Prof. Ricardo Hausmann and a team of development economists from Harvard University’s Kennedy School of Government recently published an analysis of the reasons for South Africa's poor economic performance over the past 15 years. Concluding that the main causes relate to a collapse in productivity in critical state-owned companies, and rising political and macroeconomic uncertainty, the report refutes alternative accounts of our economic decline that emphasise a so-called turn to "austerity" or the end of the commodities boom. The report, Macroeconomic risks after a decade of microeconomic turbulence, makes for sobering reading. Published in January 2022 as a UNU Wider working paper, the paper and executive summary can be accessed here.

The agriculture value chain is a complex web of interactions that includes activities within the agricultural sector and various support industries less directly linked to the sector. Despite being declared an essential service when the Covid-19 regulations were promulgated and lockdown restrictions imposed, the value chain still faced multiple bottlenecks and disruptions that needed to be overcome to ensure food security through this period. A paper, A sector-wide review of the Covid-19 impact on the South African agricultural sector during 2020–21, authored by leading agricultural economists, considers such bottlenecks and their impacts on major industries within agriculture, as well as the actions taken to address them. It highlights distributional challenges, which influenced accessibility to vulnerable groups, which was accentuated by the initial exclusion of informal traders from essential services – an omission that was later corrected. Furthermore, it notes severe impacts on non-food industries such as wine, where trade was restricted, but other sectors performed well and overall, agriculture still grew by 13% year on year and mostly keeping food inflation in check. Key to this performance was that real-time communication and reporting mechanisms were put in place, allowing stakeholders to report bottlenecks quickly, from where they could be escalated and addressed through strong collaboration between government and industry. The paper was published in Agrekon. If you are interested in the full paper and are not subscribed for academic work, kindly contact Karen Grobler (karen@agbiz.co.za) for a copy.

As far as the economy goes, last week’s State of the Nation Address (SONA) dealt primarily with structural reform in sectors like electricity, spectrum, transport and infrastructure. But even the sceptics who supported the announcement asked: it’s all very well, but will it be implemented? The easiest way to answer that question is to look back at the track record of implementation on critical economic issues. As the president himself said, “The state of the nation is linked inextricably to the state of the economy”. There is broad agreement that, without dramatic intervention, the South African economy has a growth ceiling of about 1,5% to 2,0% per year. That is about the same rate as population growth. There is no hope of dealing with the country’s triple curse of PUI (poverty, unemployment, and inequality) if this doesn’t change. So, what dramatic intervention could bring revival? Two possibilities are being debated vigorously. Please click here to access JP Landman's commentary on SONA.

Theo Boshoff, CEO of Agbiz, says that despite the many challenges facing South Africa’s agriculture sector in 2022, opportunities for growth abound. He spoke to Annelie Coleman of Farmer's Weekly. "We often work on policy and regulatory issues that affect the primary sector directly, but our focus is to unlock the blockages in the value chains that create demand and value for the primary producer. The term ‘value chain’ is highly appropriate, as you cannot push a chain; you can only pull it. In this sense, growth in primary production is ‘pulled’ from demand down the value chain. If we can improve the ease of doing business for companies in the value chain, it will have a knock-on effect for primary producers. That being said, Agbiz also plays a vital role in supporting the upstream value chain to facilitate a business environment where primary producers can have access to world-class inputs." Please click here to peruse.

The United States think tank Fund for Peace annually compiles a fragile states index consisting of states whose governments are so weak or ineffective that it has little practical control over much of its territory; where public services are no longer provided; where there is widespread corruption and criminality; involuntary movement of populations; and sharp economic decline. Countries like Yemen, Somalia and Syria top the list of fragile countries. South Africa was no 89 on the list in 2021 out of 179 countries. Definitions of what constitutes a ‘failed state’ are varied but generally centre on the inability of a state to provide positive political goods, such as security, infrastructure and services. Very few states have completely failed. Such governments may be unable to deliver services in certain areas whilst still managing to provide certain services in other areas. Agbiz head of Legal Intelligence Annelize Crosby discusses this issue in the linked blog post.

The debate regarding compensation for land taken for land reform purposes has been raging ever since the CODESA negotiations and the initial formulation of section 25 of the Constitution. Over the years there have been numerous attempts to give content to the provisions of section 25(3) which deal with just and equitable compensation, but without success. Interestingly enough, there have been few court judgements on the topic of just and equitable compensation. On 11 February 2022, the Land Claims Court handed down judgement in the case of the Moloto community v the Minister of Agriculture, Land Reform and Rural Development and others.  This judgement is an important landmark regarding the court’s interpretation of section 25(3) of the Constitution and the calculation of just and equitable compensation.  Annelize Crosby scrutinises this subject in the linked article.

President Cyril Ramaphosa made an important intervention in his 2022 state of the nation address — the establishment of an office for easing red tape across the different levels of government, in addition to continued efforts to reduce inefficiencies across SA’s network industries. For the agricultural and agribusiness sectors, which operate primarily in rural towns, the nondelivery of services is a big challenge and leads to greater business costs. Examples are Clover’s announcement in 2021 that it was leaving Lichtenburg because of unsatisfactory service delivery by the municipality. Astral is another agribusiness that has experienced poor service delivery in Mpumalanga. Agbiz chief economist Wandile Sihlobo shares his views in the linked article, written for and first published in Business Day.

The data released by Statistics South Africa earlier this week show that consumer food price inflation accelerated to 6,2% y/y in January 2022, from 5,9% y/y in the previous month. Fish, oils and fats, and vegetables are the primary products underpinning this uptick in the overall consumer food price inflation. South Africa is a net importer of vegetable oils and fats, and therefore, domestic prices tend to mirror the global trend. In January, the global vegetable oil prices remained elevated, as illustrated by the Food and Agricultural Organisation Vegetable Oil Price Index, which increased by 4,2% in January from the previous month to 186 points, an all-time high. This is on the back of concerns about a possible poor palm oil harvest in Indonesia, which South Africa imports roughly half a million tonnes of a year. India's firming demand for soybean oil also added to the general global increase in vegetable oil prices. Wandile Sihlobo interprets the latest data in the linked article.

When farmers have a good year, allied industries benefit by spending the financial gains or the produce of the farming businesses. Agricultural machinery is one such industry that benefited from farmers’ spending in 2020 and 2021. The farmers, specifically grain and oilseed producers, expanded their area planted in these past two years. Weather conditions were favourable, resulting in a large harvest for two consecutive seasons. This was also when commodity prices remained elevated, supported by global events such as dryness in South America, and rising demand for grains and oilseeds in China. Wandile Sihlobo discusses the latest data in the linked article, first published in The Herald.

Many analysts found a reason to lambast President Cyril Ramaphosa’s State of the Nation Address (Sona). But on a high (pun intended), the address’ strong push for liberalisation of the cannabis industry for economic purposes is one of the key levers for rural economic growth. Cannabis could, indeed, be a catalyst for revitalising rural communities that are economically marginalised and excluded from the agriculture value chains and create opportunities for canna-tourism – especially in rural Eastern Cape, KwaZulu- Natal and Limpopo. Wandile Sihlobo shares his views on this subject in the linked article, first published in The Citizen.

In a media statement issued by Transnet on Wednesday, the entity stated that Transnet Port Terminals (TPT) continues to work with customers and industry to ensure that the port adequately supports the timeous export of agricultural products to international markets. Reports circulating currently of congestion and lack of equipment at the port are false and mischievous. Seven of eight cranes are in operation, and 21 rubber-tyred gantries (RTGs) are available. The terminal has just completed and sailed a vessel, the MSC Meltemi, and another vessel – Santa Clara – is being worked and expected to be completed by 22:00 on Wednesday, weather permitting. There are currently five vessels at anchor, with one due to dock. The backlog has been cleared and the current average waiting time is 10 hours. Please click here for the complete Transnet media statement.

In an article published on The Conversation, scientists have expressed their concern about South Africa’s authorities approach to regulating genome-edited plants. In October 2021 the government classified genome-edited plants as genetically modified crops. This is based on its interpretation of the definition of a genetically modified organism in a 25-year-old piece of legislation rather than on recent science-based risk analysis considerations. "As experts in plant biotechnology we fear that this regulatory approach will greatly inhibit the development of improved crops for South African farmers. It will place an unnecessary regulatory burden on bio-innovators. This will discourage local investment for in-house research and development, as well as projects in the public sector. Local entrepreneurs who aim to enhance local crops’ climate resilience or to develop speciality products for niche markets through genome editing will be thwarted by the need to raise disproportionate funding to fulfil current regulations." Please click here to read the full article.

The United States Department of Agriculture lowered its 2021/22 forecast for Brazil’s soybean planted area further, to 39.8 million hectares (ha) and soybean production to 134.5 million metric tons (MMT). From the last estimates, weather conditions have continued to worsen in key producing regions. Principally, the drought in the south of the country has dampened prospects for a record crop. Post consequently also lowered the 2021/22 soybean export forecast to 86.8 MMT. Please click here for more information.

The IFR report - Futures of Agricultural Work in South Africa 2035 - was officially launched yesterday by Agbiz, in collaboration with Agri SA and BUSA. The services of the Institute for Futures Research (IFR) at Stellenbosch Business School were retained to explore the futures of work in the agricultural sector of South Africa. This was a comprehensive project, spanning over 10 months and involving several stakeholders, including government, industry, and interest groups. Agbiz, Agri SA and other role players in the agricultural value chain participated in the study and provided inputs into the scenario-planning exercise. Agricultural value chains are vital to the South African economy not just within the context of food security, but also to drive economic growth and employment. The President’s Economic Recovery Plan places a great deal of emphasis on the agricultural sector as it is a sector that performed relatively well despite the economic downturn that accompanied the Covid-19 pandemic. Even before Covid, the global movement towards a ‘just transition to a lower carbon economy created the expectation that the economy of the future will be driven by green sectors. Please click here for a media statement with more details on the report. The full report can be accessed here.

Isolated to scattered thundershowers occurred during the last few days over the central to western parts of the country, with somewhat more widespread (and in cases severe) thundershowers towards the south. Over the summer-grain production region, thundershowers concentrated on the southern to central parts, mostly from the southeastern Free State into southern North West and occurred for the most part on Monday (14th). Thundershowers that were expected over the Mpumalanga didn’t materialise, a sign of a trend towards drier conditions that have been present through much of the period since January. Generally speaking, most of the summer rainfall region remains under the influence of an upper-air high-pressure system. Upper-air systems in support of rainfall currently focus on the western and southern parts of the country. Read more in the latest issue of Cumulus, compiled by AgriSeker.

The total figures in respect of import and export of dairy products by South Africa in 2021, were recently received from SARS. Attached are graphs, as prepared by the South African Milk Processors' Organisation (Sampro) and based on the information from SARS, which provides macro pictures of import and export of each of the six different types of dairy products during 2021 and during each of the previous seven years. As is well-known, in each of the six types of dairy products, products of significantly different specifications and prices are classified. For example, the customs tariff provision for cheese contains separate provisions for fresh cheese, grated or powder cheese, processed cheese, blue-veined cheese and “other cheese”. The provision for “other cheese” includes separate provisions for, amongst others, gouda and cheddar cheese. Please click here to peruse.

In a communique with its members and industry stakeholders, Hortgro has shared a document published by the Western Cape Government explaining workplace vaccination plans. A Covid-19 plan is a legislative requirement for all businesses. This document provides guidance and answers questions you may have regarding the requirements for and compilation of workplace vaccination plans - which set out the measures your company will implement to make sure the workplace is safe. You can access the full document here. Business for South Africa also has a vaccination toolkit that you can access here.

Hortgro Science first published the Fresh Quarterly, an industry technical publication, in 2018. Since then this publication has gone from strength to strength. The FQ team is happy to announce that the publication is now interactive, which means that clicking on a link will directly take you to the chosen article. The FQ team is currently working on a new FQ website with improved search functionality, which will make the FQ an even more important resource for researchers, technical advisors, producers, and other important stakeholders. In the meantime, we are happy to report that the Fresh Quarterly Issue 16 is now available. In FQ #16 we unpack everything and anything about one of Africa's scarcest and most critical resources, water. Please click here to peruse.

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.