Agricultural Business Chamber of South Africa

A slight improvement in South Africa's March 2023 tractor sales still doesn’t change the outlook of possible moderation

South Africa’s latest agricultural machinery sales painted a mixed picture. The tractor sales were up by 6% y/y in March 2023, with 677 units sold. Meanwhile, combine harvester sales were down by 9% y/y, with 39 units sold. These data aren’t surprising, and we still believe that South Africa’s agricultural machinery sales will cool off this year, following a few years of excellent activity. For example, South Africa's tractor sales for 2022 amounted to 9 184 units, up 17% y/y and the highest annual sales for the past 40 years. The combine harvester sales amounted to 373 in the same period, up 38% y/y and the highest yearly sales figure since 1985.

Published: 17/04/2023

Are retailers and food producers exploiting South Africans through higher-than-warranted food prices?

The Competition Commission's recent report on agriculture and food markets dominated the conversations in the industry groupings last week. Therefore, we thought it was necessary to outline some shortcomings of the report in an essay published in the Sunday Times this past weekend. This morning, we jointly present our arguments in the Sunday Times essay with Professor Johann Kirsten of Stellenbosch University's Department of Agricultural Economics.

Published: 06/04/2023

SA agribusiness should keep a close eye on the rest of Africa

Although we continue to argue that South Africa should expand its agricultural export markets to new frontiers such as India, China, Bangladesh, Saudi Arabia, and South Korea, amongst others, the export drive should not be at the expense of the existing markets. We should actively engage with existing markets to stimulate the continued expansion of South African agricultural exports. The engagement should focus on the EU and Asia, both crucial regions for export growth, and the rest of the African continent.

Published: 30/03/2023

SA agricultural exports reached a new record in 2022

We now have the entire year's data on South Africa's agricultural trade in 2022. Exports reached a new record of US$12,8 billion, up 4% from the previous year. Maize, wine, grapes, citrus, berries, nuts, apples and pears, sugar, avocados, and wool were some of the top exportable products in 2022. Notably, the exports were spread across various key markets. The African continent remained a leading market, accounting for 37% of South Africa's agricultural exports in 2022. Asia was the second largest agricultural market, accounting for 27% of exports, followed by the E.U., the third largest market, accounting for 19%. The Americas region was the fourth largest, accounting for 7%, and the remaining 10% went to the rest of the world. The U.K. was one of the leading markets within the 'rest of the world' category. The products of exports to these markets were primarily the same, with the African continent and Asia importing a reasonably large volume or value of maize. Meanwhile, exports to other regions were mainly fruits and wine.

Published: 07/03/2023

SA agriculture exports showed resilience in 2022 despite headwinds

Despite various headwinds throughout the year, South Africa's agriculture exports for 2022 did not decline as much as some feared. Data for the first eleven months of the year show exports at a cumulative US$11,9 billion, up by 3% from the same period in 2021. Moreover, US$11,9 billion is the second largest agriculture exports value on record. When we receive the December exports figure in the coming weeks, it is possible that the 2022 agricultural exports could be just under 2021 levels of US$12,4 billion or even exceed them.

Published: 17/02/2023

South Africa's agricultural machinery sales are likely to moderate in 2023 compared to the robust levels of 2022

After solid activity in 20221, South Africa's agricultural machinery sales will likely soften this year. We outlined several reasons for this view in our previous update. For example, we think the possible replacement rate of older machinery will likely be lower this year as the past three years saw increased new machinery sales. The rising interest rates will also continue to pressure farmers' finances. Moreover, while the agricultural sector, specifically rain-fed areas, will likely perform well, the harvest could still be less than the 2021/22 season due to prospects of lower yields and reduced planted area. This lowers the farmers' financial muscle to spend on agricultural equipment.

Published: 09/02/2023

South Africa's rice imports to remain at stable levels as of 2022, but rice in global prices will present new challenges

After a year of generally subdued global rice prices, this year started with a notable increase in prices from various origins. With South Africa being a net importer of rice, the worldwide surge of prices presents upside risks to consumer food price inflation. The comforting part, however, is that South Africa will likely import the same volume of rice as the previous year. The International Grains Council (IGC) forecasts South Africa's 2023 rice imports at 1,1 million tonnes. This is roughly unchanged from 2022, when about 73% of the imports originated from Thailand, 23% from India, and the rest from various countries, including India, Pakistan, Brazil, and Vietnam. These origins will likely remain the same in 2023.

Published: 08/02/2023

South Africa's wheat production estimates lowered amid poor yields in parts of the Western Cape

The drier weather conditions in the Western Cape, a major wheat producer in South Africa, have weighed on the 2022/23 wheat harvest. The impact of lower yields in parts of the province is evident in the recent Crop Estimates Committee's wheat production update, which placed the province's crop at 954 000 tonnes, down from 1,26 million tonnes in the 2021/22 season.

Published: 31/01/2023

South Africa's 2022/23 summer grains and oilseeds plantings remain at decent levels

Since the start of the 2022/23 summer grains and oilseeds production season, we have maintained a positive view of the production conditions. The robust tractor sales, the La Niña-induced rains, and the relatively higher commodity prices were some of the factors that pointed to a decent area for summer crops in the 2022/23 season. The data recently released by the Crop Estimates Committee (CEC) broadly mirrors our optimism, placing the 2022/23 total area plantings for summer crops at 4,31 million hectares of summer grains and oilseeds in the 2022/23 season. This is down by 0,7% from the previous season, and 0,9% from the intentions to plant data released earlier in the season.

Published: 31/01/2023

El Niño is showing its head again and presents risks for the 2023/24 season

As the deepening energy crisis continues to present problems for different parts of the agricultural sector, another major challenge that could confront South Africa's agricultural sector in a few months is a change in weather conditions from favourable rains to drier and hot conditions. This would be a switch from a prolonged period of La Niña to El Niño.

South Africa has had a good four seasons of La Niña-induced heavy rains from 2019/20 to 2022/23. These above-normal rains supported agriculture leading to higher yields across various field crops, fruits and vegetables. The livestock industry also benefited from improved grazing pasture. Importantly, having four consecutive La Niña seasons was an unusual occurrence. The typical cycles are two seasons of higher rainfall followed by normal-drier seasons.

Published: 26/01/2023

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