He also provides more information about the latest developments in the agricultural sector. 

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In this week’s insert, Sihlobo talks about the South African agriculture market’s performance thus far.

“The South African agricultural sector has had a good start to 2021, with favourable rainfall supporting crop yields and grazing veld for the livestock industry. This is a second consecutive season of strong performance for the sector after 2020 also saw bumper harvests on various crops and subsequently the second-largest export earnings on record of US$10,2 billion.

“With 2021 set to present even larger yields than 2020 for major field crops, horticulture and wine industry, we believe that exports could surpass 2020's levels. In the first quarter of 2021, agricultural exports amounted to US$2,9 billion, which is a 28% year-on-year (y/y) increase. The size of the increase compared with last year is partly because of base effects as the first quarter of 2020 was affected by the Covid-19 related disruptions to global supply chains, but the growth also reflects rising export performance for various products.

“In the first quarter of this year, the top exportable products were fresh grapes, groundnut oil, maize, wine, greasy wool, fresh plums, fresh pears, fresh apples, and maize meal, amongst other products. We expect these products to dominate the export list throughout the year as the production promises to exceed last year's levels. For example, the South African Wine Industry Information & Systems forecasts the 2021 wine grape crop at 1,5 million tonnes, which is 9% larger than the 2020 harvest. This will likely contribute to increase wine exports in 2021. The Citrus Growers' Association has also recently projected that the South African citrus industry would probably break all previous export season records with an estimated 159 million cartons in 2021, from 146 million cartons in 2020.

“Moreover, South Africa could have 2,8 million tonnes of maize surplus available for export markets in the 2021/22 marketing year. This would be the largest volume since 1994/95, when South Africa exported 4,7 million tonnes of maize, according to data from the South African Grain Information Services (SAGIS). These available maize export volumes are on the back of a large forecast harvest, which we at Agbiz currently forecast to be 16,7 million tonnes (against the Crop Estimates Committee's figure of 16,2 million tonnes). This would be the second-largest maize harvest on record.

“From a destination point of view, the African continent and Asia were the largest markets for South Africa's agricultural exports in the first quarter of this year, respectively accounting for 33% and 25% in value terms. The European Union was the third-largest market, taking up 20% of South Africa's agricultural exports in the first quarter of 2020. The balance of 22% value was spread across other regions of the world.

“Notably, South Africa's agricultural imports also increased in the first quarter of 2021, although marginally by 4% y/y to US$1,6 billion. The top imported products were the usual ones where domestic consumption usually outstrips domestic production. These include wheat, rice, palm oil, soybean oilcake/meal, beer from malt, poultry products, live cattle, and whiskies. We believe rice, wheat, and palm oil will dominate the agricultural import product list for the year.

“The International Grains Council forecasts South Africa's 2021 rice imports at 1.1 million tonnes, a 5% increase from the previous year. The imports are usually evenly spread across the year, with a peak in volumes in the last quarter of each year. Meanwhile, South Africa's 2020/21 wheat imports are forecast at 1,58 million tonnes, down by 16% y/y. We also expect a notable decline in soybean meal imports as South Africa has a record harvest in the 2020/21 production season, which should substitute for a large share of the usual imports.

“Overall, South Africa recorded a trade surplus of US$1,4 billion in the first quarter of 2020, which is a 75% y/y increase, in part because of lower base effects, as previously stated. With major economies in Europe, Asia, and the Americas recovering from the 2020 economic shock of the pandemic, we expect the demand for food products to remain robust and support exports in South Africa despite the relatively stronger exchange rate. With the expected large volumes of production of various crops and fruits and sound output in the wool industry, it is plausible that South Africa's agricultural exports could exceed the 2020 level of US$10,2 billion this year.

“To close off with a policy view, South Africa has an export-orientated agricultural sector, which means that there needs to be continuous improvements on logistics and to expand the export markets to new destinations. There are currently ongoing engagements between industry and Transnet to address bottlenecks and efficiency challenges at the ports and rails in terms of logistics.

“In terms of export markets, South Africa's agricultural exports are well-diversified already, but the additional markets that policymakers should prioritise are China, India, Saudi Arabia, and Japan. Increased market access for a wide range of agricultural products in these markets would benefit the farming sector. The Department of Trade, Industry and Competition, and the Department of Agriculture, Land Reform and Rural Development should prioritise these countries and work with the industry in the process,” concludes Sihlobo.

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