First deputy managing director of the International Monetary Fund (IMF), Gita Gopinath, delivered opening remarks at the IMF conference on geoeconomic fragmentation, emphasising the significance of discussing how geoeconomic fragmentation is shaping the global economy. Gopinath noted that this paradigm shift away from global economic integration has been influenced by various factors, including stalled trade reforms, structural changes in the economy, geopolitical rivalries, and concerns over national security and supply chain resilience. She highlighted early signs of fragmentation, such as the increasing number of trade and foreign direct investment (FDI) restrictions, the repositioning of production to politically aligned countries, and the concentration of FDI in strategic sectors among geopolitically aligned countries. Gopinath stressed the importance of rigorous research in understanding fragmentation and its potential ramifications for the global economy. Read the full article here.

Our agricultural sector’s relationship with the US is a two-way stream that is mutually beneficial based on intrinsic value. When preparing for the Agoa summit, this is the narrative we should be pushing. The comments by US Ambassador Reuben Brigety regarding the Lady R shipments sent the rand plummeting and inflamed fears about South Africa’s future trade relations with the US. This is a high-stakes issue for South African businesses, and the agricultural sector in particular. In 2021, South Africa’s total agricultural products exported to the US amounted to $839 million. These products were exported duty-free under the African Growth and Opportunity Act (Agoa). Agoa is not a free trade agreement; it is a unilateral concession made by the US Congress to promote African development under the philosophy of 'trade, not aid'. Read the full opinion piece by Agbiz CEO Theo Boshoff first published in Daily Maverick.

The global geopolitical landscape is undergoing rapid transformation, significantly impacting world trade. The policy environment that existed just a few decades ago now feels distant. In the 1990s and 2000s, developing and transitioning economies embarked on a reform period characterised by market liberalisation and a strong embrace of globalisation. This era witnessed the establishment of the World Trade Organization, which introduced a rules-based framework for fair and non-discriminatory trade. Notably, this period was characterised by relatively low geopolitical tensions, with China prioritising economic growth and Russia grappling with stabilisation efforts. Read more the in the linked IMF article.

In a statement of the Monetary Policy Committee issued by Lesetja Kganyago, governor of the South African Reserve Bank, it is highlighted that while there is a somewhat improved global growth outlook with persistent inflation and elevated financial stability risks, South Africa's economic conditions remain poor. Growth prospects in Asia and Europe are still affected by geopolitical tensions, and China's growth is expected to remain modest. Many developing economies face high debt levels, weaker growth, and adverse financing conditions. In South Africa, energy and logistical constraints continue to limit economic activity and increase costs, with load-shedding alone expected to impact growth negatively. Read the full statement here.

Eskom released its 2023 winter outlook which addresses the intensified load-shedding situation and its significant impact on the economy. The outlook reveals an increased risk of supply shortfall against expected demand, with the worst-case scenario suggesting that load-shedding could escalate to stage 8 if interventions are not successful. However, Eskom notes that higher levels of load-shedding do not imply a greater risk of a nationwide blackout. Loadshedding is a strategy employed by Eskom to manage electricity demand and prevent such an occurrence. To combat load-shedding, collaborative efforts are required on both the supply and demand sides. Read more on Eskom’s winter outlook briefing here.

Agbiz organised an online workshop for its members on the national minimum wage, held on 23 May. The main objective of the workshop was to enhance participants' understanding of the national minimum wage adjustment process and explore effective ways for Agbiz and its members to influence the outcome of this process. During the workshop, attention was drawn to the considerable increase in the 2023 minimum wage adjustment, reaching a notable 9,6%. Furthermore, the National Minimum Wage Commission recently recommended that future increases should surpass the consumer price index. Their recommendation emphasised the importance of ensuring that all wage-earning workers receive a wage that enables them to maintain a decent standard of living. This standard encompasses the ability to support themselves and their families at a socially acceptable and economically viable level. In the linked article, Agbiz head of Legal Intelligence Annelize Crosby gives feedback on the workshop.

This month marks a year since South Africa's Agriculture and Agro-processing Master Plan was completed and launched. This plan offers the government and the private sector framework to grow the sector, build competitiveness, attract more investment, improve inclusion, and create jobs. This year should mark the start of the implementation phase. But progress so far remains limited, as the focus shifted to energy security at the beginning of the year because of the intensified load-shedding. With various interventions such as the load-curtailment, extension of diesel rebate, and Agro-energy Fund under implementation, the sector should refocus its attention on the Agriculture and Agro-processing Master Plan and explore means of implementation. In the linked article, Agbiz chief economist Wandile Sihlobo discusses the progress made in implementing South Africa's Agriculture and Agro-processing Master Plan.

Agriculture remains one of the success stories in South Africa's economic progress, irrespective of the various challenges the country has faced over the past few decades. While primary agriculture's share in the economy has declined from around 10% in the 1960s to just under 3% today, the sector has grown tremendously in real terms. This share decline only illustrates the classic story of how the South African economy has advanced over time and various industries such as finance, manufacturing and transport have grown much faster than agriculture. Read more in the linked piece by Wandile Sihlobo.

South Africa's Crop Estimates Committee lifted the country's 2022/23 maize production estimate by 2% from last month to 16,1 million tonnes. This crop is 5% more than the 2021/22 season and the third-largest harvest on record. As we stated in the previous notes, the expected large harvest is primarily on the back of large yields, as the area planted is slightly down from the 2021/22 season. About 8,5 million tonnes is white maize, with 7,6 million tonnes being yellow maize. A crop of 16,1 million tonnes implies South Africa will have sufficient supplies to meet domestic maize needs of roughly 11,4 million tonnes and have over 3,0 million tonnes for export markets in the 2023/24 marketing year. Wandile Sihlobo discusses this further in the linked article.

Kenya's President Ruto's government lost a case seeking approval to import GMO maize into the country, which was intended to address food insecurity caused by drought and high maize importation. The liberalisation of the maize seed market with GMO crops could have benefited farmers and boosted domestic production. Countries like China are also embracing GMO crops to enhance domestic production. South Africa's early adoption of GMO technologies led to significant increases in maize yields and other benefits such as labor savings and reduced pesticide use. Allowing GMO maize imports could have helped lower Kenya's domestic maize prices, which are currently high compared to South Africa. Read more in the linked article by Wandile Sihlobo.

South Africa's Crop Estimates Committee lifted the country's 2022/23 maize production estimate by 2% from last month to 16,1 million tonnes. This crop is 5% more than the 2021/22 season and the third-largest harvest on record. As we stated in the previous notes, the expected large harvest is primarily on the back of large yields, as the area planted is slightly down from the 2021/22 season. About 8,5 million tonnes is white maize, with 7,6 million tonnes being yellow maize. A crop of 16,1 million tonnes implies South Africa will have sufficient supplies to meet domestic maize needs of roughly 11,4 million tonnes and have over 3,0 million tonnes for export markets in the 2023/24 marketing year. For more, listen to this week’s podcast by Wandile Sihlobo.

On 24 April 2023, PricewaterhouseCoopers (PwC) published its socio-economic outlook for South Africa. The major trends that agricultural enterprises should take note of include climate change, technological disruption, demographic shifts, social instability, and a decrease in globalization. In South Africa, climate change can put pressure on the affordability of food, job creation can be hindered by technological advancements, and the growing population is increasingly youthful with expectations of finding employment. Agbiz Grain general manager Wessel Lemmer discusses this subject in the linked article, first published in Landbouweekblad.

Revenues from carbon taxes and emissions trading systems (ETS) have reached a record high, about $95 billion, finds the World Bank’s annual State and Trends of Carbon Pricing report released today. This is despite the challenging context for governments facing high inflation, fiscal pressures, and energy crises. “Carbon pricing can be an effective way to incorporate the costs of climate change into economic decision-making, thereby incentivising climate action,” said Jennifer Sara, global director for climate change at the World Bank. Read more in the linked World Bank article. 

To alleviate the burden of living costs, South Korea's finance ministry announced that starting in June, tariffs on higher-priced edible products such as pork and sugar will be reduced. The current tariffs, which range up to 10%, will be lowered to 0% for seven food items, in response to temporary supply shortages. This measure, amounting to a total of 47,3 billion won ($35,81 million), will remain in effect for most of these products until the end of the year. Read more in the linked article by Reuters.

Africa is set to be the second-fastest growing region in the world after Asia in 2023–24, demonstrating the resilience of its economy despite dealing with multiple global shocks. But the projected growth will depend on global conditions and the continent’s ability to bolster its economic resilience, the African Development Bank’s 2023 African Economic Outlook report has found. The theme of the 2023 African Economic Outlook is "Mobilizing Private Sector Financing for Climate and Green Growth in Africa". Read the full study on the 2023 African economic outlook here. 

The European Commission is adopting intermediate proposals in its international climate policy as outlined in the European Green Deal. The Green Deal provides a road map for a socioecological transition to a low-carbon future and the building blocks for a green economic growth strategy to address climate change, energy, and biodiversity. However, the implications of the EU Green Deal (EU GD) for Africa are multifaceted. Most prominently, the stringent policies outlined in the Farm to Fork (F2F) and Chemical Sustainability Strategies will greatly affect global trade in agricultural inputs and outputs and, by extension, the economies of African countries that greatly depend on agriculture. Read the full Study by Eastern Africa Farmers Federation here.

The avocado industry has experienced significant growth, resulting in increased availability of avocados in recent years. Surprisingly, despite this growth, the price of avocados has remained relatively stable in the US. This stability has shifted the demand curve outward as consumers recognize the value of avocados for their health benefits. The Hass Avocado Board (HAB) has played a crucial role in maintaining the value of avocados through a comprehensive effort, investing heavily in research to highlight the nutritional value and health benefits of avocados. This investment, amounting to around $30 million in the past decade, has helped change the perception of avocados from being considered unhealthy due to their fat content to being recognized as a healthy addition to one's diet. Read more in the linked article first published on FreshFruitPortal.com

The South African fruit industry has a 'can do' attitude, says the newly appointed chairperson of Fruit SA, Anton Kruger. In an interview with Food For Mzansi, Kruger talks about how the fruit industry is dealing with the geopolitical changes and challenges on South African soil. He also shares areas of focus for him as the new chair and has a strong message to farmers in the fruit industry. Please click here to read the full article, first published on foodformzansi.co.za.

Business Unity South Africa (BUSA) released the 138th update on the South African supply chain and international trade providing an overview of recent developments. Adverse weather, equipment breakdowns, shortages, vessel ranging, and congestion have contributed to operational delays at the ports. The Port of Ngqura's Mooring Master system remains out of commission, causing significant losses in operational hours. Technicians from Ireland have been assisting with the repair of crane QC 5 at Durban Container Terminal's Pier 1. Construction has led to the closure of the Bypass Road en route to the Durban port, but it is expected to reopen soon. Cable theft and vandalism on the rail system have shown some improvement, although a notable incident caused a four-hour delay. Read more in the latest BUSA Cargo Movement Update.

During the first half of May, the summer rainfall region, particularly the northeastern, eastern, and southern parts of the country, experienced a substantial increase in rainfall compared to normal levels. Not only did the total rainfall exceed expectations, but there were also more rain days than usual in the central to northeastern areas. In contrast, the winter rainfall region remained relatively dry as the prevailing atmospheric circulation patterns favored precipitation in the interior and along the east coast. However, there has been a recent shift in the atmospheric circulation patterns. Over the next few days, the focus of rainfall will move towards the west, primarily targeting the winter rainfall region. This shift is attributed to the influence of two significant cold fronts accompanied by upper-air lows, which will lead to widespread rainfall and even snowfall in higher-altitude areas, particularly in the winter rainfall region and the central to southern parts of the country. Read more in the latest edition of Cumulus, published by AgriSeker.

The World Economic Forum and its partner institute, Business Unity South Africa (BUSA), invite you to take part in the Executive Opinion Survey 2023/24 to assess the level of competitiveness of South Africa in an international comparison. This annual survey is a major component of the World Economic Forum’s Global Competitiveness Report, as well as other WEF insight pieces. The survey provides the key ingredient that turns the Global Competitiveness Report into a representative annual measure of a nation’s economic environment. A truly unique source of data, the Survey has also long been used by numerous international and non-governmental organizations, investors, think tanks, and academia for empirical and policy work. Please follow this link to complete the 2023/24 survey.

The VKB and GWK merger has officially been granted final approval by the necessary regulatory authorities, including the competition authorities. All suspensive conditions required for the transaction have been fulfilled, paving the way for these two agricultural groups to commence operations as a newly combined entity as of today, 31 May 2023. This announcement comes after the Competition Tribunal approved the merger on 21 December 2022, with certain conditions that were accepted by VKB and GWK following a recommendation by the Competition Commission in support of the merger. Read more in the joint media release by VKB and GWK here.

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