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
-
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
-
2
4
6
8
10
12
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: [email protected]
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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