Thinking about SA agriculture in the “new economy”

Wandile Sihlobo

SA Berry Producers’ Association AGM

Pretoria (via Zoom)

29 May 2020

Outline

• Impact of COVID-19 on agriculture

• Global impact

• Domestic impact

• SA agriculture growth strategy post-COVID-19, or what some call “the new economy”

• Making the berry industry relevant in “the new economy”

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Global agriculture is in a remarkably uncertain territory

• Trade restrictions (Cambodia, Vietnam,

Russia, etc.)

• Logistical challenges (India, Nigeria, Kenya,

etc.)

• Food waste amid closure of restaurants (USA,

Belgium, Canada, etc.)

• Labour shortages due to lockdown (France,

Netherlands, Germany, etc.)

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Grains and oilseeds shipping under pressure*

Source: *Baltic Exchange

There are solid supplies in the global grains market, no need for export restrictions

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Source: International Grains Council, Agbiz Research

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200

400

600

800

1 000

1 200

2017/18 2018/19 2019/20 2020/21*

Mill

ion tonnes

Rice Wheat Maize

SA agriculture not as hard hit by the COVID 19 pandemic

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• Admittedly, the South African agricultural sector was already constrained prior to the outbreak of COVID-19

due to a series of droughts and biosecurity issues, amongst other aspects. But we could see a recovery in

2020, because of a bumper grain and fruit harvest.

• We currently estimate a 10% y/y recovery in SA agricultural GDP for 2020.

• There are four agricultural products which were not classified as essential services during the “level 5”

lockdown and were therefore interrupted until May 1 when level 4 regulations kicked in. These included wool,

cotton, mohair & wine and the state needs to re-open their operations (the floriculture industry still impacted).

• Exports of all agricultural products will now continue given that ports services and logistics should continue to

facilitate the trade in goods.

• Concerns remain of whether global demand for food will remain vibrant, amid shutdowns in various countries,

and also sharp slowdown in economic activity.

Projected reduction in sub-Saharan Africa GDP per capita growth in 2020

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Specific country projections

Source: World Bank

Sub-Saharan Africa projections

South Africa’s agricultural exports by region

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Source: Trade Map, Agbiz Research

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2

4

6

8

10

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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

USD Billions

Africa EU Asia Americas ROW

SA agriculture policy post-COVID-19 will focus on expansion and job creation

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• Expansion of primary agriculture (especially in

KZN, EC & LP).

• Improve land governance in the former homelands

and co-create solutions (e.g. crowd in

investments)

• Prioritize agricultural infrastructure with the highest

R.O.I. (revamping essential water schemes, road

infrastructure, electricity supply, etc.).

• Enhance the ability of state funding institutions to

attract private capital (thus alleviating the strain on

the fiscus).

• Better local government delivery (especially the

maintenance of road networks and basic

services).

The focus should be in regions with higher poverty levels

Source: Stats SA, BFAP and Agbiz Research

Maximimum impact of

government at minimal cost

Land

Water and other infrastructure

Agri Food Value Chains

Stra

tegi

c Pa

rtn

ersh

ips

Road infrastructure, electricity supply

IrrigationServices

Access to Agri. Technology &Skills

Access to Agri-food Markets

Access to Finance

Res. & Extension Ag. Input Markets

Roads SPS &Trade Agree.Market Infra.

Credit and investment

Risk ManagementInsurance

Distribution

TVET

Land Administration

Communal Land

Pu

blic

In

fras

tru

ctu

re

Pu

blic

Se

rvic

esSu

pp

ort

ive

po

licy

JOBS INCLUSION RESILIENCE

InstitutionsLegal & Regulation

Demarcation & Registration

Cadaster & Deeds Registry

Land Audit

Ro

le o

f th

e p

ub

lic s

ecto

r

Digital Technology

Security of Tenure

Making the berry industry relevant in “the new economy”

Source: Presidential Economic Advisory Council of South Africa (PEAC)

Making the blueberry industry relevant to “the new economy”

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• Blueberry global demand is solid; imports

grew at around 12% per annum since 2013.

• Blueberry industry has the highest

employment intensity amongst the major fruits

grown in South Africa.

• Blueberry has outperformed other fruit

industries by growing from its gross value of

production from an estimated value of R15.8

million to R1.3 billion in 2018.

• Blueberry production, measured in Rand

value terms, was about 2% of South Africa’s

total value of horticultural production in 2018.

There’s still room to grow.

Comparison of growth and jobs in crop industries (2013-18)

Source: WCDoA and Agbiz Research

SA blueberry is export orientated, therefore market access is also key

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• SA blueberry industry key export markets are the UK (55%), the Netherlands (20%) and Germany (9%), amongstothers.

• But when expanding production, trade will need to be a key focus and that involves addressing the existing tariffs inthe aforementioned markets.

Source: WCDoA , Trade Map, and Agbiz Research

Thank you for your attention.

Contact details:

Wandile Sihlobo

Chief economist, Agricultural Business Chamber of South Africa (Agbiz)

Email: wandile@agbiz.co.za

Twitter: @WandileSihlobo

www.agbiz.co.za

Disclaimer:

The views contained in this file are those of the author, and do not represent the opinions and the Presidential Advisory Panel on Land Reform and Agriculture

or the Agricultural Business Chamber of South Africa (Agbiz).

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