by SAVIOUS KWINIKA
Group Editor-In-Chief
JOHANNESBURG, (CAJ News) – AFTER two years of growth, South Africa’s agricultural economy is forecast to contract in 2022 because of the Russia-Ukraine war, excessive rains, higher input costs and livestock disease fears.
“If we look ahead, the South African agricultural sector will probably face more challenging conditions this year and into 2023,” said Wandile Sihlobo, Chief Economist of the Agricultural Business Chamber of South Africa (Agbiz).
He noted the Russia-Ukraine war and the resultant sanctions would probably limit South Africa’s presence in these markets in the near term.
Given the significance of this market, the diversion of the volumes to other export markets of the domestic market could add downward pressure on prices, Sihlobo noted.
The trends are forecast to negatively influence farmers’ finances and the general export earnings of South Africa.
Also, excessive rains at the start of the 2021-22 production season threatened the crops as various areas of the country experienced damages that required replanting.
Higher input costs, there were some increased by more than 50 percent, these are other difficulties of this past season for field crops and horticulture farmers.
Areas that had to replant after crop damages by excessive rains thus incurred much higher costs.
“Therefore, the elevated commodity prices, while looking favourable for farmers that have the crop, gains will largely be overshadowed by the higher input costs,” Sihlobo forecast.
The expert noted that while the livestock industry remains in solid condition, there were still bio-security cases (foot-and-mouth disease) in parts of the KwaZulu-Natal.
Fears of other disease outbreaks are rife on the back of a wet season.
Furthermore, the higher grains and oil-seeds prices add cost pressures to the livestock and the poultry industry that uses these products in their feed.
In the poultry sector, maize and soybeans make up more than 50 percent of input costs.
“To have these products rising double-digit will add cost pressure to the poultry farming businesses,” Sihlobo said.
According to Agbiz, South Africa’s agricultural sector expanded by 13,4 percent year-on-year in 2020 and 8,3 percent year-on-year in 2021.
This was a period of favourable rainfall.
Higher commodity prices, specifically for grains and oilseeds, also boosted the farmers’ incomes in 2020 and 2021.
Increased global demand for agricultural commodities culminated in South Africa exporting U$10,3 billion of agro products in 2020 and a record $12,4 billion in 2021.
– CAJ News