There is hope that the next La Niña season will bring less damaging rains than experienced in the 2021/22 production season, thereby reducing the risk to local farmers.
Agricultural Business Chamber (Agbiz) chief economist Wandile Sihlobo noted that only three months were left before the 2022/23 summer crop planting season begins in the eastern regions of South Africa.
“Indications thus far from farmers we have interacted with are that they will likely stay on the job and boost plantings although the rising input costs like fuel, fertiliser and agro-chemicals, are putting a strain on the sector.
“A stronger indication of whether this story stands or not will be the release of the farmers’ intentions to plant data at the end of October. The favourable rains in recent seasons have not only benefited grains and oilseeds, but have also been supportive to the horticulture and livestock sub-sectors,” Sihlobo said.
For horticulture, Sihlobo said while the yields had been reasonably large over the past few seasons, the price gains were not as big as those witnessed in the grains and oilseeds industry.
South Africa’s exposure through roughly 7 percent of overall citrus exports and 12 percent of overall apples and pears to Russia and Ukraine, had dampened the export outlook for this year and had implications for profitability.
Sihlobo said the same cautious view held in the livestock industry as foot-and-mouth disease had led to a temporary ban on the export of livestock products by various countries, thus negatively affecting the profitability of businesses in this sub- sector at a time when input costs for maize and soybeans were at higher levels.
However, the expected favourable summer rains in the 2022/23 season would help improve pastures and thus slightly reduce the reliance on increasingly expensive grain feed for the livestock.
Agbiz said that South Africa has had an unusually long period of higher-than-average rainfall over the past three seasons. Ordinarily, the country would have one or two consecutive years of above-average rainfall followed by an average rainfall season or even dryness.
These rains have been supportive of the agricultural sector. The past three seasons have seen large harvests, which boosted domestic food supplies and agricultural export earnings.
The recently released Seasonal Climate Watch report by the South African Weather Service provided an optimistic outlook as the agency noted that the El Niño-Southern Oscillation (ENSO) was currently in a La Niña state. Forecasts indicated that it will likely remain in this state during the coming seasons. .
Agbiz said that while South Africa’s agriculture faced numerous challenges, the weather conditions continued to contribute positively to the growth of the sector.
The optimistic preliminary projections for weather conditions were an important signal for a strong harvest, particularly for farmers who might have to incur debt for inputs purchases in the 2023 season as fertilisers and agro-chemical prices had more than doubled from the 2019 levels.
Sihlobo said that this also meant that the global grain and oilseed prices, as well as local ones, could remain elevated for some time.
“Ordinarily, while a La Niña season brings rains in the Southern Africa region, the South America region tends to experience dryness. If this holds in the 2022/23 season, then the global grains and oilseeds stock levels might not recover much, and with ongoing geopolitical tensions, an environment of higher grains and oilseeds prices could persist.
“Such conditions should be an additional incentive to take risks and plan for the 2022/23 season. More will unfold in the coming months, but we remain optimistic about plantings, even in the face of higher input costs,” Sihlobo said.
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