Written by Wandile Sihlobo, chief economist at Agbiz
“Optimism” and the “recovery” of South Africa’s agriculture have been the running themes of these notes since the start of the year.
Consider the subsector that accounts for roughly half of South Africa’s agricultural fortunes — the livestock and poultry industry. Its exports are improving, and the better grazing veld is assisting in easing the production costs.
We also see improvement in controlling the spread of animal diseases, except for KwaZulu-Natal and the Eastern Cape, where foot-and-mouth disease remains a problem.
Moreover, the horticulture industry — fruit and vegetables — has benefited from the favourable rains and the continuous improvements of port operations supports exports. Better fruit prices in a year when the harvest is decent also supports the recovery of this industry.
Field crops was another vital subsector hit by the mid-summer drought in 2023-24 season and the word “recovery” is more appropriate here. This sector includes grains, oilseeds and sugar cane. We see an improvement in the production conditions, supported by the favourable rainfall since the start of the 2024-25 season.
For example, the Crop Estimates Committee’s data on 26 March showed that the 2024-25 summer grain and oilseeds production is forecast at 18 million tonnes. This is up 5% from the previous month’s estimate and 16% of the prior season’s crop. This comprises maize, sunflower seed, soybeans, groundnuts, sorghum and dry beans.
The expected yield improvements after favourable rains underscore the better harvest prospects. The overall area planting is 4.4 million hectares, roughly unchanged from the last season.
Given that this is a second production estimate, and possibly still does not fully account for the gains of the favourable weather conditions in recent weeks, we could see further upside revision in the coming months, even if mildly. After all, there are eight more production estimates to follow monthly.
A closer look at the data shows the second maize production estimate at 14.6 million tonnes, up 5% month-on-month and 13% year-on-year (y/y). About 7.7 million tonnes is white maize (up 26% y/y), and 6.9 million tonnes is yellow maize (up 1% y/y). The difference is caused by the area switch, with white maize taking a more significant area and the yield expectations.
The prospects of a better maize season have already added downward pressure on prices, which are currently trading below last year’s. Importantly, these forecasts are well above South Africa’s annual maize needs of about 11.8 million tonnes, which implies that, if the crop materialises, the country will remain a net exporter of maize.
Regarding oilseeds, the soybean harvest is estimated at 2.4 million tonnes, up 29% y/y. This is on the back of anticipated better yields, as the area is roughly the same as the past season. Moreover, the sunflower seed harvest is forecast at 770 500 tonnes, up 22% y/y, benefiting from expected higher yields.
The groundnut harvest is estimated at 66 929 tonnes (up 29% y/y), sorghum production is estimated at 137 435 tonnes (up 40% y/y) and the dry beans harvest is at 79 007 tonnes (up 56%). The base effects also boost the significant annual increases, given the poor harvest we recorded in 2023-24 during the drought.
Overall, this is shaping up to be a better agricultural season and a year of recovery in the sector. Indeed, there might be regions that aren’t fully recovering and have suffered from erratic weather. Still, the national picture is solid.
From a consumer perspective, the softening commodity prices on the back of the expected large harvest paints a comforting food inflation path for the year’s second half.
The next quarter, specifically for the grain-related products in the food inflation basket, could reflect the effects of the higher prices of tight grain supplies at the start of this year before we get the new season deliveries.
This article first appeared at https://wandile.substack.com/p/crop-data-reaffirms-south-african. Subscribe to Sihlobo’s newsletters here.