If we do not write about South Africa’s first quarter of 2019 agricultural trade figures, one would assume that there have been limited positive developments in this sector as the past few months have been clouded by unwelcoming news.
Growth amid trying production conditions
These varied from tough production conditions in summer crop growing areas due to drought earlier in the year and disappointing jobs numbers, to biosecurity matters which for a number of weeks affected exports of livestock and its products, among others.
In the midst of all this, South Africa reported an agricultural trade surplus of US$660 million in the first quarter of this year. This is up by 11% from the corresponding period in 2018. This was primarily due to an 18% year-on-year decline in the value of imports to US$1,45 billion, not an uptick in exports. South Africa’s agricultural exports were down by 10% from the first quarter of 2018, recorded at US$2,11 billion.
The exports were underpinned by grapes, wine, apples, pears, wool, fruit juice, apricots, cherries, peaches, and maize, amongst other agricultural products. We expect these products to have continue driving South Africa’s agricultural exports in the second quarter of 2019. That said, maize might not feature prominently as we think South Africa’s 2019/20 maize exports could fall by 55% year-on-year to about one million tons, owing to an expected lower harvest.
Expected increase in product import volumes
In terms of imports, the leading products included poultry meat (edible offal of fowls), rice, wheat, sugar, palm oil, beer, fish, sunflower oil, tobacco, and live cattle. Looking at the historical activity, the import values might not change much in the coming months. Also, we expect an increase in some products’ import volumes this year. Most notably, South Africa’s 2019 rice imports could amount to 1,1 million tons, up by 10% from 2018. In addition, South Africa’s 2019 palm oil imports could increase by 1% from last year to 477 603 tons.
From a destination point of view, the African continent and Europe continued to be the largest markets for South Africa’s agricultural exports, accounting for 44% and 30% respectively in value terms. Asia was the third largest market, taking up 18% of South Africa’s agricultural exports in the first quarter of 2019. The balance of 8% value was spread across other regions of the world.
An expansion in agricultural production
Looking ahead, South Africa’s agricultural trade prospects for 2019 are not as positive as for 2018, as unfavourable weather conditions in parts of the country could lead to lower production, particularly in grains and wine grapes. Trade in livestock and its products, which has been distracted following the foot-and-mouth disease outbreak in some parts of the country, has resumed somewhat and conditions could normalise in the coming months.
All in all, we still expect a positive trade balance for South Africa’s agriculture in 2019. Regarding a national policy perspective, in his 2019 State of the Nation Address, President Ramaphosa signalled that potential expansion in agricultural production would mainly be directed to export-oriented products.
There is already a clear pathway for this initiative as South Africa is well-positioned in terms of export markets, and there is clarity about products that show a growing demand in the world market, such as horticultural products, and to some extent livestock, to name but a few categories. – Wandile Sihlbo, Agbiz
Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets. Click here for the full report on agri markets for the major commodities.