Published: 26/03/2018
South Africa’s agricultural sector is continuously influenced by global and local demand and supply conditions, weather patterns and exchange rate fluctuations. This season, weather conditions are once again playing a bigger role with the drought in the Western Cape and the delayed onset of rainfall in Free State and North-West provinces which affected production negatively - Wandile Sihlobo, Agbiz economist
South Africa’s agricultural sector is continuously influenced by global and local demand and supply conditions, weather patterns and exchange rate fluctuations. This season, weather conditions are once again playing a bigger role with the drought in the Western Cape and the delayed onset of rainfall in Free State and North-West provinces which affected production negatively. Meanwhile, the weak US dollar – which translates into rand strength – offset the impacts of farm input costs (most of which are imported, such as fuel, fertilizers and chemicals) on the one hand, while making the commodity exports less competitive on the international markets, on the other. In net terms, unfavourable weather implies a decline in yields (and in turn, production) while exchange volatility points to shifts in profitability. Considering the collective impact of these variables, we make a succinct reflection on weather, local market conditions and trade in the agricultural sector for the current planting season.
Shifts in weather patterns make planning difficult
Climate change is one critical mega-trend that is affecting global agriculture in general and South Africa’s agro-industry in particular. There are two fundamental aspects that underpin the weather factor in South Africa’s agricultural sector.
As such, the farming sector has had to continuously adapt to this shift in order to ensure that planting coincides with peak rainfall patterns in order for crops to receive sufficient moisture for seed germination and crop development. However, the farming sector has struggled not only due to the uncertainty in the onset of the seasonal peak (intraseasonal variation), but also because of erratic and progressively lower rainfall (inter-seasonal variation). Therefore, the changes in the rainfall patterns mean that farmers will also need to adjust the planting dates. The weather has been a major risk factor in the past few seasons, as rainfall patterns did not only change, but were erratic, making it difficult for farmers to plan the planting schedules properly.