Waking South Africa’s economy up requires the government and businesses to work together |
South Africa has lost its two main levers of economic development: public investment in physical and social infrastructure (think China, which invests almost 20% of its GDP per year) and a Schumpeter-like creative destruction process through which obsolete firms are replaced by innovative ones (think IBM and Microsoft). The economy, a sleeping giant on the African continent, can only achieve a faster and more inclusive trajectory of growth if the country rebuilds its public capital stock and dynamises its businesses, especially by creating synergies between the public and private sectors. This simple lesson is derived from economic theory and empirical evidence in fast-growing countries. Read more in the linked World Bank blog post.
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Trade integration in Africa: Unleashing the continent's potential in a changing world |
Since the 1960s, efforts have been made to improve trade integration in Africa, but barriers to trade remain. Recently, African leaders have shown a renewed commitment to regional integration by signing the African Continental Free Trade Area (AfCFTA) agreement. AfCFTA has the potential to transform regional trade, promoting growth and improving livelihoods across Africa. This linked paper highlights the benefits of successful AfCFTA implementation, including increased income, jobs, and other advantages. It presents an empirical analysis of trade obstacles, regional value chain integration, and the role of trade policy. The findings demonstrate that AfCFTA, coupled with supportive policies and improvements in the trade-enabling environment, can significantly enhance intra-African trade, integrate African countries into regional value chains, and address challenges such as population growth, climate change, and geopolitical changes.
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Europe and the world should use green subsidies cooperatively |
Governments worldwide are employing subsidies to facilitate the shift towards sustainable practices. These green subsidies play a significant role in situations where market deficiencies exist. When carbon emissions are undervalued compared to their actual societal impact, or when preferable policy measures like carbon pricing are absent, subsidies can effectively guide businesses and consumers towards cleaner technologies that are less harmful to the environment. Additionally, they contribute to reducing the costs associated with these technologies. However, it is crucial for subsidies to be carefully directed to address market failures without favouring specific companies based on their origin, longevity, size, or any other discriminatory factors. It is equally important for these subsidies to align with the regulations set forth by the World Trade Organization. Read more in the linked International Monetary Fund blog post.
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The proposed employment equity sectoral targets have been published, now what? |
On 12 May 2021, the Department of Employment and Labour gazetted draft sectoral targets for employment equity. These targets aim to promote workplace diversity and equality in various industries throughout the country, including the agricultural sector. The employment equity sectoral targets consist of specific goals that each industry must meet in terms of representation and participation of designated groups in the workforce. These designated groups include Black, Indian and Coloured people, and people with disabilities. These proposed sector targets, once finalised will be legally binding, and employers who fail to meet them will face penalties and fines. In addition, employers that do not comply, will not be able to conclude any contracts with government. In the linked article, Thapelo Machaba, Agibz agricultural economist and policy analyst, discusses the effects of the draft sectoral targets.
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Risks to SA's agricultural sector amid rising geopolitical tension
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Geopolitical risks are back on the South African agricultural agenda. Over the past year, South Africa has indirectly felt the effects of Russia's invasion of Ukraine through the disruption of various commodity supply chains and the subsequent price surge, specifically of grains, vegetable oils, fertiliser, Brent crude oil and natural gases. This time around, the United States' accusation that South Africa has supplied military equipment to Russia has raised diplomatic tensions between the two countries, leaving a great deal of uncertainty about political and trade relations between the two countries. In the linked article, Agbiz chief economist Wandile Sihlobo discusses the subject.
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South Africa's maize exports to China are not a political posture
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The geopolitical matters this past week also extended to the maize market. China cancelled the United States' maize orders and purchased South African maize. This volume was 108 104 tonnes of maize in the last week of March and the first few weeks of April 2023. This activity formed part of South Africa's maize exports in the 2022/23 marketing year. Some interpreted this market activity as China replacing the United States with South African maize as part of the broader geopolitical matter. We think such a view may be an overstatement. First, South African maize is currently competitively priced and of good quality, which might have influenced China's decision. Second, this was not the first time China bought South African maize, but the volumes were always small in the past. For example, China's maize imports from South Africa averaged 3 780 tonnes per annum over the past 10 years. This was only the first time China imported large volumes in recent memory. In the linked article, Wandile Sihlobo shares his view on this subject. He also shared his views on this in the linked podcast.
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Poor roads limit South Africa’s agricultural potential |
Despite various challenges in trade and animal diseases, South Africa’s agricultural sector has had a good few seasons. But one other crucial issue is road deterioration; in some provinces, such as the Eastern Cape, roads are almost non-existent in various regions. These past few days, farmers in areas such as the Ncora region of the Eastern Cape have struggled to receive diesel supplies, which they need to keep the dairy farming entities running given the load-shedding, feeds, and concentrates. The roads are so bad and muddy in this rainy weather that farmers can’t even deliver the milk to processing facilities; it’s a cocktail of challenges. We should not have such challenges in a province like the Eastern Cape, where the government leadership speaks of its drive for agricultural development, expansion, job creation, and agri-tourism. Wandile Sihlobo discusses this subject in the linked blog post.
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SA agricultural jobs up 5% y/y in Q1, 2023
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The data released this week by Statistics South Africa paints an encouraging picture of agricultural employment. In the first quarter of 2023, about 888 000 people were employed in primary agriculture, up 3% q/q and 5% y/y. This is well above the long-term agricultural employment of 780 000. From a regional perspective, the Western Cape, KwaZulu-Natal, and Gauteng were the significant drivers of this employment. At the same time, other provinces showed a slight decline compared to levels seen in the first quarter of 2022. The robust production conditions of various field crops, fruits, forestry and aquaculture were behind the improvement in agricultural jobs in the first quarter. Meanwhile, the livestock industry saw a decline in employment, which is unsurprising given the pressures presented by the higher feed costs at the start of the year and animal diseases for much of 2022 and into 2023. In the linked article, Wandile Sihlobo discusses the latest agricultural jobs data.
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Conversation on SA winter crops, food supplies and inflation |
Winter is an important season for South African agriculture, with some of its key field crops being produced during the cold months of June, July and August, and maturing after that, with harvesting in December. Preparation of the land for winter crops begins in April, which is also the same time harvesting of the summer crops begins. Farmers in the Western and Northern Cape, Free State, Limpopo and other winter crop growing regions are making arrangements for growing winter wheat, canola, barley and oats. All of the country’s wheat production takes place during the winter months, making the winter season an important contributor to the country’s wheat needs. This year, the outlook for winter crops is clouded by a difficult operating environment, especially the areas that are under irrigation. The two biggest headwinds are power cuts and dollar strength. Nevertheless, there are also positives which should take the pressure off food price rises that have hit consumers hard. These positives include a fall in the cost of inputs, like fertiliser and agrochemicals, as well as good harvests from the summer season just ending. Wandile Sihlobo discusses this in the linked interview with eNCA.
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World agricultural production |
The United States Department of Agriculture issues a monthly report on crop acreage, yield, and production in major countries worldwide. Sources include reporting from the Foreign Agriculture Service (FAS)’s worldwide offices of the United States Department of Agriculture, official statistics of foreign governments, and analysis of economic data and satellite imagery. The report reflects official USDA estimates released in the monthly World Agricultural Supply and Demand Estimates (WASDE). Please click here to peruse.
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Black Sea grain and oilseed trade dashboard released |
The United States Department of Agriculture’s Foreign Agricultural Service (FAS) has released a dashboard that demonstrates the scope of the Black Sea grain and oilseed trade. Millions of tonnes of grain are shipped through these international waters each year, making the Black Sea region a major supplier of agricultural commodities worldwide. Using pre-war data from FAS’s Production, Supply and Distribution database and Centre d'Etudes Prospectives et d'Informations Internationales, the dashboard demonstrates the impacts Black Sea trade disruption can have on food access in various countries. The analysis focuses on key commodities, including barley, corn, soya bean oil, sunflower seed oil, and wheat. For each country, the largest suppliers are shown, which allows the dashboard to illustrate the potential impact of the conflict in Ukraine. The dashboard is complementary to the Russia Grain and Oilseed Exports Expand trade report published last week by FAS. The new trade report shows that Russia’s grain and oilseed exports have managed to continue during the current marketing year.
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Most sub-Saharan African currencies have weakened against the US dollar, fanning inflationary pressures across the continent as import prices surge. This, together with a growth slowdown, leaves policymakers with difficult choices as they balance keeping inflation in check with a still-fragile recovery. As the International Monetary Fund (IMF) Chart of the Week shows, the average depreciation for the region since January 2022 is about 8%. The extent varies by country, however. Ghana’s cedi and Sierra Leone’s leone depreciated by more than 45%. Read more in the linked IMF blog post.
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Helping African farmers from the sky |
Agricultural productivity in Africa has lagged behind for decades, and now climate change is making things worse. But for Hamza Rkha Chaham, the prospect of helping African farmers increase crop yields prompted him to launch a startup that is transforming lives. Chaham was only 27 years old in 2018 when he co-founded SOWIT, a company that uses processed satellite imagery to provide farmers with invaluable data to optimise decisions related to irrigation and fertilization. In this podcast, he says startups in Africa can be challenging on many levels, but the rewards far outweigh the risks. Please click here to listen to the International Monetary Fund podcast.
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Citrus consumption in Spain has fallen by five kilogram per capita in just 10 years |
During the past decade, the consumption of citrus fruits has witnessed a decline in Spain and across Europe. As indicated by Paco Borras, an international agri-food consultant, there is cause for concern with regard to a significant 11,53% decrease specifically in mandarin consumption. The situation worsens when considering that the campaign has been extended by approximately two months due to varietal renewal and the introduction of new types such as Nadorcott, Tango, and Orri. Should mandarins experience a greater decline compared to the average annual rate, it is evident that a clear monthly consumption decrease is occurring. Examining the trend in orange consumption reveals alarming statistics, with a per capita decrease of five kilograms over a mere 10-year span. Read more in the linked article first published on FreshPlaza.
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Blueberry industry frustrated at receding Chinese access |
No good crisis ought to go wasted, believes Justin Mudge, blueberry farmer and chair of the board of BerriesZA for the past four years, during which they’ve had no such shortage. At Macfrut next month he will be explaining why he believes that in the blueberry industry, only the robust and resilient will survive and will definitely make a success of it. Mudge believes that a stratified berry industry has been gathered together by BerriesZA, coalescing around common problems like the chemical application and registration process which is, he says, an absolute struggle or the status quo at South Africa’s ports, of which Mudge has been an outspoken critic. Read more in the linked article, first published on FreshPlaza.
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ITAC imposes anti-dumping duty on frozen chips |
Trade lawyers Hilton Lambert note that the International Trade Administration Commission (ITAC) has confirmed that the European Union has been dumping frozen potato chips into the South African market and that it will be taking corrective action by imposing definitive anti-dumping duties as of 17 May 2023. The announcement comes just one day before the statutory 18-month cut-off point within which an anti-dumping investigation has to be completed. ITAC has found that the dumping by European frozen chip manufacturers has been highly injurious and predatory upon the domestic potato value chain, and as such has imposed anti-dumping duties against Belgium at a rate of 67,33%, the Netherlands at a rate of 239,1%, and against Germany at a rate of 181.05%. This said it is noted that several individual European companies will face duties well lower than these general country-specific duties. Agbiz Fruit general manager Wolfe Braude discusses this subject in the linked article.
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South Africa's harvest may be slowed by erratic rainfall |
The recent rainfall in South Africa did not have a major impact on the harvest, although some areas experienced sporadic showers. This pattern of unpredictable rainfall will persist in the coming week, potentially causing a more noticeable slowdown in harvesting in the wettest regions. However, farmers will still have sufficient opportunities to work in the fields between rain showers, and no significant negative effects on crop quality are anticipated. Meanwhile, the Western Cape and Northern Cape regions are expected to remain dry until the end of next week, allowing for uninterrupted progress in planting winter wheat. However, as the month progresses, the need for timely rainfall will become more critical. In the Free State region, wheat planting will continue or commence during periods of light rain, and the area would benefit from a slight increase in precipitation later this month. Read more in the linked report by World Weather Inc.
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Global cotton production is up from the previous month to 115,9 million bales which can be attributed to higher production in China, against a lower crop in Brazil. This is close to a stable global production of 24,55 million tons. Global consumption is currently recorded at 23,79 tons and global trade is 8,99 million tons. On the local market, the lint price for South African farmers remains reasonably good, reaching an average reference price of around R32,86 per kg lint for strict low middling 11/16” (on 24/04/2023). The fourth official crop estimate for 2022/23 remained the same as the previous month, namely 71 542 lint bales. The fourth official crop estimate for 2022/23 thus remains just over 5 000 bales less than the final estimate of the previous season. Ginning has started at the beginning of May in the Northern Cape and the crop volumes and quality look good. Read more in the linked Cotton Market Report, published by Cotton SA.
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Zimbabwe anticipates 1% rise in sugar cane production |
The Pretoria Post of the United States Department of Agriculture forecasts Zimbabwe’s sugar cane production will increase by 1% to 3,5 million metric tons (MT) in marketing year (MY) 2023/24 based on a return to normal weather conditions, the availability of sufficient irrigation water, and an increase in planted area. Post forecasts sugar production will increase by 3% to 410 000 MT in MY 2023/24, based on an increase in the quantity of sugar delivered to mills, improved sugar cane quality (sucrose content), and consistent milling efficiencies (sugar recovery rate). Zimbabwe is expected to fully utilise its allocation of 12 910 MT for the US sugar tariff rate quota in both the 2022/23 and 2023/24 MYs. Please click here to peruse.
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BUSA Covid-19 cargo movement update |
Following some improvements last week, the numerical performance of domestic port operations took a step backwards this week, returning to the familiar pattern of adverse weather, frequent equipment breakdowns and shortages, load-shedding, operational incidents, and congestion. Once again, East London was unable to avoid the impact of load-shedding. Additionally, operational delays were caused by equipment challenges such as breakdowns of straddle carriers and a malfunctioning gearbox on one of the cranes. At the beginning of the week, Durban Container Terminal's Pier 2 had only 51 available straddle carriers out of a total of 108, and by the end of the week, there was a slight improvement with a range of 61 to 65. Furthermore, Transnet Freight Rail experienced significant incidents of cable theft and vandalism, which dampened the prospects of recovery for rail network operations. Read more in the latest edition of the BUSA Covid-19 Cargo Movement Update.
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Get the latest news from the FPEF |
In the latest edition of Keeping it Fresh, the Fresh Produce Exporter's Forum (FPEF)'s newsletter, you will get a summary of the most pertinent information as well as reminders of important upcoming events. Please click here to peruse.
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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.
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8th Africa Agribusiness and Science Week
5–8 June 2023 | International Convention Centre (ICC) | Durban.
International Fresh Produce Association (IFPA) Southern African Conference
2–3 August 2023 | Century City Conference Centre | Cape Town
95th SASTA Congress
15–17 August 2023 | International Convention Centre (ICC) | Durban
Agbiz Grain Symposium
4–7 September 2023 | Virtual
AFMA Forum 2023
Theme: "Feed & Food – The 4th Agricultural Revolution"
5–7 September 2023 | Sun City | South Africa
Asia Fruit Logistica
6–8 September 2023 | Hong Kong
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- Agbiz is the only organisation that serves the broader and common over-arching business interests of agribusinesses in South Africa.
- Agbiz addresses the legislative and policy environment on the many fronts that it impacts on the agribusiness environment.
- Agbiz facilitates considerable top-level networking opportunities so that South African agribusinesses can play an active and creative role within the local and international organised business environment.
- Agbiz research provides sector-specific information for informed decision-making.
- Agbiz newsletter publishes members' press releases and member product announcements.
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THIRD-PARTY WEBSITE LINKS TO THIS NEWSLETTER |
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The Agbiz Newsletter may contain a few links to websites that belong to third parties unrelated to us. By making these links available, we are not endorsing third-party websites, their content, products, services or their events. Agbiz seeks to protect the integrity of its newsletter and links used in it, and therefore welcomes any feedback. |
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