SA agricultural outlook in the global context
By Thulasizwe Mkhabela
IT IS NOW common knowledge that the Covid-19 pandemic has disrupted agricultural and food supply chains in unprecedented ways, and the results continue to be experienced in developed and developing economies.
The disruptions meted out by the pandemic include bottlenecks in the input industry, marketing of products, and reduced agriculture production and food processing, including changes in patterns the demand for food and food services. At the research level, the pandemic disrupted seasonal research trials, and most laboratories closed for months as workers stayed home. Thus, it is estimated that the number of people at risk of extreme hunger will double to 235 million.
Despite the effects of the pandemic due to the continued lockdown in some regions of the world, no major structural changes in the demand for food are expected in the next decade at a global level. Population growth remains the main driver of the increasing demand for food, while countries will experience different trajectories in the demand for commodities.
Increased consumer incomes, coupled with changing tastes and preferences, under-girded by perceptions about health and the environment in developed countries, will induce a downward demand for red meat, while higher incomes in developing countries will drive up the demand for protein, including red meat.
Staples, on the other hand, are expected to experience a decline in their share of the food basket, induced by the fad for reducing carbohydrate intake. This scenario presents an opportunity for fresh produce, as consumers substitute vegetables for starch-dense staples.
Most regions have reached their agricultural land expansion frontier; thus an increase in output will be achieved through yield improvements that are driven by increased productivity. The gains from intensive input use, new cultivars and better production practices are expected to increase agricultural sustainability and resilience.
Agriculture faces more challenges than the Covid-19 pandemic.
For Africa, the locust invasion, coupled with the Cyclone Eloise, decimated yields in some countries. Moreover, regulatory limitations on some breeding techniques, coupled with climate change, have increased the pressures on the agri-food sector. Together with digital innovations in the sector, these factors will determine strategic intentions for research and development (R&D) organisations and governments in the future.
The stellar performance of the South African agricultural sector last year - with growth in the first three quarters - was in sharp contrast to other sectors of the economy that contracted in the first two quarters, mainly because of the lockdowns.
As a result of strong agricultural export growth, a good rainy reason, an expected good crop harvest and high commodity prices, it is expected that the final figures will show positive growth for agriculture across all four quarters.
This optimistic outlook has been bridled by the recent Cyclone Eloise that hit parts of Southern Africa. A comparison of third-quarter performance from 2018 to 2020 showed an annual increase across all sub-sectors. Field crops showed a 34 percent growth in the value of production for 2020 compared with third-quarter 2019 figures. The notable changes in the performance of specific sub-sectors include an increased demand for citrus crops due to the pandemic-related demand for Vitamin C. This growth in citrus demand is likely to be sustained in 2021 and possibly beyond.
The sector’s growth momentum is expected to continue this year, with adequate supplies of grains, oil seeds and horticulture crops expected for the country. The high yields and positive prospects for the sector will likely curtail food and overall consumer inflation, and enhance the sector’s contribution to gross domestic product.
Consumption trends, which were on a changing trajectory for middle and high income-earners, with an emphasis on health and safety, and environmental concerns could witness a hiatus due to income pressures caused by the Covid-19 pandemic.
Grain consumption, which forms part of basic foods, could claim a higher share of the consumer food basket due to the pandemic-induced decline in disposable incomes.
Generally, it is expected that Southern Africa will experience a good harvest for 2020, notwithstanding the effects Cyclone Eloise. The 2020/21 maize harvest is expected to be 37 percent higher than the 2019/20 harvest. More than 80 percent of the harvest is expected to come from Mpumalanga, Free State and North West.
The positive outlook for the sector despite concerns about the economy’s post-Covid-19 recovery, presents several opportunities for agricultural R&D. In line with the global trends for meeting the increased demand for food driven by population growth, agricultural R&D in South Africa continues to be expected to contribute towards increased yields and reduced post-harvest losses.
An increasingly important focus of research is in the area of diseases transmitted between animals and humans (zoonotic diseases), diseases transmitted through food (food-borne pathogens), and vaccine development for different livestock diseases. There is space for the development of digital innovations in the agricultural sector in South Africa, with particular emphasis on innovations that address the constraints facing smallholder farmer and are suitable for uptake by such farmers.
Dr Thulasizwe Mkhabela is an agricultural economist and is the group executive: impact and partnerships at the Agricultural Research Council. The author acknowledges the contributions of Dr Petronella Chaminuka and Dr Kenneth Nhundu from the Economic Analysis Unit of the ARC.
*The views expressed here are not necessarily those of IOL or of title sites