Maize production is expected to decrease. Photo: David Bloomberg
South Africa's food security is at risk due to climate shocks that are significantly disrupting the production of grains and oilseeds, the National Agricultural Marketing Council (Namc) warned on Friday in their Market Intelligence Report for February this year.
Last month, local agricultural service Grain SA said the recent weather conditions that prevailed in the winter grain regions and current conditions in the summer grain regions had a significant economic impact on grain producers.
It said the winter grain production season faced several challenges with excessive rain in certain areas resulting in losses in yields and placing financial pressure on producers in the affected areas.
In Namc’s grains and oilseeds section, Namc’s Thulani Ningi, Naledi Radebe and Thabile Nkunjana say those regions that have historically produced relatively little in the way of grains and oilseeds need to be given a serious second look.
For producers of grains and oilseeds, the absence of essential infrastructure in provinces such as KwaZulu-Natal, Limpopo and the Eastern Cape were a significant obstacle.
In Anchor’s Coffee Table Economics note released earlier this month, Casey Sprake, an investment analyst for Fixed Income at Anchor Capital, said the Bureau for Food and Agricultural Policy shows that roughly one-third of SA’s farming income depended directly on irrigation, which naturally required power.
But deteriorating roads, collapsing water infrastructure, poor performance at South Africa’s key trading ports, and rising crime formed additional barriers to the agriculture sector functioning effectively and efficiently, Sprake said.
Namc said seasons of high or low commodity prices meant almost nothing to these farmers because, for example, they must sell their maize during unfavourable price points, which results in little to no profit.
“Following this, some farmers lose interest in growing grains, which has consequences for the industry's growth and raises the issue of food security in the country during periods of drought like the current one,” they said.
In comparison to last month, Namc said the global grain prediction for this month was lower production, more trade and lower ending stocks.
It was anticipated that global grain production would drop by 2.7 million tons to 1 507.4 million in 2023/24. Maize production was expected to decrease, with rises for Argentina and Syria partially offsetting decreases for South Africa, Ukraine, Mexico, Venezuela and Russia. Mexico was lowered due to projections of a smaller winter corn area, while South Africa was down due to poorer yield forecasts. Reduced imports from the EU, Saudi Arabia and Israel offset increased imports from Mexico and Venezuela.
Global oilseed production for 2023/24 was also expected to drop by 0.7 million tons to 658.7 million tons, somewhat offset by increased production of rapeseed and less soybean and sunflower seed.
Due to decreasing output in Brazil and South Africa, the world's soybean production had decreased by 1.4 million tons. Brazil's soybean output had decreased by 1.0 million tons to 155 million tons due to harvest failures in Parana and unfavourable weather in São Paulo, which had been partially offset by favourable conditions in Rio Grande do Sul and the north. Conversely, soybean production was anticipated to decrease by 0.4 million to 2.1 million in South Africa.
Looking at livestock and animal products, Namc’s Bigboy Singwana and Bernard Manganyi said several strategies must be employed to stimulate growth to unlock livestock and animal products. Diversification of beef exports was a crucial measure to reduce dependency on a single market, as evidenced by recent deals such as the Saudi Arabia export agreement.
Addressing concentration in the poultry industry, where a few major players dominated, was essential. They said facilitating easier market entry for small producers could encourage competition and inclusivity while prioritising biosecurity measures and accessible vaccines for all producers, which could aid in combating avian influenza (AI) and foot-and mouth-disease.
“Improving economies of scale, particularly among small and medium-scale producers, can help meet high domestic demand efficiently, reducing the need for imports. As neighbouring countries such as Botswana, Mozambique and Lesotho have demonstrated, boosting regional commerce can open new doors for economic progress,” the report noted
Meanwhile, the statutory body’s Food Basket Price Monthly Report March 2024 showed that during February, the nominal cost of the Namc’s 28-item urban food basket amounted to R1 257.23 compared to the R1 251.50 reported in January. This represented a monthly increase of 0.5% and a year-on-year increase of 9.5%.
BUSINESS REPORT