to prospective students with an interest in agriculture to combine holistic preparation for adulthood and the world of work with a year of fun. While still following structured learning programs in agricultural management and gaining valuable exposure to various components of agriculture. The programme is an ideal opportunity for prospective students to take a step back and gain perspective after a challenging and demanding school career. Read more on this exciting partnership between Peritum Agri Institute and Reitz Landbou Akademie in the linked media statement.

Keeping it Fresh, the newsletter of the Fresh Produce Exporters Forum (FPEF), contains all the recent relevant news and developments. Please click here for the latest edition.

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.

Read more about the latest developments and news in the pork industry in the South African Pork Producers' Organisation (SAPPO) newsletter, SAPPO Weekly Update.