12
e-Newsletter
32/2020
28 August 2020
Economic and fiscal outlook by National Treasury 
 
This past week, National Treasury (NT) presented their Economic and Fiscal Outlook at Nedlac in the build-up to the 2020 Medium Term Budget Policy Statement (MTBPS) due to be tabled in Parliament in October 2020. The MTBPS has special and great significance this year due to the Covid-19 pandemic, the subsequent lockdown measures, and their disastrous impact on South Africa's economy and the livelihoods of the broader population. Government will have to massively rein in its expenditure, especially its out of proportion public wage bill, and ensure that its tax collection is far more efficient, especially in getting all illicit trade taxed properly. National debt management is going to be critical over the next five years to ensure we avoid a sovereign debt crisis. The question is whether the political will exists to achieve debt stability. Time will tell, but watch this space. Please click on link to peruse.
TIPS Tracker: the economy and the pandemic
 
One of the key findings in TIPS Tracker for the period 10 August to 23 August 2020, is that new Covid-19 cases declined in every province in the past two weeks, but the rate of decline flattened out. Moreover, the number of new diagnoses remained well above the level on May 31, when the country moved to level 3. That in itself increases the risk that the contagion could accelerate again. The TIPS Tracker on the economy and the pandemic highlights important trends in the Covid-19 pandemic in South Africa, and how they affect the economy. It analyses publicly available data, research and media reports to identify current developments, and reflect on the prognosis for the contagion, the economy, and policy responses. Please click here for the latest report.
AGRIBUSINESS RESEARCH
Outlook looks sunny for agriculture sector

South Africa's agricultural sector had a solid start to 2020, with first quarter gross value-added growing 27.8% quarter on quarter on a seasonally adjusted and annualised basis. "I noted then that the succeeding quarters would likely continue to show strong growth - a view I still maintain," says Agbiz chief economist Wandile Sihlobo.
"But the second-quarter expansion could be somewhat milder than the first, probably in the range of 20%-25%. The key drivers will remain similar to the previous quarter - an uptick in animal products, field crops and horticulture." Wandile Sihlobo discusses this subject in the linked article, written for and first published in Business Day.
Covid-19 and the climate present varying risks for Southern and East Africa agriculture 

The reports of a potential La Niña event during the coming summer months presents mixed fortunes for Southern and East Africa's agriculture. For parts of East Africa, the La Niña weather event typically correlates with below-average rainfall in the months between December and February, while Southern Africa experiences wetter conditions over the same period. What makes this concerning for East Africa is that this is a period just before the start of the summer grains planting, which occurs in February each year. Therefore, a La Niña event would raise the risk of yet another poor agricultural harvest for countries in this region. Wandile Sihlobo and Tinashe Kapyua discuss how climate and pandemic risks could weigh on agricultural output and farm profitability in the 2020/21 season, and in turn, the livelihoods of those who are directly and indirectly dependent on the sector, in the linked article written for and first published on Daily Maverick.
Is the uptick in South Africa's pineapples consumption a temporary trend? 

"Pineapples are one of the fruits I seldom write about, but the recent uptick in production and consumption warrants some attention," says Wandile Sihlobo. "First, after hovering at levels below 100 000 tonnes for roughly six seasons, the United States Department of Agriculture (USDA) Pretoria office painted an optimistic picture of this industry this past week." The USDA estimates an 18% increase in South Africa's pineapples production to 132 000 tonnes in 2019/20 production season. Growth is underpinned by an expansion in area planted, improvements in yields, and generally favourable weather conditions especially given that the production is done on dryland/rain-fed, which makes the weather crucial to the industry. Wandile Sihlobo elaborates on this topic in the linked blogpost.
Brief reflections on South Africa's food price inflation

South Africa's food price inflation increased slightly to 4.6% y/y in July 2020, from 4.5% y/y in the previous month. This was primarily underpinned by a slight uptick in bread and cereals; fish; and oils and fats. With the current higher maize prices, which recently crossed the R3 000 per tonne mark, Wandile Sihlobo says he is inclined to believe that we could see a further uptick in food price inflation, although probably mild, in the coming months. "At the start of the year, when we were seeing prospects of good maize, fruits and vegetables harvest; I was convinced that the only upside risk to South Africa's food price inflation would be meat. Even here, the challenge was to be base effects, as in 2019 South Africa's meat prices were largely under pressure on the back of increased supply when the beef exports were temporarily suspended because of the foot-and-mouth disease. Read more in Wandile Sihlobo's linked blogpost.
LABOUR
Occupational health and Covid-19: don't let controls slip in level 2
 
With the impending arrival of a new Occupational Health and Safety (OHS) Direction to ensure health and safety control measures in lockdown level 2, it is important to remember the basics that all employers should have in place. We can't fully avoid Covid-19, but we can avoid unnecessary transmissions through responsible workplace interventions. In the linked articleJahni de Villiers of Labour Amplified explains how companies can identify and mitigate the risks associated with Covid-19 within reasonable bounds.  
OTHER NEWS
Without help, low-income developing countries risk a lost decade
 
While the Covid-19 crisis is sending shockwaves around the globe, low-income developing countries (LIDCs) are in a particularly difficult position to respond. LIDCs have both been hit hard by external shocks and are suffering severe domestic contractions from the spread of the virus and the lockdown measures to contain it. At the same time, limited resources and weak institutions constrain the capacity of many LIDC governments to support their economies.Growth in LIDCs is likely to come to a standstill this year, compared to growth of 5% in 2019. Further, the absence of a sustained international effort to support them, permanent scars are likely to harm development prospects, exacerbate inequality, and threaten to wipe out a decade of progress reducing poverty. Read more in the linked IMF blogpost. 
Department reports positive progress on last FMD outbreak
 
In a follow-up report on the foot-and-mouth disease outbreak in the Molemole district in November 2019, Dr Mpho Maja, director of animal health, reported that the last positive location was reported to the OIE on 26 February 2020 and more than six months have passed since the clinical end point on most affected properties. The process of resolving the outbreak is ongoing and quarantine has been lifted on nine of the 19 positive locations. Please click here for the full report.
Global macadamia supply down this year 

The macadamia season started strongly with the world's largest retailers moving confidently to secure their projected 2020 requirements. However, sellers to the travel sector and manufacturers of impulse lines have been hard hit. Downward crop revisions are largely attributed to adverse weather conditions, together with pest and disease control concerns. Countries and geographies have been
affected individually and collectively, and so have the core macadamia segments of snack (retail), food service, and food manufacturing. Read more in the latest market report compiled by Green & Gold Macadamias.
 Weekly newsletter from CGA

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

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

Agbiz Congress 2021

We are currently finding ourselves in challenging and unprecedented times, and the uncertainty around what the future holds makes it very difficult for any of us to plan ahead. This also applies to the arrangements for the Agbiz Congress, which was scheduled for July this year, but had to be postponed to April 2021 due to the Covid-19 pandemic. We are soliciting advice from professional event organisers to assist us in finding the most suitable solution to host the congress next year, despite the uncertain times we find ourselves in. We will present the various options at the Council meeting on 28 August 2020 for input and recommendations from Council members. For more information, please visit the congress web page. 
2020 AgriAllAfrica Agribusiness Conference
Theme: "Imagined responses to Covid-19: Progress with the development of solutions"
29 October 2020 | CSIR | Pretoria (live event tbc)
Enquiries: Marianna.duplessis@gmail.com | +27 063 076 9135

MPO Annual National Congress, cheese-making course and AGMs
4 November  2020 | Lythwood Lodge | Lidgetton | KZN Midlands
Contact Julie McLachlan: julie@mpo.co.za or 083 740 2720

3rd African Symposium on Mycotoxicology joint MYTOXSOUTH conference 
6-9 September 2020 | Stellenbosch

Agbiz Congress 2021
Theme: "Building resilient and sustainable agri-food ecosystems".
7-9 April 2021 | Sun City Convention Centre | South Africa

Second International Congress of Biological Control (ICBC2) 
26-30 April 2021 | Davos, Switzerland
AGBIZ MEMBERSHIP
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