Here is Sihlobo...

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He says the continued crisis around Covid-19 across the world has brought uncertainty in global trade because of disruptions in supply chains and a weakening of demand by consumers. South Africa’s agricultural sector, which is export-orientated, is one of the sectors that could have been disrupted by the pandemic. He, however, says thus far there has been minimal disruptions as the agricultural and food sector had been generally operational across the globe and the coming months could be even better as many countries are slowly easing restrictions on economic activity and the movement of people after widespread lockdowns. In the first quarter of the year, which is a period before the coronavirus lockdowns were implemented across the globe, South Africa’s agricultural trade remained vibrant and recorded an agricultural trade surplus of US$773. This is an increase of 16% on a year-to-year (y/y) basis, with exports having increased at a much higher rate than imports.

According to him exports were underpinned by grapes, maize, wine, wool, pears, apples, plums, lemons and macadamia nuts, among other agricultural products. It is expected that these products will continue to underpin South Africa’s agricultural exports in the second quarter of 2020. There might, however, be some decline in wine exports which had briefly been impacted by domestic lockdown regulations. Citrus will feature prominently from the second quarter data onwards as its exports for this year are expected to reach a record 143.3 million cartons (for the Southern Africa region, mainly from South Africa).  

In terms of imports, the leading products included wheat, palm oil, rice, poultry meat, sunflower oil and sugar and for the year, rice, wheat and palm oil could dominate the agricultural import product list. South Africa’s 2020 rice imports could amount to 1.1 million tonnes, up by 10% from 2019, according to data from the International Grains Council. Meanwhile, South Africa’s 2019/20 wheat imports could increase by 29% y/y to 1.8 million tonnes. We could also see an increase in palm oil in the coming months.  

He says while the pandemic will result in a loss of income in various regions of the world, and in turn, a decline in demand for goods, the agriculture and food sector is one of the few that might not be as hard hit. As such, for the year, South Africa’s agricultural exports could increase from the US$ 9.9 billion of 2019. The key catalysts this year will be the increase in grains and horticulture output and to some extent the weakening domestic currency. Therefore, as in the previous year, trade will continue to be a key driver of South Africa’s agricultural sector, at least in 2020.

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PRESENTER OUTRO: That was Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa, Agbiz, only on the Agri Hour.