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BFAP Baseline

Managing Agriculture’s Investments in

an Uncertain Environment

Prof Ferdi Meyer

2

Context

Real agricultural prices declining

Per-capita use of grains and oilseeds

Source: Author calculations based on June 2016 USDA PSD Online data for 9 grains and 5 oilseeds and U.S. Census Bureau population estimates

5Bureau of Food and Agricultural Policy

SA Household Disposable Income per Capita

-4

-2

0

2

4

6

8

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

% C

han

ge Y

ear-

on

-Year Real Rate of Change

Context

Source: SARB, 2017

Fig. 16, Page 21

6

SA economy - 2016Context

Gross domestic produt by industry 2016 (@ current prices) Agriculture, forestry,

hunting and fishing

Mining and quarrying

Manufacturing

Wholesale and retailtrade, catering andaccomodationOther

7

Manufacturing sales - 2016Context

Food and beverages

24%

Petroleum, chemical

products, rubber and plastic products

21%

Basic iron and steel, non-ferrous metal products, metal products and machinery

20%

Motor vehicles, parts and

accessories and other transport

equipment13%

Wood and wood products, paper, publishing and

printing8%

Other14%

Agricultural growth

8 |

9

Agriculture’s compositionContext


The NDP is a good plan – Execution?

11

Agriculture’s PerformanceContext

12

Agriculture’s Performance - TradeContext


SA Share of World Exports (Value)Context

2.0%

8.7%

5.6%

5.7%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Wine Citrus Grapes Apples and Pears

Fig. 4, Page 7

Households in agriculture: 2011-2015

14 |


Grains & Oilseeds


Grains & Oilseeds: Area Implication

0

250

500

750

1000

1250

1500

1750

2000

2250

2500

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

20

18

20

20

20

22

20

24

Tho

usa

nd

hec

tare

s WM

YM

WS

WW

Sunflower

Soybeans


Domestic Price Trends: Catching up with Low Global Cycle

• Decreasing real commodity prices

• Firm decline from 2016 to 2017 providing relief for consumers

• White maize 62% lower oppose to 2016 levels. Recovery anticipated in 2018

0

1000

2000

3000

4000

5000

6000

7000

8000

R/t

on

Nominal

White Maize Yellow Maize Soybeans

Sunflower Wheat Canola

0

1000

2000

3000

4000

5000

6000

R/t

on

Real (2010)

White Maize Yellow Maize Soybeans

Sunflower Wheat Canola


Competitiveness : Western FS & Iowa, USA

$84 $80

$96

$106

$95

$104

$66

$102

$123

$62 $61 $61

$48

$59

$73 $66

$69

$53 $52 $59

$-

$20

$40

$60

$80

$100

$120

$140

US

$ p

er

ton

Maiz

e P

rod

uced

WFS per ton Establishment cost Iowa per ton Establishment cost


Provincial Recovery After Drought

-49%

63%

21%

-39%-45%

-35%-29%

18%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

-6

-4

-2

0

2

4

6

8

10

Bill

ion R

and

Gross Revenue 2016 Gross Revenue 2017 Percentage change: 2016-2017


-200

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2200

2400

0

1000

2000

3000

4000

5000

6000

7000

8000

200

6

200

8

201

0

201

2

201

4

201

6

201

8

20

20

202

2

202

4

202

6

Th

ou

san

d t

on

s

R/t

on

Production

Domestic use

Net imports

Import parity -Randfontein

SAFEX

Export parity -deep sea

Soybean Production & Domestic Use


Soybean UtilisationGrains, Oilseeds and Potatoes

Benchmark crush capacity (2.06 Million

tons)

(80% Utilisation of dedicated soya and

dual capacity)

Benchmark crush capacity (1.40 Million

tons), (80% Utilisation of dedicated soya

capacity)

Fig. 52, Page 56

0%

20%

40%

60%

80%

100%

120%

140%

0

500

1000

1500

2000

2500

Uti

lis

ati

on

ra

te

Th

ou

sa

nd

to

ns

Soybean crush Soybean full fat

Soya crush capacity (80% utilisation) Soya and dual crush capacity (80% utilisation)

Implied utilisation rate (Soya capacity) Implied utilisation rate (Soya and dual capacity)


Livestock


Meat Consumption: 2026 vs. CurrentLivestock and Dairy

0%

5%

10%

15%

20%

25%

30%

35%

0

250

500

750

1000

1250

1500

1750

2000

2250

2500

2750

20

14

-16

2026

20

14

-16

2026

20

14

-16

2026

20

14

-16

2026

20

14

-16

2026

Beef Chicken Sheep meat Pork Eggs

Th

ou

sa

nd

to

ns

Net Imports

Domestic Production

Net import share inconsumption (RightAxis)

Net export share ofconsumption (RightAxis)

23%

19%

5%

30% 22%

• Slowdown in growth from past decade

• Chicken dominates consumption growth

-> affordability

• Affordability vs. income level of consumer

base

• Trade share projections differ by meat type


Relief for Livestock ProducersLivestock and Dairy

• SA catching up with global cycles

• Declining feed – meat price ratios supported

by time required for supply response

0

5

10

15

20

25

30

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

Ra

tio

Chicken to maizeratio domestic

Chicken to maizeratio international

Beef to maize ratiodomestic

Beef to maize ratiointernational

• Relative competitiveness of beef

and poultry production - extent of

price increases across sectors


Net Trade in Beef Products – Shift in MarketsLivestock and Dairy

• Predominantly high value cuts

destined for Middle East

• Vet protocols are paramount – need

to remain free of FMD

-30

-20

-10

0

10

20

30

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Th

ou

sa

nd

s t

on

s Fresh or chilled edibleoffal: bovine

Frozen, boneless meat

Frozen, bone in cuts

Frozen, Carcass & HalfCarcass

Fresh or chilled, boneless

Fresh or Chilled, bone incuts

Fresh / Chilled, Carcass &Half Carcass

Source: ITC Trademap


Cost Competitiveness of SA Poultry ProducersLivestock and Dairy

• More expensive to

produce a whole bird in

EU than in SA

• SA remains higher cost

producer than USA,

Brazil, Argentina,

Ukraine

• Feed costs primary

driver of higher

production costs –

Value chain approach

required

• Differences in consumer

demand & marketing

strategies across

countries

Source: BFAP & WUR, 2017

-20%

-10%

0%

10%

20%

30%

40%

% d

evia

tio

n t

o S

ou

th A

fric

a

Primary production & slaughter cost 2015

Primary production & slaughter cost 2013

Fig. 77, Page 76


Horticulture


Agricultural Census: Flyover data Breede Valley Pilot

CropCurrent Pilot

(2017) – Ha

Previous Census

(2013/14) – Ha% change

Proteas 5 7 -38%

Figs 39 18 +115%

Lemons 57 29 +98%

Naartjies 324 34 +860%

Oranges 164 201 -18%

Wine Grapes 15 849 17 189 -8%

Source: WC DoA, SIQ (2017)

29Bureau of Food and Agricultural PolicySource: SAMAC (2016) and Trademap (ITC) 2017

Macadamia Production and ExportsHorticulture and Wine

+10% p.a.

Kernel: USA (49%),

NL (9%)

In Shell: China (64%),

Vietnam (31%)

30Bureau of Food and Agricultural PolicySource: HORTGRO (2016) and Trademap (ITC) 2017

Berry Exports and ProductionHorticulture and Wine


Western Cape drought

Industry

Total

Productio

n 2016/17

Estimated

Total

Production

2017/18

Drop in

Productio

n (%)

GVA Shock

2016/17 vs

2017/18

(R million)

Employme

nt losses

Wine Grapes 1 599 728 1 279 782 -20.0 -591.21 -2 809

Table Grapes 186 772 153 000 -18.1 -787.36 -4 019

Pome Fruit 1 376 279 1 256 773 -8.7 -898.26 -9 635

Stone Fruit 319 424 293 288 -8.2 -458.26 -2 070

Citrus 311 955 287 887 -7.7 -259.24 -1 280

Alternative Fruit* 7 693 7 037 -8.5 -36.35 -220

Major

Vegetables**1 104 580 881 280 -20.2 -78.73 -2 716

Grains*** 1 558 200 986 928 -36.7 -2 812.97 -7 482

Total 6 464 630 5 145 975 -20.4 -5 922.37 -30 230


African markets

Baseline GrowthGrowth in real GDP: Outlook vs. Past Decade

Source: IMF, 2017

-2%

-1%

0%

1%

2%

3%

4%

5%

6%Per Capita

Past Decade Outlook

0%

1%

2%

3%

4%

5%

6%

7%

8%Total

Past Decade Outlook

34

SSA rapid population growthTransformation in Regional Agri-food System

Source: World Bank Development Group, 2015

Fig. 123, Page 123


0

5

10

15

20

25

30

35

40

45

50

200

1

200

2

20

03

200

4

200

5

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20

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200

9

201

0

201

1

201

2

201

3

201

4

201

5

US

D B

illi

on

s

SSA Imports from non-SSA

SSA's imports from SSA

SSA Total Food Imports from 7 to 40 billion USD (2001-2015)(intra SSA trade from 1 to 10 billion USD)

Source: ITC, 2017

Fig. 126, Page 125


Intra-SSA Top 10 Agri ImportsTransformation in Regional Agri-food System

Product label2015

Average annual

growth rate:

2001 - 2015

(USD billions) (% of Total) (%)

Edible vegetables and certain roots and tubers 1.032788 12.8% 20.1%

Cereals 0.922442 11.4% 10.5%

Animal or vegetable fats and oils and their cleavage

products; prepared edible fats; animal 0.794882 9.8% 14.0%

Beverages, spirits and vinegar 0.784497 9.7% 12.1%

Sugars and sugar confectionery 0.631979 7.8% 9.9%

Fish and crustaceans, molluscs and other aquatic

invertebrates 0.569927 7.0% 14.0%

Miscellaneous edible preparations 0.529197 6.5% 9.1%

Coffee, tea, maté and spices 0.482271 6.0% 9.0%

Edible fruit and nuts; peel of citrus fruit or melons 0.351619 4.3% 13.4%

Preparations of cereals, flour, starch or milk;

pastrycooks' products 0.310362 3.8% 13.5%

Table 21, Page 127


List of supplying markets from SSA of food imported by SSA

Transformation in Regional Agri-food System

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Rest SSA

Swaziland

Kenya

Senegal

Tanzania, UnitedRepublic of

Côte d'Ivoire

Namibia

Zambia

Uganda

Ethiopia

South Africa


Regional Production and Prices in Maize Markets

0

100

200

300

400

500

600

0

2

4

6

8

10

12

14

16

18

SA ZAM MOZ TAN MAL ZIM KEN

$/t

on

Mil

lio

n t

on

s

Maize production & Prices

2014 2015 2016 2017 Maize price


Regional Production and Prices in Maize Markets

-4000

-3000

-2000

-1000

0

1000

2000

3000

4000

5000

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

20

14

201

5

201

6

20

17

201

8

201

9

202

0

Th

ou

san

d t

on

s

Maize Net Exports

Total Net Trade

Zimbabwe

Uganda

DRC

Mozambique

Malawi

Tanzania

Zambia

Kenya

South Africa


Tanzania Sunflower Market


Selected bottlenecks of growth


Tariffs: South Africa vs. Competitors

Market Product

Market

Imports

('000 US $)

Exporters: Tariff & Export Value

South Africa

Tariff

South Africa

Exports

('000 US $)

Peru Tariff

Peru

Exports

('000 US $)

Chile

Tariff

Chile

Exports

('000 US $)

China

Grapes

603 197 13% 5342 0% 85 035 0% 171 362 (28%)

Thailand 114 948 43% 0 0% 29 720

Japan 51 715 17% 0 8.5% 25 017 (48%)

South

Korea189 512 45% 0 0% 126 654 (67%)

Market Product

Market

Imports

('000 US $)

Exporters: Tariff & Export Value

South Africa

Tariff

South Africa

Exports

('000 US $)

Peru Tariff

Peru

Exports

('000 US $)

Chile

Tariff

Chile

Exports

('000 US $)

Taiwan

Apples

244 576 20% 4 380 0% 32 956 (13%)

China 46 312 10% 25 0% 4 213 (9%) 0% 20 739 (45%)

China Plums 51 902 10% 45 0% 22 650 (44%)

China Avocadoes 11 956 25% 0 0% 74

Horticulture and Wine

Source: DAFF


Unlocking and Protecting Natural Resources

21 000 Ha

6 600 Ha

8 100 Ha


Boosting Output with the Correct Support

Source: GHS 2010- 2015 (Stats SA) Source: IVIS

Income sources for rural HH’s

Income sources for rural HH’s linked to

public private sector support programs

45

Something to think about….

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