Land reform, expansion of export markets, access to finance, the dysfunctional state of veterinarian services, and deteriorating municipality services are some of the things that agricultural economist, Wandile Sihlobo, believes will dominate the agenda in the agricultural industrial sector this year.
Projecting what to expect in 2023 in the agricultural industry, Sihlobo is optimistic that things won’t be that bad, however, one must expect mild contractions that may come into play as well as many themes that will influence the agricultural economy in South Africa and beyond its borders.
Sihlobo said previous figures showed positive growth in the agriculture industry, such that in 2020 the sector grew by 14.9% and in 2021 it grew by 8.8%, and the 2022 figures are expected to be released in March.
He said these figures were fairly encouraging.
“If you think about the third quarter numbers, for this financial year, they painted a somewhat positive picture of expansion in the gross value added, but I think the annual figure will likely show a mild contraction in the sector, because a number of things made me slightly pessimistic, including the fact that some of the key growth crops like maize showed a mild decline, compared to the previous quarter, even though they are still way above the long term average,“ said Sihlobo.
Challenges in the sugar industry, which is one of the important industries in South Africa, are also showing a bit of a decline, and this is also one of the things the industry can expect this year.
“And of course, there are more technical senses that we’ve had two years of solid growth, and one can even say an exceptionally high base because of that solid growth.
“So, there’s going to be a bit of a pull back from there, which is why I expect the mild contractions, and this doesn’t mean that the sector is necessarily in bad shape,” he said.
Sihlobo said in this new year there's going to be intensified discussion about the need for the expansion of export markets.
“South Africa is an export-oriented sector, exporting about half of what we produce in value terms, so organised agriculture groupings and the government are looking to expand the export markets.
“They are talking to China, South Korea, Japan, the US, India, Vietnam, Taiwan, Saudi Arabia, Mexico, the Philippines, and Bangladesh, all of which are key countries to watch.“
Another issue Sihlobo talked about was land reform, which has been the subject of debate all over the country, both from the government and the public sector.
“Going into 2020, there was a lot of talks focused on expropriation, and in 2022, there was focus on an expropriation bill, but this time around, I think that the discussion will move towards what we call the agricultural development and land reform agency, which could focus on land redistribution,“ said Sihlobo.
He said another issue is going to be about the deteriorating state of municipalities, and this is going to be linked with issues in roads, rail, water, electricity, and ports.
“And I think it also connects with the first point about the export activity because you need this to be fully functional for us to have a growing sector that can also participate effectively in the export markets,” said Sihlobo.
Ismail Motale, a farmer in the Western Cape, believes that all the challenges that the industry faced in the last season won’t simply disappear in 2023; however, he said he is also ‘cautiously optimistic’ for this new season.
“Last year was difficult because of the conflict between Ukraine and Russia.
“We had an impact on marketing products throughout the world, which also had an impact on the logistic costs, which were extremely high last year.
“So we hope that marketing companies have learned and found ways to mitigate some of those costs,” he said.
Motale said the last season was a very difficult year, especially for small producers like himself, however, the recent move by the state to drop fuel prices gives them a little hope. However, they can only hope this will remain stable throughout the year.
“It was tough, and one can’t cushion the economic blow, and we don't have deep pockets. It's been really difficult and tight when it comes to cash flow as we don't have the affordability of having large bank accounts that can see us through a difficult year,” said Motale.
“Anything could happen. I think as a farmer, and generally, as South African, we are very resilient and very positive people, but I am cautiously optimistic that this year will do it.
“I had a great deal of hope that this year, we might have a better season and a better return than the previous year,” he added.