Agriculture’s record performance is likely to decelerate as export earnings will likely soften this year, experts said yesterday.
Economic growth for the agricultural sector was likely to be modest or even trend slightly negative, Absa AgriBusiness senior economist Dr Marlene Louw said yesterday.
Maize export prices had eased substantially from last year's levels, thereby negatively affecting the total export value for this product group.
‘’In the case of exported fruit, like table grapes and citrus, the exported volumes are also down compared to the previous season. This was, however, to some extent, offset by favourable price levels in certain key export markets. Going forward, the economic performance of agricultural export industries is likely to find support from firm price levels, as global weather issues remain front of mind,’’ Louw said.
Absa AgriBusiness said that, for farmers, this was likely to result in pressure on margins.
‘’This could, however, be offset by lower price levels in certain agricultural inputs, such as chemicals and fertilisers, which have seen notable price decreases since mid-2022.’’
To maximise the country’s agricultural export potential, Louw said focusing on efficiency and quality had proven a good strategy for numerous producers in times when global market conditions proved challenging and prices were under pressure.
‘’We have also seen that the adoption and use of affordable and applicable technologies and innovations could drive productivity and efficiencies,’’ Louw said.
Meanwhile, Agricultural Business Chamber(Agbiz) chief economist Wandile Sihlobo said yesterday that South Africa's agricultural export earnings would likely soften this year from last year's record.
The lower commodity prices, ongoing restrictions to exports of some livestock products because of the foot-and-mouth disease, and the stringent regulations of the citrus black spot disease in the EU market were among some of the factors likely to result in lower export earnings.
‘’While SA's agricultural exports have remained relatively solid in the first few months of the year, we are expecting the effects of these challenges to be more evident in the second half. South Africa's agricultural exports for the first five months of this year were still robust, amounting to $5.06bn (R96bn), roughly unchanged from the corresponding period in 2022,’’ Sihlobo said.
Agbiz said the export destinations remained the same as the previous years, with the African continent as a leading market, followed by the EU and selected Asian and Middle-East markets. Outside these regions, it said the US was also a prominent export market.
‘’With the citrus industry and nuts benefiting from AGOA in the US market, its continuation is vital for these industries. In terms of products, citrus, maize, apples and pears, soya beans, wine, wool, sugar, flour meals, fruit juices, and various nuts were the leading products in the exports,’’ Agbiz said.
Regarding foot-and-mouth, Sihlobo said the livestock industry continued to struggle with the tail-end challenges of last year's outbreaks.
‘’Notably, the government must assist at such times to ensure the sustainability of farming businesses and jobs in rural South Africa. Fortunately, this year, wool exports have not been interrupted, as was the case in 2022 when China temporarily banned wool from South Africa because of fears of foot-and-mouth disease. Hence, wool was amongst South Africa's top ten agricultural export products in the first five months of this year,’’ he said.
Agbiz said South Africa's agricultural sector would remain a net exporter this year.
‘’But the value may not be as robust as in 2022, when the sector reached a record $12.8bn. At the time, the increase in the volume and value of exports was the key driver. This stemmed from a good agricultural season and higher global prices. We have yet another good agricultural season this year, but commodity prices have, on average, declined by roughly 11% from a year ago. Moreover, the biosecurity challenges and ongoing constraints in key fruit export markets such as the EU remain a constant worry,’’ it said.