Despite the end of COVID-19 restrictions leading to renewed regional economic activity, the energy sector in sub-Saharan Africa continues to face conflicting challenges. The region is burdened by COVID-19-related debt, and the Russia-Ukraine conflict looms as a significant concern. The conflict's impact on commodity prices has been a mixed blessing, benefiting some countries while posing challenges for others. It has also highlighted the importance of energy security, leading to increased energy investments across the region. Although there have been notable hydrocarbon discoveries, the transition toward clean energy remains a challenge for future upstream activities. Read more in the linked S&P Global Strategic Report.

Since the 2021 local government elections, several municipalities have been governed by coalitions. It has not been a happy experience. Johannesburg recently had its eighth mayor elected in eight years. In Tshwane, Ekurhuleni and Nelson Mandela Bay power has been bouncing around between the major parties like ping-pong balls. Position, power, and patronage determined the formation of the councils, and governance fell by the wayside. It was and is about who will govern, not how they will govern. The term of the current Parliament comes to an end in May 2024, and a national election must then be held. (The Constitution allows for some postponement.) Currently, opinion polls and by-election results indicate that we may face a situation where no single party will have 50% plus one, leading to a coalition government at a national level. In light of what has been happening in municipalities, this possibility fills many people with horror. In the linked article, political analyst JP Landman shares his views on the possibility of a national coalition government.

In an unexpected turn of events, the annual consumer price inflation for March rose from 7,0% to 7,1%, contradicting market expectations that had predicted a modest decline to around 6,7%. The main contributor to this increase can be attributed to the soaring prices of food. With inflation rates remaining at 7,1%, it significantly surpasses the South African Reserve Bank's (SARB) target range of 3% to 6%. Consequently, many analysts had already anticipated a further 25 basis points (bps) hike in interest rates at the upcoming May Monetary Policy Committee (MPC) meeting due to the expected decrease in inflation. The recent inflation rise has strengthened the likelihood of the MPC adopting a more hawkish stance. This development should be considered within the context of the SARB's ongoing efforts to increase borrowing costs, with a cumulative 425 bps hike since the initiation of the interest rate-raising cycle in November 2021. The current repo rate stands at its highest level since 2010. Read more in the linked article by Prof. Raymond Parsons, economist at the North-West University Business School.

At Nampo’s annual harvest day celebrations, Agbiz staff and office bearers once again played a leading role in topical debates at Nation in Conversation. Agbiz chairperson and Senwes CEO, Francois Strydom, and Agbiz CEO Theo Boshoff, participated in a panel discussion on the changing nature of agricultural value chains. Theo Boshoff also participated in the sponsor’s closed panel where Engen hosted a session focusing on global energy dynamics and its impact on the domestic fuel price and supply. The manager of Agbiz’s Fruit Desk, Wolfe Braude, provided insights into changes in consumer patterns and their impact on the fruit industry. Herewith please find the links to the conversations:

The data released by Statistics South Africa this week shows that consumer food inflation moderated at 14,3% in April 2023 from 14,4% in the previous month. The food products prices that underpinned this slight deceleration are meat; oils and fats; and fruit. Meanwhile, other product prices increased mildly. As stated in our previous notes, we expect consumer food inflation to remain sticky at relatively higher levels for another month or so, and decelerate in the year's second half. Red meat prices, which have started to soften, should continue to moderate in the coming months as we see that trend at the farm level. Fruit prices will likely follow a similar trend as harvesting across South Africa gains momentum and improves domestic supplies. The moderation in the 'oils and fats' products is in line with what we are seeing in the global environment, as South Africa still imports its palm oil usage. In the linked article, Agbiz chief economist Wandile Sihlobo discusses the latest food inflation data.

On 16 May 2023, we received encouraging job data in South Africa's agriculture. Statistics South Africa indicated that in the first quarter of 2023, about 888 000 people were employed in primary agriculture, up 3% quarter-on-quarter and 5% year-on-year. 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 jobs data.

South Africa's agriculture has had a few excellent consecutive seasons. The current 2022/23 season will likely also deliver solid growth again for the sector, although with variation across the different subsectors. Favourable rainfall and the sector's ability to cope with the current load-shedding crisis have supported production. This also means the export performance will likely be robust, especially with a weaker exchange rate that makes South African products more competitively priced in the global market. Still, this positive outlook and the previous years of strong performance that allow agribusiness to support rural towns and communities have not motivated the provincial governments and municipalities to play a more helpful role in propelling the sector's progress. Read more in the linked article by Wandile Sihlobo.

This past week, there were positive developments both domestically and globally. On the domestic front, the latest data from Statistics South Africa shows encouraging growth in agricultural employment. In the first quarter of 2023, primary agriculture saw a 3% increase quarter-on-quarter and a 5% increase year-on-year, with approximately 888 000 people employed in the sector. This exceeds the long-term average of 780 000, driven primarily by the Western Cape, KwaZulu-Natal, and Gauteng regions. However, other provinces experienced a slight decline compared to the same period in 2022. The growth in agricultural jobs can be attributed to favourable conditions for field crops, fruits, forestry, and aquaculture, while the livestock industry faced challenges due to higher feed costs and animal diseases. On a global scale, the extension of the Black Sea Grain Deal is a positive development. The deal, which began in July 2022, aims to facilitate grain movement from Ukraine to the world market without military interference. Thanks to this agreement, Ukraine has successfully exported over 25 million tonnes of grains and vegetable oils. For more, listen to this week's podcast by Wandile Sihlobo.

Agbiz Grain is seeking a service provider to fulfil various contractual responsibilities. These include establishing a collaborative forum for training providers, supporting skills development providers (SDPs) with accreditation and learner registration, assisting in the accreditation of assessment centres, managing learner registrations for the external integrated summative assessment (EISA), and preparing assessment centres for EISA administration. Applicants should have experience in the SETA and QCTO environment, knowledge of grain handling, facilitation and assessment skills, strong planning and organising abilities, effective communication, attention to detail, and prioritisation skills. Interested parties can submit their CVs/proposals before 31 May 2023. Please click here for more information and contact details.

South Africa currently benefits from favourable preferential access to primarily traditional markets, including the EU, UK, US, Africa, and certain South American countries through Mercosur. However, in the fast-growing South and East Asian region, there is only one potential agreement in progress – a preferential trade agreement with India. On the other hand, there are no existing trade agreements with Middle Eastern states. Nonetheless, the government maintains strong relationships with most markets in these regions and endeavours to deepen trade ties. Preferential access is highly advantageous as it eliminates tariffs and encompasses binding protocols and agreements that promote trade, cooperation, and the resolution of disputes. In the linked article, Agbiz Fruit manager Wolfe Braude discusses South Africa's trade in agricultural products with the US under the African Growth and Opportunity Act (AGOA).

While natural gas is a universal commodity, its prices can significantly differ worldwide due to the intricate infrastructure required for transportation. This results in a partially fragmented global market, primarily due to the predominant use of pipelines for natural gas movement, unlike the more integrated market for crude oil, which tends to have a unified price across most locations. This market fragmentation not only leads to price variations across regions but also means that high prices in one part of the world do not necessarily impact buyers in other areas. Read more in the linked International Monetary Fund blog post.

Significant rainfall was observed in southern KwaZulu-Natal with reported amounts of 5,00 to 8,62 inches, causing flooding. Moderate to heavy rain was also reported in southern parts of the Eastern Cape and eastern coastal areas of the Western Cape, ranging from 2,00 to over 5,00 inches. Other regions of South Africa received less rainfall, with local totals ranging from 1,00 to 1,61 inches in northern KwaZulu-Natal, southeastern Free State, southwestern Limpopo, and southeastern parts of North West. Some areas in the south-central Northern Cape reported 1,00 inch of rain, while the remaining regions experienced varying amounts from 0,15 to 0,88 inches. Western North West, eastern Limpopo, Mpumalanga, western Free State, and northwestern parts of Western Cape mostly experienced dry conditions, along with the rest of Northern Cape. Read more in the linked article by World Weather Inc.

The upcoming 2022/23 marketing year (MY) is expected to witness a slight decline in the production of apples, pears, and table grapes. This decrease can be attributed to several factors, including stagnant production areas and a return to normal yields after achieving record production levels for all three commodities. Unfortunately, apple and pear-producing regions were hit by hailstorms in November 2022, resulting in significant crop damage. Additionally, the Northern Cape experienced a heatwave in January 2023, leading to losses in the table grape sector. Fortunately, South Africa maintains self-sufficiency in the production of deciduous fruits and relies on imports only for fulfilling specific niche markets or meeting demand during the off-season when supply is limited. However, due to a lower supply available for export and challenges pertaining to port access, there is a projected decrease in exports of apples, pears, and table grapes for the upcoming MY 2022/23. Read more in the linked report compiled by the United States Department of Agriculture's Foreign Agricultural Service in Pretoria.

The citrus industry in South Africa is calling on Public Enterprises Minister Pravin Gordhan to urgently address the country's rail network issues to enhance the export of citrus fruits, which are in high demand globally. Justin Chadwick, CEO of the Citrus Growers' Association of Southern Africa (CGA), has urged Gordhan to announce a turnaround plan during his upcoming budget speech in Parliament. The current crisis in the freight rail network poses a significant threat to the sector's future growth and the livelihoods of the 130 000 people it employs. The citrus industry contributes approximately R30 billion in export revenue annually. Chadwick highlighted that a large portion of the rail network is currently inoperable due to cable theft and a shortage of locomotives and rolling stock. He emphasised that an efficiently functioning rail system is crucial to achieving the CGA's vision of exporting 260 million cartons of citrus by 2032. This growth target has the potential to create 100 000 new jobs and generate an additional R20 billion in export revenue each year. Read more in the linked article, first published on freightnews.co.za.

In the recent Container Port Performance Index (CPPI), South Africa's primary ports, except for the Port of Gqberha (Port Elizabeth), have once again fallen behind their sub-Saharan counterparts, landing at the bottom of the regional rankings. Based on box-handling data for 2022, compiled by the World Bank and S&P Global Market Intelligence, the rankings position the three ports as follows: Ngqura at 338th, Durban at 341st, and Cape Town at 344th out of a total of 348 ports assessed by the CPPI. To provide some perspective, the US West Coast Port of Long Beach, which has been grappling with congestion issues resulting from the impact of the coronavirus pandemic on American ports, ranks third to last on the CPPI. Furthermore, Vancouver in Canada and Savannah on the US East Coast occupy the 347th and 348th positions, respectively, securing the last two spots on the CPPI. Read more in the linked article, first published on freightnews.co.za.

Port operations at the Port of Cape Town faced various challenges, including adverse weather, frequent equipment breakdowns, shortages, load-shedding, roadshows, and congestion. One notable challenge occurred when the port was windbound for almost a day at the beginning of the week. To address congestion issues, Durban Container Terminal (DCT)'s Pier 1 implemented a tiered cargo evacuation approach that allows for cargo evacuation without the need for a booking slot. The Port of Richards Bay also introduced a booking system to improve communication between mines and terminals and alleviate congestion. Furthermore, the rail network experienced ongoing incidents of cable theft and vandalism, leading to more significant disruptions throughout the week. Read more in the latest edition of the BUSA Covid-19 Cargo Movement Update.

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.