Land Bank: Challenges persist as new opportunities emerge for SA agriculture
By Karabo Mabuza
The South African agriculture industry continues to face difficulties that threaten its viability, while also pursuing exciting new growth prospects. For the Land Bank, which is dedicated to agricultural financing, assessing these developments is critical, both from a risk management and opportunity point of view, as well as on how they will impact the well-being of our farmer clients and the sector overall.
Among the most pressing issues are the problems at the Port of Cape Town, which are disrupting fruit exports during peak season for crops such as table grapes and deciduous fruits.
Container throughput has dropped compared to last year, due to reported operational inefficiencies and weather patterns resulting in delays in the movement of goods at the ports. These persistent challenges amplify the industry's anxiety, especially as most fruit consignments are en route to international markets.
Ensuring that the ports function efficiently is not just about sustaining exports; it's about maintaining the lifeline of South Africa's fruit industry and the numerous jobs it supports.
The intervention by the Minister of Public Enterprises, working together with industry bodies to prioritise the well-functioning of the ports, will hopefully bring some positive results to assist the industries that are already faced with high production costs. The longer it takes for the perishable commodities to reach the market, the less the quality on arrival, resulting in wastage or low prices being paid for the commodities.
Added to this is the ongoing avian influenza outbreak, which is especially affecting layers, breeding chicken and domestic egg markets. The poultry industry is still recovering from previous outbreaks and has struggled to restock flocks, keeping consumer prices high. While the rate of new cases has slowed, the persistence of the virus remains a concern.
Those who are in a position of having stock, having got over the restocking hurdle, are experiencing the silver lining of favourable prices. The recent successful importation of fertile eggs is a beacon of hope for the industry, as it paves the way for restocking of bird populations to normal levels, and ultimately the alleviation of high egg prices for consumers.
Ensuring effective disease management is essential for maintaining stability within the industry, and interventions that are being made by the Department of Agriculture Land Reform and Rural Development, working together with the industry players to finalise the protocols on vaccines, remain key to the sector’s development.
The agriculture sector's ability to adapt and recover is testament to the resilience and dedication of our farmers, supported by the unwavering commitment of financial institutions dedicated to agricultural financing. The Land Bank remains steadfast in its support for the agricultural community, underpinning the sector's overall well-being and ensuring that farmers can navigate these turbulent times.
However, not all news is grim. Optimism for the agricultural sector also stems from the latest estimates by the Crop Estimates Committee (https://www.sagis.org.za/cec.html). These figures indicate a promising outlook for 2023/24’s summer grain and oilseed production, with a marginal year-on-year increase in the total area planted.
The transition from La Niña to El Niño has not deterred farmers from planting summer crops, and, fortunately, weather conditions have been supportive too.
Taking a look at the 2023 winter crop planting season, it is encouraging to note that the majority of winter crops are forecast to achieve increased production output. However, it is worth mentioning that wheat is anticipated to experience a slight decline of about 1% compared to the previous season. Overall, this points to adequate domestic supplies and opportunities for exports of surplus crops. These developments are an indicator of the sector’s resilience as key to food security hence the Land Bank continues to provide its support to the industry.
The agriculture industry is also developing valuable new export opportunities. The government recently secured market access to Saudi Arabia and China for commodities such as avocados, beef and other livestock products (new export markets for SA).
The pursuit of emerging trade partnerships that can contribute significantly to economic development and stability is important, while maintaining the existing trade relations to ensure that the forecast growth of the sector is supported by the availability of markets. This will ensure that South African agriculture in global markets remains competitive through diversification.
In conclusion, the agricultural sector's resilience is being tested, and it is important that the strength and tenacity of South African farmers – and the support provided by financial institutions such as the Land Bank – continue to ensure food security for the nation.
Karabo Mabuza is an agricultural economist in the Agriculture Economics and Advisory Division of the Land Bank. Please follow Land Bank on Facebook: @Land and Development Bank of South Africa; LinkedIn : @Land and Development Bank of South Africa
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