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Farmers eye higher commodity prices as they plant crops

The 2022/23 winter crop season is more crucial than other seasons as the Russia-Ukraine war has negatively affected global wheat supplies, forcing some countries to look for ways to improve domestic production, says Agbiz.

The 2022/23 winter crop season is more crucial than other seasons as the Russia-Ukraine war has negatively affected global wheat supplies, forcing some countries to look for ways to improve domestic production, says Agbiz.

Published Jun 21, 2022

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While it was initially feared that the higher input costs would discourage plantings, the intentions to plant data suggested that farmers could push through and take advantage of the higher commodity prices, according to the Agricultural Business Chamber (Agbiz) chief economist Wandile Sihlobo.

He said fortunately, the week ending on June 27 promised further showers in the Western Cape before clearing in the first week of July. While this might still not be sufficient, it would improve soil moisture following the dryness experienced in May.

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“The improved soil moisture from these rains will allow farmers to complete the winter crops planting activity, mainly wheat, canola, barley and oats, while also improving the growing conditions in the fruit fields and grapevines.

“The 2022/23 winter crop season is more crucial than other seasons as the Russia-Ukraine war has negatively affected global wheat supplies, forcing some countries to look for ways to improve domestic production,” he said.

South Africa is also counting on prospects of improvement in the domestic wheat plantings, which will partially depend on the weather conditions and the rising input costs.

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Fortunately, farmers have responded positively, as the Crop Estimates Committee’s intentions to plant report noted that farmers aimed to increase the total winter crop plantings by 6 percent from the 2020/21 season.

“Wheat plantings could lift by 3 percent from the 2021/22 season to 538 350 hectares, which is well above the 5-year average area of 513 650 hectares,” Sihlobo said.

He said the past season’s abundant harvest coupled with relatively higher prices also helped to improve farmers’ financial conditions.

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“Therefore, they are in a relatively better position than in the past to absorb, to some extent, the current higher fertiliser, agrochemicals and fuel costs,” he said.

The agricultural organisation said the weather was yet again a top-of-mind issue in South Africa’s agriculture. The warmer or drier weather conditions were needed to complete the harvests of the summer crops and citrus, as well as the transportation of products across most regions of the country.

On the other hand, rains were also needed for the winter crops, which are currently in the middle of its planting season, and various horticulture products, mainly in the Western Cape and various regions of the Northern Cape.

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Ordinarily, the Western Cape would by this time have received moderate rainfall that helped with winter crop planting and germination in early planted areas and improved growing conditions in the horticulture fields.

But this year, there was a relatively dry spell in May.

It was only in the third week of this month that the province received the much-needed rains for winter crops, grapevines and various fruits.

These were welcome rains, but farmers indicated that more was needed.

Sihlobo said while the Western Cape was an important area to monitor for wheat, as it accounted for two-thirds of South Africa’s plantings, the country would likely see a jump in plantings within the Free State this year.

He said the current estimates suggested that the Free State could account for 18 percent of South Africa’s wheat plantings in the 2022/23 season.

While the Free State did not receive as much rain as the Western Cape in the past week, the province could receive showers in the week ending June 27.

“Notably, the heavy rains in the 2021/22 summer season, which caused damage in some crop fields at the time, helped improve soil moisture, which will now be beneficial to the planting season of winter wheat.

“For the horticulture sub-sector, improving moisture and production conditions in the Western Cape are also helpful for employment. This specific sub-sector is labour intensive.”

He said an important date to keep in mind was July 27, when the crop estimates committee would release the preliminary estimate for area plantings of winter crops for the 2022/23 season. August would also see the release of the Bureau for Food and Agricultural Policy’s (BFAP) 2022 baseline report.

This particular report would provide a crop forecast and a detailed long-term view not only for wheat, but all winter crops, wine grapes, and various horticulture products, livestock and summer crops. These reports would help determine how South Africa’s wheat supplies would fare in the 2022/23 production season, as it was believed that global wheat supplies will remain constrained for some time.

“For example, earlier this month, the US Department of Agriculture estimated the 2022/23 global wheat production at 773 million tons, down by 1 percent y/y. Subsequently, the 2022/23 global wheat stocks are down by 4 percent y/y, estimated at 266 million tons. These estimates are supportive of prices globally and in the domestic market. And thus, we believe prices will stay at their current higher levels in the foreseeable future,” Sihlobo said.

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