• South Africa’s Crop Estimates Committee releases its first estimate of the country’s 2019/20 summer crop harvest today

  •  The outbreak of the coronavirus (Covid-19) in China is spreading across Asia and other regions of the world. The health implications of this virus on people also present risks for global value chains.

  •  South Africa’s farming economy was not in good shape in 2019.

  • There is a strong sense of unease in the world right now. The coronavirus outbreak in China is fast spreading across Asia and other regions, and the health implications present risks for global value chains.

  • Amid the news flow of the coronavirus, which we have also contributed to (see here), there have been some positive developments on South Africa’s maize production front. The United States Department of Agriculture (USDA) has revised its estimate for South Africa’s 2019/20 maize production up by 10% from last month’s estimate to 16.0 million tonnes. This is up by 35% from the previous season.

    One thing we should remember, however, is that the USDA data includes both commercial and non-commercial production, and therefore not directly comparable to South Africa’s Crop Estimates Committee’s number of 14.6 million tonnes released last month, which accounts for only commercial production. Nonetheless, this doesn’t change the view we expressed last month, which is; this could be the second-largest maize harvest on record after the 2016/17 season (which was 16.8 million tonnes for total maize).

    Aside from a favourable food price inflation outlook, which we estimate at 4% y/y in 2020 (see here), this data essentially means that South Africa would remain a net exporter in the 2020/21 marketing year which starts in May 2020 (this corresponds with 2019/20 production season). This is at a time where Southern African maize import needs could outpace the previous year, with Zimbabwe in need of maize supplies to an extent that the country lifted a ban on the importation of genetically modified maize, which eases access for South African maize exporters.

    Moreover, a maize harvest of 16.0 million tonnes would enable South Africa to export maize beyond the continent to other typical markets such as Japan, Taiwan, Vietnam and South Korea who are not prominent in the current marketing year. With that said, the coronavirus remains a key threat to global trade and may disrupt South Africa’s agricultural exports in various markets as we explained here.

  • The outbreak of Covid-19 will change the way we live our lives, without exception.

  • The data released this morning by Statistics South Africa shows that the country’s food price inflation accelerated to 4.2% y/y in February 2020, from 3.7% y/y in the previous month.

  •  South Africa’s farming sector is heavily in debt. As of 2018, the total farm debt was at record R168 billion. About 60% of the debt is with the commercial banks, 29% is with the Land Bank, with the rest spread between agricultural cooperatives, private persons and other institutions.

  • The COVID-19 pandemic is fast changing the way we live our lives, without exception.

  • The 21-day lockdown period may lead to a newfound respect for our food producers.

  • In "Africa’s Path to Growth: Sector by Sector", published in 2010, global consultancy McKinsey argues for a sectoral approach to development in Africa.

  • Most European and North American countries are generally regarded as food secure and hold a prominent place in the Global Food Security Index.

  •  Two new developments will add to an already uncertain agricultural sector in South Africa, namely the potential rise in oil prices and weak demand in most agricultural export regions.

  • After suffering severe labor shortages due to the COVID-19 pandemic, it seems unlikely that advanced-economy farmers will return to business as usual. Instead, many will probably attempt to mitigate the risks stemming from dependence on foreign seasonal workers by automating more of their operations.

  • While it is early to make a definitive assessment, one can argue that South Africa’s agricultural sector has been relatively more insulated from the Covid-19 pandemic than other sectors of the economy that are on complete lockdown.

  • South Africa imports all of its rice and half of its wheat requirements. We have previously warned of the restrictions placed by countries on agricultural commodity exports, specifically rice and wheat.

  • Agriculture is a dominant economic activity across Sub-Saharan Africa, except for a few resource-rich economies, such as South Africa, Botswana and Angola. Yet Sub-Saharan Africa is the region with high levels of food insecurity and the most acute levels of malnutrition compared to other regions in the world.

  • The data released this afternoon by the Crop Estimates Committee show that South Africa’s 2019/20 summer grains and oilseeds production could increase by 32% y/y to 17.5 million tonnes. 

  • Global food and agricultural supply chains are taking strain from disruptions caused by the Covid-19 pandemic. This is the case whether one looks at meat or grain supply chains.

  •  Last week brought further evidence that there is no need for protectionist policies in the global grains market as there are abundant supplies.