All key indicators point to the agricultural sector’s outlook being broadly positive, the Agricultural Business Chamber(Agbiz) chief economist Wandile Sihlobo said yesterday.
South Africa was likely heading to a favourable winter crop season while finishing a promising summer crop season.
He said besides the developments in winter crops, the summer crop-growing regions of South Africa were also nearing the harvest process.
“In the early planted regions, we should see a start of the harvest later this month. The crop across the country is in reasonably good condition, maturing and drying in some regions. We generally expect an ample harvest in most summer crops, which is aligned with the view of the CEC,” Sihlobo said.
In its March update, the Crop Estimates Committee (CEC) projected South Africa's 2022/23 summer grains and oilseed production estimate at 19.6 million tonnes, 5% higher than the previous season. This was primarily on the back of expected higher yields as the overall planted area for summer grains and oilseeds was 4.4 million hectares, roughly unchanged from the previous season.
For large crops like maize, soybeans and sunflower seed, production was forecast at 15.9 million tonnes, up 3% year on year (y/y), 2.7 million tonnes (up 22% y/y), and 797 610 tonnes (down 6% y/y), respectively.
Moreover, the demand for the crop domestically remained strong.
Sihlobo added that the input prices have come off from the highs seen last year. For example, in February this year, essential agrochemicals such as glyphosate, acetochlor, and atrazine were down by 32% y/y, 18% y/y and 2% y/y, respectively, in rand terms.
“Had the South African rand not weakened during this period, the gains from the price declines would have been significant. In US dollar terms, the above-mentioned input prices were down by roughly 30% and atrazine by 17% from February 2022. Prices of insecticides and fungicides have also declined notably from last year's levels.
“Also worth noting is that in February 2023, essential fertilisers such as ammonia, urea, di-ammonium phosphate and potassium chloride are down 6%, 36%, 28% and 14% in rand terms, respectively. Again, in US dollar terms, the price decline was more notable, which speaks to the impact of the relatively weaker South African rand on imported products.”
In its Input Cost Monitoring update for March last year, the National Agricultural Marketing Council said that in line with the global market price trends, domestic fertiliser prices had been trending downwards over the past few months, mirroring the developments from the international markets.
Sihlobo said these price changes in inputs were vital as they impacted vast components of the grain input costs.
“Fertiliser accounts for a third of grain farmers' input costs, while other agrochemicals account for roughly 13%. This means that a decline in the prices of these inputs will make a notable saving on farmers' input costs. This partially compensates for the decline in commodity prices over the past few months.”
He added that while farmers were currently in an environment of lower commodity prices than last year, softening input prices provided a necessary financial cushion.
According to Agbiz, the weather conditions for the winter crops also remained positive.
In its Seasonal Climate Watch update published earlier this month, the South African Weather Service (SAWS) noted that while the weather conditions were transitioning into an El Niño state, which typically brings below-normal rains in much of the country, the winter crop-growing regions of South Africa would receive rains.
“This is positive for the season. In addition, the areas that produce under irrigation in Limpopo, Free State, Northern Cape and other provinces of South Africa should also thrive, benefiting from the 2022/23 soil moisture and improved dam levels,” it said.
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