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22 September 2022

Agriculture meeting highlights food security, urgency of implementing MC12 outcomes

Food security was the main focus of the meeting of the WTO’s Committee on Agriculture on 14 and 15 September as WTO members discussed how to act quickly amid the ongoing polycrisis to implement outcomes reached at the 12th Ministerial Conference (MC12), in particular those related to food security and the WTO response to the Covid-19 pandemic. Members continued examining each other’s farm policies to ensure compliance with WTO rules while working across other implementation issues relevant to the Bali and Nairobi ministerial decisions. Read more in the linked WTO article.

Africa’s rapid economic growth hasn’t fully closed income gaps

Many economies in sub-Saharan Africa grew at a record pace before the pandemic. Ethiopia and Rwanda, for example, saw some of the fastest expansions in the world—an average of more than 7.5 per cent per year over the past two decades. However, it is less clear whether the gains in economic growth have been shared equally across regions within countries because income data at the subnational level are not always available. To assess the extent to which sub-Saharan Africa’s strong growth performance spread across subnational regions, we used satellite-recorded images of the Earth’s nighttime lights as a proxy for economic activity. The data show that at least until 2010, African countries made tremendous progress in reducing regional income inequality (differences in output per capita across regions of a country). This is in marked contrast with other parts of the world, where inequality either increased or convergence was slower. Read more in the linked IMF blog post.

Agbiz/IDC Agribusiness Confidence Index deteriorates further in Q3, 2022

The Agbiz/IDC Agribusiness Confidence Index (ACI) deteriorated further by 7 points to 53 in the third quarter following a 2-point decline in Q2, 2022. Higher input costs, friction in some export markets, persistent animal disease challenges, rising interest rates, intensified geopolitical risks which disrupted supply chains, and ongoing weaknesses in municipal service delivery and network industries remained the key factors that survey respondents cited as the key concerns. Still, a level of the ACI above the neutral 50-point mark implies that agribusinesses remain cautiously optimistic about operating conditions in South Africa. Therefore, Q3, 2022 results still reflect broadly favourable agricultural conditions, albeit not as strong as the previous seven quarters. This survey was conducted in the first two weeks of September 2022 and covered agribusinesses operating in all agricultural subsectors across South Africa. In the linked article, Agbiz chief economist Wandile Sihlobo provides more insights on the ACI.


National Road Traffic Amendment Bill and the blood-alcohol level - sanity prevails

On 16 September, the Portfolio Committee on Transport rejected provisions of the National Road Traffic Amendment Bill that sought to criminalize driving a vehicle in South Africa with any traces of alcohol in the blood. This is a welcome outcome as there was a genuine belief from the agricultural industry that the changes would not be effective but have huge unintended consequences on the wine and wine tourism industry. By means of background, the Bill seeks to make several changes to our traffic laws but the most contentious amendment related to the permissible blood alcohol content (BAC) whilst operating a vehicle. Understandably, it is a sensitive topic. The evidence shows that South Africa has a very unhealthy relationship with drinking and driving. As Agbiz highlighted in its presentation to the Portfolio Committee, academic research shows that roughly 27% of total road accidents in South Africa and up to 60% of fatal road injuries can be attributed to intoxicated drivers or pedestrians. There is little doubt that we have a problem. However, there was genuine concern that proposals to move from a BAC of 0.05% to a BAC of 0.00% could miss the point. Agbiz CEO Theo Boshoff discusses this subject in the linked article.


Agricultural input prices remain elevated, weighing on SA farmers and agribusinesses 

While some farmers in the grains and oilseeds industry benefited from the unusually long period of large yields and higher prices, higher input costs since the start of 2020 have limited the benefits. For farmers in the horticulture industry, where commodity prices did not increase as much as in grains, the higher input costs were an even heavier burden. These price increases were mainly in agrochemicals (herbicides, fungicides, insecticides), fertilizers and fuel. Various factors caused the price increases, but the main ones were the disruptions in industrial production when the Covid-19 pandemic started, protracted supply chain bottlenecks, higher shipping costs, China's decision to limit fertilizer exports, and more recently, the Russia-Ukraine war. In the months after the war started, prices of some products increased to record highs. In the linked article, Agbiz chief economist Wandile Sihlobo explains why price dynamics matter in the agricultural industry.

South Africa’s farm exports are an economic lifeline – with weak spots

International trade has been at the core of South Africa’s agricultural progress since the early 2000s. Since 1994, the country has excelled in opening up new markets, as evidenced by several free trade agreements with critical regional and international markets. The country exports roughly half of its produce in value terms. The top exportable products are high-value and labour-intensive horticulture produce, a subsector that expanded significantly over the past two decades. Citrus, table grapes and a range of deciduous fruits dominate the export list.

This means international trade has become crucial for sustaining farm profitability and job creation in South African agriculture. Wandile Sihlobo discusses this subject in the linked article, first published on The Conversation.

Wheat in South Africa

If one is not dealing with a particular commodity in their daily business, they rarely keep an eye on whether it is produced sufficiently locally or imported. The main concern for consumers is always whether they get their preferred products on shelves when they go to the store. This has been the reality of wheaten products in South Africa. Hence, some South Africans realising that the country imports roughly half of its annual wheat consumption has sparked a discussion about why it is not expanding domestic production in all the fallow land in some provinces. This is a fair question about the threat of rising wheat prices and supply constraints amid the Russian invasion of Ukraine; both countries account for nearly a third of the world's wheat exports and have increased food security concerns. In this week's segment, agricultural economist Wandile Sihlobo provides insight into South Africa's wheat production changes over the past decades and the current import activities. He closes by assuring South Africans that there are no possible wheat shortages in the country.

How to unlock SA's agricultural potential

Joining CNBC Africa for a discussion on how to unlock the country's agricultural potential are Penny Byrne, investment analyst at Standard Bank, Theo de Jager, president of the World Farmers Organisation and Wandile Sihlobo, chief economist at Agricultural Business Chamber of South Africa. Please click here to watch the video.


Will the train dream come true?


Transnet's core mandate is to enable economic growth by providing appropriate ports, rail and pipeline infrastructure for the purpose. This must be done in a cost-effective manner that is internationally competitive. It's not happening yet. Instead, investment is low and maintenance poor. This led to a decline in the use of rail transport over many decades, while Transnet maintained a monopoly over train transport. Transnet realises that it cannot alone provide the services needed to expand South Africa's rail infrastructure. That is why it is looking for partners in the private sector to meet the demand for rail transport. Read more in the linked article by Agbiz Grain general manager Wessel Lemmer, Agbiz CEO Theo Boshoff and Malcolm Simpson, and independent specialist, written for and first published in Landbouweekblad.


FAO's montly report on food price trends

International wheat prices continued to ease in August,

influenced by increased availability from ongoing harvests and the resumption of exports from Ukraine’s Black Sea ports. By contrast, maize prices firmed mostly on strong demand for supplies from Argentina and Brazil amidst a tighter global supply outlook and pressure from energy markets. World rice prices held steady in August, as slight declines in quotations of the most widely traded “Indica” varieties compensated for the mild price gains in other rice market segments. Based on the latest available data, FAO analysis indicates that a significant number of countries, particularly low‑income food importers, continued to face elevated levels of food prices in August. Upward price pressures slightly eased in areas where harvests were ongoing or recently concluded, but prices generally remained higher year on year from the combined effects of reduced domestic supplies, national

macroeconomic difficulties, currency depreciation, localized insecurity and higher-than-normal fuel and fertilizer prices. Read more in the linked Food Price Monitoring and Analysis (FPMA) Bulletin published by the FAO.

Challenges that keep South African farming community up at night

Transnet Ports

To understand the real challenges of farmers, it is necessary to spend a considerable amount of time on the ground talking to farmers and to get a better feel of the markets. In such engagements in the last week of August 2022, one theme that came up time and again in most discussions with role players in the sector, is the need for the diversification of the export markets to non-traditional regions while retaining the sector’s foothold in key markets such as the European Union. Other issues that keep farmers sitting up and scratching their heads at night are the need to improve logistics – roads, rail and ports; expansion of agricultural finance, particularly developmental finance or flexible finance products for the new entrant farmers, and strengthening of trust between government and the industry. Wandile Sihlobo discusses these issues in the linked article, first published on CNBCAfrica.

Nampo Cape flourishes in the Overberg

The third hosting of Nampo Cape, and the biggest yet, concluded over the past weekend. Grain SA together with Bredasdorp Park NPC is grateful for the record 32 640 guests who visited Nampo Cape over the four days to see the more than 500 exhibitors. Visitors and exhibitors were blessed with lovely weather conditions despite the rain that the grain producers in the area so desperately need. "It was wonderful to be able to host Nampo Cape again after an absence of two years," said Toit Wessels, Grain SA's assistant manager of Nampo. "The positive feedback from the exhibitors in terms of business transactions still remains one of the most important and accurate measures of success, and the exhibitors have certainly benefited from this highlight on the Cape agricultural calendar. The many new additions during the week, especially the Elim Fynbos exhibition, the Merino Classic and a large number of farmer innovation entries were all hits. The ladies were pleasantly surprised this year with the option to visit the beauty salon after attending the ladies' program for a treat. Read more in the linked Nampo media statement.


Sugar industry provides R5 million in funding for tertiary bursaries

The Sugar Industry Trust Fund for Education (SITFE) has opened applications for bursaries for first-year students pursuing tertiary studies in science, engineering and agricultural fields at South African universities, technical universities, and colleges. R5 million has been set aside for this bursary programme. The funding forms part of the industry’s commitment to invest more than R1 billion in the industry’s transformation over a five-year period.

While these bursaries are primarily aimed at children of sugarcane growers and farmworkers in KwaZulu-Natal and Mpumalanga, all students pursuing studies in the qualifying fields may apply. Read more in the linked media statement issued by Andrew Russel, chairperson of SA Canegrowers.

Latest news from CGA

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


WTO Trade Dialogues webinar

Theme: “Improved Seed Trade; Unlocking Global Food Security”

22 September 2022 | Virtual

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Employment Equity Inspections: Are you ready?

27 September 2022 | Live online

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NAMPO Alfa Livestock, Outdoor & Hunting Expo

29 September-1 October 2022 | NAMPO Park

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AFMA Symposium 

Theme: "The future of protein | Staying relevant!"

18-19 October 2022 | Virtual

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African Agri Investment Indaba

14-16 November 2022 | CTICC | Cape Town

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Africa Agri Tech Conference and Exhibition

14-16 March 2023 | Sun Arena | Menlyn Maine | Pretoria

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