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Optimism about SA maize harvest

The United States Department of Agriculture (USDA) 's Pretoria office is a key institution and it is worthwhile to keep an eye on their views. They recently released an updated view of South Africa's 2022/23 maize production season, leaning strongly towards the views of South Africa's Crop Estimates Committee (CEC).

They forecast the country's commercial maize plantings at 2,60 million hectares in the 2022/23 season, broadly aligned with the CEC, whose data points to a possible area of 2,59 million hectares. This area is slightly below the 2021/22 season of 2,62 million hectares.

Still, it is well above the long-term average. Considering the USDA's yield forecast of 5,70 tonnes per hectare, South Africa's maize harvest could amount to 15,00 million tonnes in the 2022/23 season, marginally down from 15,33 million tonnes of the 2021/22 season. Still, this will be well above the annual consumption of 11,80 million tonnes and maintains South Africa as a net exporter of maize. Under such conditions, South Africa's maize exports could be above 3,00 million tonnes.

The usual export destinations for South Africa include Taiwan, Japan, Vietnam, South Korea, Botswana, Italy, Namibia, Eswatini, Mozambique, Spain, Lesotho, Angola and Zimbabwe, amongst others. These markets, especially the offshore ones, will likely remain dominant in South Africa's export list.

The countries whose imports could decline, depending on how widespread the favourable rains are, are the southern African countries. In the La Niña years, the whole region receives higher rainfall which should support crop production. The major issue that farmers in some southern African countries could struggle with is the higher input costs.

In the 20221/22 season, the likes of Tanzania saw a decline in fertilizer usage because of higher prices, which reflected in lower yields in some regions. With the fertilizer prices still over 20% higher than last year, although having softened from the months after Russia invaded Ukraine, the current levels are still relatively high and costly to farmers.

Regarding the subsistence farmers, the USDA forecasts an area of 300 000 hectares, down from 379 000 hectares in the previous season. With a yield expectation of 2,00 tonnes per hectare, subsistence farmers' production could amount to 600 000 tonnes in the 2022/23 season. This is also down from 657 000 tonnes in the previous season. Still, this is a decent harvest and will help cover the household needs in various communities.

In this week’s segment of the podcast, agricultural economist Wandile Sihlobo, provides more color on these dynamics and their impact on grain prices.


Production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli

Heavy rains in SA agriculture

In this week’s podcast segment, agricultural economist Wandile Sihlobo shares his observations of how the heavy rains in South Africa influence farm activity. He provides granular insights into each agricultural subsector. For example, the rains have had a mixed impact on fruits, where Banana and macadamia fields were distracted in parts of Mpumalanga. In contrast, the overall country and other fruits were left untouched.
In the field crops, the sugarcane fields thrive in these rains, while maize farmers in the Free State are experiencing excessively wet conditions that delay plantings. He also dives into the livestock industry issues, outlining possibilities of disease occurrences in this period.
Broadly, this week’s segment is a necessary update on South Africa’s agricultural conditions from an on-the-ground perspective.


Production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli

Highest tractor sales in 40 years

I have been closely following South Africa's monthly tractors sales data, and the results remain encouraging. Since April 2020, the monthly sales have remained positive, registering an average of 26% y/y growth over the past 31 months.

When this year started, I thought the farmers would reduce spending on agricultural machinery as fertilizer, agrochemicals and fuel prices increased aggressively along with a rise in the interest rates, all of which added financial pressure on farmers.

I also assumed that the two years of solid sales – 2020 and 2021 – would mean farmers would see a limited need to replace the tractors. But the data tells a different story; with tractor sales seeing an average of 20% y/y growth over the past ten months of 2022.

The major surprise came with October 2022 tractor sales data released this past week. The sales were up 48% y/y from October 2021, amounting to 1 268 units, the highest in 40 years.
Several factors explain this solid activity. But at the core, it's the reasonably healthy financial condition of some farmers, specifically the grains and oilseeds. This is the main subsector of agriculture that has experienced better conditions over the past three years.
Grains and oilseeds prices were higher even before the Russia-Ukraine war. The drought in South America and rising demand for grains and oilseeds in China were the key factors underpinning the surge in grains and oilseeds prices pre-war.
Had it not been for higher global agricultural prices, the local grains and oilseeds prices would have softened due to large harvests. Consequently, we had a couple of seasons of large grains and oilseeds, coinciding with higher prices, which boosted the farmers' incomes.

I explain more in this week’s podcast episode.


Production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli.

Favourable agriculture season for SA

In this week's podcast episode, agricultural economist Wandile Sihlobo provides an update on South Africa's agricultural conditions. He highlights that signals point to another favourable agricultural season for South Africa and the broader southern Africa region in 2022/23.

He cites the Seasonal Climate Watch report recently released by the South African Weather Service (SAWS), which highlighted that "the El Niño-Southern Oscillation is currently in a La Niña state, and forecasts indicate that it will likely remain in this state during the remainder of 2022 and early 2023. A La Niña event usually impacts rainfall most during the mid-summer months. With the continued strengthening of the La Niña event, there is a high chance that it will have its usual effect on South Africa, generally for above-normal rainfall and below-normal temperatures over the summer rainfall areas."

Sihlobo notes an increased likelihood of improvement in soil moisture from now until February 2023, a critical period that covers the cultivation to the pollination stages of the crop. He also reflects on his experience with farmers travelling around South Africa, which suggests that farmers will increase the area plantings for grains and oilseeds in the 2022/23 season. This will occur although input costs remain elevated.

Essentially, this episode is a wide-ranging update on agricultural conditions and what we can expect going forward for crops, fruits, vegetables and livestock.


Production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli.

Kenya embracing genetically modified crops

In this week’s episode, the agricultural economist, Wandile Sihlobo, assesses what Kenya’s decision to lift the ban on the cultivation and importing of genetically modified (GM) white maize means.

Kenya’s President, William Ruto, a scientist with a PhD, made this change in response to growing food insecurity in the country. Kenya has struggled with drought in the recent past and remains a net importer of maize.

There will be an assessment of each GM trait by the Kenyan Biosafety Authority before actual imports and cultivation can occur. Assuming some of this scientific legwork has already been done, we could see imports start in the next few months.

In the 2022/2023 season, Kenya needs to import a substantial volume of maize, estimated at about 700,000 tonnes. This is roughly unchanged from the previous season, which also posted poor domestic production.

In the 2021/2022 season several sub-Saharan African countries, including Zambia, Tanzania, Zimbabwe, and SA, had ample maize harvests. This made it easy for them to meet Kenya’s import needs, with Tanzania and Zambia leading the way.

However, this year things are different. Tanzania’s maize harvest is down roughly 16% year on year to 5.9-million tonnes due to sparse rainfall at the start of the season combined with armyworm infestations and reduced fertilizer usage in some regions because of prohibitively high prices.
The fall in production and firmer domestic consumption means Tanzania will have less maize to export. The numbers I have seen thus far point to available maize for export of just 100,000 tonnes. This is well below the previous season’s exports of 800,000 tonnes, which saved Kenya when the country was most in need of maize.


Production by Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli.

Global agricultural conditions

In this week’s segment, agricultural economist, Wandile Sihlobo, explores the global agricultural conditions for the 2022/23 season, with a specific focus on grains and oilseeds.
In painting this global picture, Sihlobo utilizes the grains and oilseeds production estimates from the International Grains Council (IGC).
In essence, the 2022/23 global grain and oilseed season presents a comfortable picture of supplies. The 2022/23 global grain and oilseed production is estimated at 2,26 billion tonnes. This harvest is 1% lower than the 2021/22 season but still the second-largest crop on record. There is a variation across crops production levels, which will influence the prices.
Still, the current expected crop will probably be sufficient to provide relief from the levels the prices were in the weeks after the start of the Russia-Ukraine war. With that said, the current production levels also mean that global grains and oilseeds prices are unlikely to return to the pre-covid and pre-war levels soon.

Production by Lwandiso Gwarubana, Richard Humphries and Sam Mkokeli.

South Africa’s Food Security Conditions

October 16 marked World Food Day, commemorating the founding of the United Nations Food and Agriculture Organization in 1945. Across the world, this day offers an opportunity for countries to assess their food security conditions and efforts to boost agricultural production. One of the measures that some often use to evaluate the food security condition of each country relative to the world is The Economist's Global Food Security Index, which Corteva sponsors.
This Index ranks South Africa at 59 out of 113 countries, improving from the 70th position in 2021. This places South Africa as the most food secure in the African continent, followed by Tunisia, ranked at 62nd.
This improvement is commendable. When looking at the Index scoring's technical position, it becomes clear that South Africa's food security conditions have improved, as the "headline" ranking suggests.
For example, a closer inspection reveals South Africa's scoring is 61,4, a notable improvement from 57,8 in 2021. Notably, South Africa's progress in the Global Food Security Index is not merely because other countries have regressed notably since the start of the Russia-Ukraine war, which increased global food prices; there has been an actual improvement.
In this week’s segment, agricultural economist, Wandile Sihlobo, unpacks South Africa’s food security conditions, and provides policy interventions to improve agricultural production and address the prevailing household food insecurity in the country.

Production by Lwandiso Gwarubana, Richard Humphries and Sam Mkokeli.

What a possible strike at Transnet would mean for SA Agriculture

One major challenge that emerged this past week that directly impacts South Africa's agriculture is the possible strike at Transnet.

The weekend papers cited statements by the representatives of the South African Transport and Allied Workers Union (Satawu) and the United National Transport Union (Untu) that demand a wage increase of a minimum of 10%, with an initial demand being 13,5%. This is far steep from the current offer by Transnet at 4%.

Thus, Satawu talks of a possible strike on Monday, October 10, 2022. A potential strike, and its duration, would negatively impact South Africa's food, fibre and beverages sector.

In this week’s podcast episode, agricultural economist, Wandile Sihlobo, speaks on what the potential strike would mean for agricultural trade?

Production by Lwandiso Gwarubana, Richard Humphries and Sam Mkokeli.

SA starts the 2022/23 crop season

South Africa is starting the 2022/23 summer crop production season this month. The preliminary insights suggest that South Africa could have another good season. The three critical indicators we have thus far, i.e., (1) the tractor sales, (2) the weather outlook for the next four months, and (3) grains and oilseed prices, paint a positive outlook for the 2022/23 season.
In this week’s podcast segment, agricultural economist, Wandile Sihlobo, provides insights into these indicators and the broader outlook for the 2022/23 summer crop season.

Production by Lwandiso Gwarubana, Richard Humphries and Sam Mkokeli.

Agricultural input prices elevated

While some farmers in the grains and oilseeds industry benefited from the unusually long period of large yields and higher prices, higher input costs since the start of 2020 have limited the benefits.

For farmers in the horticulture industry, where commodity prices did not increase as much as in grains, the higher input costs were an even heavier burden. These price increases were mainly in agrochemicals (herbicides, fungicides, insecticides), fertilizers and fuel.

Various factors caused the price increases, but the main ones were the disruptions in industrial production when the covid-19 pandemic started, protracted supply chain bottlenecks, higher shipping costs, China's decision to limit fertilizer exports, and more recently, the Russia-Ukraine war. In the months after the war started, prices of some products increased to record highs.

Fortunately, prices have come off in recent months from those highs. For example, at the beginning of September, the global fertilizer price index is down by 18% compared with April 2022 highs. Despite the recent moderation, current price levels are about 60% higher than a year ago. The market is still far from adjusting to levels before covid-19 and the Russia-Ukraine war. Similarly, Brent crude prices have come off the recent highs, averaging US$93 per barrel in the first half of this month. Still, these levels are 31% higher than a year ago. We see similar price dynamics in the agrochemicals, which have softened over the past few months, but are roughly 20% more than a year ago.

These price dynamics matter, especially as South Africa approaches its summer crop season, which starts in October. This includes the horticulture industry, which will also be busy in the fields in the summer season. With that said, the grains and oilseeds industry is arguably still in a relatively better position compared with other subsectors of agriculture, which have been confronted by various other challenges these past few months which weighed on profitability for some.

In this week’s segment of the podcast, agricultural economist Wandile Sihlobo provides insight on how the agricultural sector is coping with the rising input costs.

Production by Lwandiso Gwarubana, Richard Humphries and Sam Mkokeli.

Wheat in South Africa

If one is not dealing with a particular commodity in their daily business, they rarely keep an eye on whether it is produced sufficiently locally or imported. The main concern for consumers is always whether they get their preferred products on shelves when they go to the store. This has been the reality of wheaten products in South Africa.
Hence, some South Africans realising that the country imports roughly half of its annual wheat consumption has sparked a discussion about why it is not expanding domestic production in all the fallow land in some provinces. This is a fair question about the threat of rising wheat prices and supply constraints amid the Russian invasion of Ukraine; both countries account for nearly a third of the world's wheat exports and have increased food security concerns.
South Africa began importing over a million tonnes of wheat from the 2003/04 marketing year. In the years before, wheat imports averaged 458 518 tonnes, for example, between 2002/03 and 1989/90. The import surge resulted from increased consumption and a decline in area plantings.
In this week's segment, agricultural economist Wandile Sihlobo provides insight into South Africa's wheat production changes over the past decades and the current import activities. He closes by assuring South Africans that there are no possible wheat shortages in the country.

Production by Lwandiso Gwarubana, Richard Humphries and Sam Mkokeli.

SA is in a weather market

We are a month away from the start of the 2022/23 summer season. Farmers in the eastern regions of South Africa, which includes the eastern Free State, Mpumalanga, KwaZulu-Natal and Eastern Cape, will start planting by mid-October. This will primarily be summer grains and oilseed plantings.

The Northern Hemisphere experienced extreme heat and drought these past few months, which prompted us to wonder if the Southern Hemisphere could experience similar extremes in the upcoming 2022/23 summer season. We are in a La Niña cycle, which means there is a possibility of above-normal rainfall for Southern Africa. Meanwhile, East Africa and South America could experience drought. This will have implications for the agricultural output in these regions.

Thus, in this week’s segment, agricultural economist Wandile Sihlobo unpacks the potential impact of the forecast La Niña on agriculture in South Africa, and globally.

Production by Lwandiso Gwarubana, Richard Humphries and Sam Mkokeli.

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