Some Recent Notable Changes in SA Agricultural Sector

1. Food Inflation Takes a Dip in August 2023

In August 2023, Statistics South Africa released data showing a noteworthy 2% month-on-month deceleration in food inflation, dropping from 9.9% in July to 8.0%. Thabile Nkunjana, a Senior Agricultural Economist at the National Agricultural Marketing Council (NAMC), identified this trend and attributed it to slight decreases in meat, unprocessed products, milk, eggs, and cheese. Additionally, certain products like sugar, vegetables, animal products, bread, and cereals maintained stable prices on an annual basis. This decline in food inflation offered a positive outlook for consumers, signaling a temporary relief from the upward price pressures often associated with food products.


Nkunjana's analysis extended beyond South Africa, revealing global variations in food inflation. While countries like Turkey, Zambia, and Russia experienced an increase in food inflation in August compared to July 2023, the majority of the 11 countries examined witnessed a decrease in food inflation. Nkunjana emphasised that these diverse trends are shaped by various domestic factors such as local food production, economic performance, and production costs, illustrating the nuanced nature of food price dynamics on a global scale. Understanding these intricacies is essential for policymakers and economists as they navigate the complex landscape of food inflation.


2. South Africa's Agricultural Exports Remain Strong, Despite Challenges

In a recent statement by Mr. Wandile Sihlobo, Chief Economist of the Agricultural Business Chamber of South Africa, it has been revealed that South Africa's agricultural exports maintained their robust performance in the second half of the year. According to data from Trade Map, agricultural exports from South Africa reached US$3.4 billion in the second quarter of the year, marking a 0.1% year-on-year increase. This achievement is noteworthy, especially considering challenges faced in key export markets such as the European Union (EU), particularly for citrus products.

The leading products driving South Africa's export success in the second quarter of 2023 included citrus, maize, apples, pears, wine, sugar, soybeans, wool, avocados, pineapples, fruit juices, nuts, and grapes. Importantly, this export performance was not solely reliant on price improvements but also witnessed enhanced volumes. Collaborative efforts between the industry and Transnet to enhance port logistics played a significant role in this success, although further improvements are still required to optimise efficiency.

From a regional perspective, Africa remained the largest market for South Africa's agricultural exports, constituting 36% of the total exports in the second quarter. Asia and the Middle East followed closely as the second-largest region, with a 30% share. The EU accounted for 18% of South Africa's agricultural exports, the Americas region contributed 6%, and the UK remained a substantial single market, representing 7% of the exports. The remaining 3% was distributed among various regions across the globe.

In terms of agricultural imports, South Africa saw a 6% year-on-year decrease in the second quarter, totaling US$1.8 billion. Key imported products included rice, wheat, palm oil, whiskeys, and poultry. Despite these imports, South Africa maintained an agricultural trade surplus of US$1.6 billion in the first half of 2023, signifying a 9% year-on-year increase.

Looking forward, while the first half of the year showcased encouraging export earnings, challenges like lower commodity prices and stringent EU regulations regarding the citrus black spot disease are expected to impact export earnings in the second half. However, Mr. Sihlobo highlights the need for continued engagement with the EU and an expansion of export markets to mitigate these challenges. South Africa's ambitions include expanding market access to key countries such as China, India, Saudi Arabia, South Korea, Japan, Vietnam, Taiwan, Mexico, the Philippines, and Bangladesh, with both the private sector and the government sharing the goal of export market expansion.

South Africa's agricultural sector has demonstrated resilience and growth in its export performance, even in the face of challenges. Collaborative efforts and a strategic approach to expanding export markets will be crucial in sustaining this positive momentum for the country's agricultural industry.