13.04.2018

Western Cape’s prospects depend on good winter rain

The west coast of South Africa, which is well known for good wines and being the country’ major winter grains producing region, has been saddled with below-normal winter rainfall for the past three years. The impact of this is clear from the Western Cape’s dwindling agricultural output - Wandile Sihlobo, Agbiz economist

The west coast of South Africa, which is well known for good wines and being the country’ major winter grains producing region, has been saddled with below-normal winter rainfall for the past three years. The impact of this is clear from the Western Cape’s dwindling agricultural output.

In 2017, the Western Cape’s winter wheat production declined by 47% from the previous year, easing to 586 800 tonnes. Because of the province’s large share in national wheat production, the aforementioned decline translated to a 20% reduction in national wheat production to 1.52 million tonnes. This led to a notable increase in wheat imports in order to fulfil the domestic needs.

The South African Supply and Demand Estimates Committee forecasts wheat imports for 2017/18 marketing year at 1.93 million tonnes. This is a second largest import volume on record, in a dataset dating back from 1936/37. So far, the country has imported about 60% of the seasonal import forecast, and the rest will possibly reach our shores between now and the end of September 2018 (the end of the marketing year).

Other winter crops such as barley and canola, which are mainly produced in the Western Cape province, declined by 13% and 11% from the previous year to 307 064 tonnes and 93 468 tonnes in 2017, respectively.

In a drought policy brief released in February 2018, the Western Cape government and the Bureau for Food and Agricultural Policy (BFAP) estimated that production of wine grapes, table grapes, pome fruit and stone fruit would possibly decline by 20%, 18%, 9% and 8%, respectively in the 2017/18 season. This will, of course, constrain the province’s agricultural economic growth and labour market participation.

For winter grain farmers, planting time for the new season crop is fast-approaching. Fortunately, this year promises some improvements as the rainy season, which starts at the end of this month, could be more effective than the previous ones. In its recent Seasonal Climate Watch, the South African Weather Service indicated that between April and June 2018, parts of the south-western cape regions of the country could receive above-normal rainfall.

The prospects of above-normal rainfall are just what the Western Cape province’s agricultural sector needs. This rainfall will be critical for improving soil moisture content ahead of planting. Already, some analysts such as the United States Department of Agriculture (USDA), forecast South Africa’s 2018/19 wheat production at 1.65 million tonnes, up by 8% from the previous season.

The USDA’s optimism is based on expectations of higher yields supported by favourable weather conditions. The yields are forecast at 3.4 tonnes per hectare, up by 10% from the previous season. The USDA expects these higher yields to offset a lower area plantings of 480 000 hectares, down by 2% year-on-year.

Our official analysts, the National Crop Estimates Committee (CEC), will release their first production estimate for winter wheat at the end of August 2018. But, we will get an indication of the prospects of the 2018/19 winter crop production at the end of this month when the CEC releases farmers’ intentions-to-plant data. Contrary to the USDA, the CEC’s forecast could show an improvement in the area plantings from last year, as sentiment is fairly positive amongst farmers. In a conversation with Grain SA’s Western Cape representative, Toit Wessels, earlier this week, he expressed some optimism, underpinned by the hope that the forecast rainfall for the coming month will materialise.  

While the aforementioned developments are welcome, the Western Cape’s agricultural economy will remain lacklustre this year due to the decline in the wine and other horticultural industries. The dial could perhaps turn positive if weather conditions improve in the coming winter rainfall seasons. Only time will tell.

*This article first appeared on Business Day on 12 April 2018.

ENQUIRIES:
Wandile Sihlobo (wandile@agbiz.co.za)
012 807 6686

 

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