The barometer for world food commodity prices declined for the fifth consecutive month in August, as quotations for most benchmark items dropped, according to a new report released today by the Food and Agriculture Organization of the United Nations (FAO). The closely watched FAO Food Price Index averaged 138.0 points in August, down 1.9 per cent from July although remaining 7.9 per cent above its value a year before. The Index tracks monthly changes in the international prices of a basket of commonly traded food commodities. The FAO Cereal Price Index decreased by 1.4 per cent from the previous month, a drop driven by a 5.1 per cent decline in international wheat prices that reflected improved production prospects in North America and the Russian Federation as well as the resumption of exports from the Black Sea ports in Ukraine. Please click here to peruse.

Late on Friday 26 August, the National Electricity Regulator of South Africa (NERSA) put out an innocent-sounding and typically bureaucratic statement. It asked for public comment on three section 34 determinations made by the Minister of Mineral Resources and Energy, Gwede Mantashe, which the minister sent to NERSA for concurrence. The bureaucratic story goes like this: NERSA has to ‘give concurrence to’, ie agree with, the minister’s determinations before the latter can take effect and power can be legally procured. Before NERSA can give concurrence, it must obtain public comment. Once concurrence is given, the minister can open bid windows that will then be implemented by the Independent Power Producers’ Office. It is a cumbersome and dirigiste system, but that is how it currently

works. Political and trend analyst JP Landman shares his views on the latest announcement in the linked article.

The rough start of the 2021/22 agricultural season has been muted in several sectoral economic indicators. But the data released this week by Statistics South Africa put the picture in perspective. The agricultural gross value added contracted by 7,7% quarter-on-quarter (seasonally adjusted) in the second quarter of this year. This follows a revised contraction of 2,4% in the first quarter of the year. These results are unsurprising as various subsectors of agriculture face varied challenges. For example, the livestock industry, which accounts for roughly half of the sector's gross value added, continues to suffer from foot-and-mouth disease outbreaks and rising feed costs. Moreover, some field crops' harvests aren't as robust as the 2020/21 season due to heavy rains at the start of the season, albeit well above the long-term harvest levels. These constraints have undermined the robust activity we saw in field crops such as soybeans, sunflower seeds, and various fruits, which promised to provide some activity at the start of the year. Agbiz chief economist Wandile Sihlobo discusses the latest data in the linked article.

Trade is at the core of South Africa's agricultural progress. The expansion on the ground has to be followed by improvements in market access to various markets and logistical efficiency for the agricultural sector to remain sustainable. Recent challenges regarding the market access of wool into China have now been resolved. But the losses from when the ban was in place are clear in the trade data. Wool exports fell by 42% in the second quarter of 2022 compared with the corresponding period in 2021. For citrus, which continues to experience market access challenges in the EU after changes in plant regulations, the impact could show more pointedly in the third quarter of the year. Still, a lot will depend on the engagements between the South African and EU authorities on the new plant safety regulations, which involve stringent new cold treatment requirements. Read more in the linked article by Wandile Sihlobo.

South Africa's agricultural export activity will likely soften this year from the 2021 record of US$12,4 billion. Lower production of key crops, animal disease spread and changes in phytosanitary regulations in key markets such as the EU will all weigh on the export activity this year. The changes in export volumes and values might not show in the year's first half but will likely reflect in the second half of the year. In this week’s segment, agricultural economist Wandile Sihlobo unpacks South Africa’s agricultural trade and the expectations of export activity in 2022 in the linked podcast.

South Africa’s agricultural sector faces various challenges, including uncertainty in domestic agricultural policy, logistics, biosecurity, geopolitics, and rising input costs. Therefore, it is essential to analyse and determine the confidence levels in the agricultural and agribusiness sectors. As you know, we do this through the Agbiz/IDC Agribusiness Confidence Index. Decision-makers from within the agricultural community, Stats SA, SA Reserve Bank, and the National Treasury, amongst others, are close observers of this index. Kindly respond to the Agbiz/IDC Agribusiness Confidence Index Survey for the third quarter of 2022 and submit your response on/or before Friday, September 9, 2022, either electronically (by clicking on this link) or by completing the printable version and sending it back to this email address: wandile@agbiz.co.za.

The Bureau for Food and Agricultural Policy (BFAP) recently shared its agricultural outlook until 2031. A senior civil servant of the Department of Agriculture, Land Reform and Rural Development has referred to the “fabulous BFAP” in his speech. Fabulous could refer to one of two things: that BFAP's outputs are extraordinary or that BFAP's outputs have no basis in reality. There is no doubt what the official meant when he referred to BFAP as fabulous. In the South African economy, the agricultural sector’s performance is fabulous. Agbiz Grain general manager Wessel Lemmer discusses some of the highlights in the linked article, written for and first published in Landbouweekblad.

The Dutch agriculture minister has resigned amid a tumultuous summer of protests by farmers over pollution regulations. Henk Staghouwer, who held the position for only nine months, announced his departure on Twitter. He later told reporters that he wasn’t the right person for the job and would be resigning. The country’s lucrative agriculture sector has been in crisis since a 2019 court ruling forced the government to slash emissions of nitrogen oxide and ammonia, which livestock produce. Thousands of agricultural workers have staged protests, blockading cities with tractors and burning hay bales along major roads. Read more in the linked article, first published on msn.com.

Across the globe several countries are dealing with extreme weather events on a scale not seen before in recorded history. The damage to agricultural crops in Pakistan, the world’s fifth largest cotton producer, is extensive with many fields completely submerged. Vegetables and cotton are among the hardest hit and the impact on the cotton crop will not be fully realised until the water subsides, but sources are reporting a large reduction in the expected crop for the 2022/23 season. The original country estimates for the current season were an optimistic 1.88 million tons. The ICAC is reducing the estimated production for Pakistan to 1 million tons. Read more in the Cotton Market Report published by Cotton SA.

South Africa currently has 142 open foot-and-mouth disease (FMD) outbreaks in the previous FMD-free zone. The outbreaks affect the Limpopo, North West, Gauteng, Mpumalanga, Free State and KwaZulu-Natal Provinces of South Africa. In order to halt the spread of FMD, the movement of cattle in the whole country was temporarily suspended on 18 August 2022. A national movement ban on cattle was declared in the Government Gazette notice 2391 on 18 August 2022 and the country is currently in the second week of the national movement ban. This restriction will remain in place for only a short period of time until the current exponential spread of FMD has been stopped. Read more in the linked update report from the Department of Agriculture, Land Reform and Rural Development.

Port operations this past week were again dominated by adverse weather conditions (especially in the form of strong winds), equipment breakdowns, congestion, and system downtime. Consequently, throughput was very low. The port of Durban suffered the most from the poor weather, and extensive hours were lost due to strong winds, which added to the backlogs and congestion already experienced. In Cape Town, NAVIS system downtime was reported on two separate occasions during the week for an approximate period exceeding one hour, while inaccurate vessel size calculations delayed the MOL Proficiency for approximately 16 hours. Furthermore, TPT continued to implement the four-hour review period for slot allocations this week while the incidence of cancelled and wasted slots remained high. Internationally, the capacity shortage in the global container industry will not be solved by the added non-cellular capacity, despite the massive increase in the sector. Read more in the latest BUSA Covid-19 Cargo Movement Update.

With a month left of the current export season, the Citrus Growers’ Association of South Africa (CGA) and the Fresh Produce Exporters’ Forum Boards have decided to voluntarily close the export of Valencia oranges from citrus black spot (CBS) affected areas in South Africa to the European Union (EU) starting from 16 September 2022. This decision was taken in response to the 10 CBS notifications of non-compliance (NONCs) on SA citrus detected so far this season and the traditional heightened risk that Valencia oranges pose for CBS non-compliance at the tail end of the EU export season. Read more in the linked CGA media statement.

The Citrus Growers' Association of Southern Africa, shares the latest news in the citrus industry in its weekly update - From the desk of the CEO. Please click here to peruse