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Resilient agriculture sector faces bumpy road ahead

AFTER three years of sustained growth across virtually all agricultural sectors, headwinds have started to blow which threaten to slow but not derail this vibrant sector.

The Editor asked Kgampi Bapela, Head: Agro processing and Agriculture at the IDC for his assessment of the agri-sector in 2023.

“There is no doubt that agriculture is an SA success story that has proved its resilience against inclement weather – flooding in KZN and elsewhere, but the sector has been able to bounce back and over the last couple of years, we have seen bumper harvests in the grain sector in particular.

“However the conflict in Ukraine has dented enthusiasm with increased commodity prices for imported fertilizer, oil seeds and oil cake has contributed to consumer price rises both here and abroad, bringing into sharp focus how interconnected our economies are with shortages, conflicts and restrictions in one region having consequences in another.

Own goals limit growth

“While our grains industry is booming, we are net importers of wheat and as most of our wheat imports come from Ukraine and Russia, shortages have meant that consumers have had to bear the brunt of higher bread prices.

“Even with increased input costs, we still see our grain exports growing strongly – weather permitting, but issues at home can soon make our exports less competitive on world markets and there is plenty of competition. Output to meet world demand is being throttled across all agri sectors where increased transportation costs, loadshedding, failed infrastructure – particularly rail and ports, energy price rises and the escalating price of diesel all impact negatively on our exports. Due to these problems and insufficient capacity and congestion at our ports, some producers are diverting their bulk exports through Maputo but that involves longer road trips and an extended cold chain for perishable products such as citrus and avocados.

Future expansion in horticulture encouraging

“Despite these setbacks, all agricultural sectors are expected to show substantial growth. Our predictions for the next seven years up to 2030 show increases of Avos – from 16 million cases to 50 million, grapes, from 70 million cases to 82 million, oranges, from 78 million to 108 million, and similar increases in lemons and other soft fruit.

Diversification now vital

“Our geography and climate make our agricultural export potential the envy of many countries but it is imperative that we not only fix our infrastructure and power problems but look at diversifying our markets. South African agricultural exports are seen as a threat to some EU countries – one of our major markets – that view our exports as unfair competition as we can compete over multiple seasons. The recent issue where citrus imports into the EU were restricted due to “Black Spot” provided an opportunity to limit our exports in favour of local producers in the EU. That raises another issue of tightening up on our disease control regulations too. 

“Preferential trade agreements need to be fostered with other countries such as China and the many Far Eastern nations where our produce is exported but through third parties as preferential trade relations don’t exist with countries such as Japan, Indonesia, Philippines etc. which have burgeoning populations. India is another target although preferential trade relations do exist there.

“It is heartening to see increased local investment across the agricultural spectrum – an example is the poultry industry but they rely on a stable supply of animal feed and proteins, some of which has to be imported from the very countries involved in conflict…

“So the agricultural landscape is vast and much needs to be done to secure market access and improve delivery infrastructure. While grains do not present many employment opportunities due to mechanisation, citrus and soft fruit exports do and our predicted expansion and growth in those industries are sure to make a dent in our unacceptable unemployment figures”.

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