The year 2023 has been a tricky one that has needed to be carefully navigated.
In many ways it has been a year of consolidation and recovery, particularly for exports. And while there has been some easing of input costs, many challenges and elevated risk in the sector remain.
On the plus side, the Agbiz/IDC Agribusiness Confidence Index rebounded by 6 points to reach 50 points in the 3rd quarter, after having remained below the 50-point mark for 3 consecutive quarters. This suggests that agribusinesses are gradually adapting to long-standing challenges affecting business conditions such as deteriorating infrastructure, failing municipalities, intensified geopolitical tensions, and persistent load-shedding.
2023 was a mixed bag of blessings and challenges
Various sectors such as wheat, soybeans and maize – which are on track to produce the second-largest harvest on record – have continued to yield excellent harvests, but we are seeing the impact of downward pressure on commodity prices. South Africa’s agricultural export earnings are expected to soften this year from the 2022 record of US$12,8 billion, which was driven by a strong agricultural season and higher global prices. Commodity prices have on average declined by roughly 11% this year, while stringent regulations relating to citrus black spot disease in the European Union market and ongoing restrictions on exports of some livestock products due to foot-and-mouth disease are likely to lower export earnings.
Livestock diseases remain a concern, particularly the recent avian influenza outbreak, which has had far-reaching consequences affecting producer and consumer. A report released by a government-appointed task team in May warned that South Africa's veterinary and animal disease controls are ‘broken’ and in a state of crisis, which threatens the viability of the country's livestock industry. Some of the main problems flagged in the report are poor maintenance of laboratory infrastructure, equipment and research facilities; a lack of control over the movement of animals from infected areas; non-availability of vaccines for notifiable diseases; poor and unscientific decision-making by officials; bad coordination between national and provincial governments; and a slow response to emergency situations. Unfortunately, there appears to be no dedicated plan to deal with the crisis, and so far no effort has been made to implement the recommended corrective actions.
What’s in store for 2024
Unfortunately, many of the ‘usual’ challenges of doing business in South Africa will remain in 2024. Uncertainty around the intensity of load-shedding persists but many agribusinesses have taken matters into their own hands and are producing their own power. Underlying infrastructure issues – with roads on the brink of collapse and rail and port systems being among the least efficient in the world – are unlikely to be addressed as uncertainty and paralysis in an election year will mean limited progress.
Pressure around household food security is likely to continue into 2024, and any food price increases will add immense pressure to already stretched household budgets. It is a delicate balance to maintain a healthy and sustainable food sector amid rising production costs and biosecurity issues while ensuring access and affordability of food for all. Of course, this is not something that can be solved by agriculture alone – it requires a robust economy that offers greater employment and growth opportunities.
Another factor that is unlikely to improve next year is the export environment, which we expect to remain challenging for various reasons. We have commented extensively on our potential exclusion from the United States African Growth and Opportunity Act trade pact and the negative impact this would have on the agricultural sector, while regulations in the EU continue to mount. In addition, geopolitical tensions are expected to continue into 2024, with the Russia–Ukraine and Israel–Palestine conflicts showing little sign of resolution as the year draws to a close. It is our view, then, that attention must be urgently focused on improving logistics efficiency, intensifying the promotion of South African products in export markets, and sustaining solid relations with existing critical export markets while securing expansion into new markets.
Fortunately, El Niño is expected to have less of an impact than initially feared on agricultural conditions in terms of rainfall due to improved soil moisture from past rainy seasons. However, the South African Weather Service forecasts above-normal minimum and maximum temperatures for summer. This forecast comes amid warnings from the World Meteorological Organization that globally El Niño, along with climate change, would usher in record-breaking temperatures in the next 5 years. This has already been experienced as heat waves struck the northern hemisphere this year. This does not auger well for crops and livestock, while water loss through evaporation and increased wildfires are additional threats.
The year 2024 is being hailed as a defining moment for South Africa and it is bound to have its highlights and obstacles. Agriculture has been a highlight since Covid-19 and, despite all the challenges we face, there are encouraging signs that it will continue. However, it is important to view the immense opportunities in the sector through the lens of the reality of doing business in South Africa. It is not easy but there is always hope, and the challenges we have faced as an industry and as a country have made us more resilient. Through it all, we believe the private sector will continue to forge the way ahead – with or without government.
AFRIKAANS
Landbou in 2023 en wat om in 2024 te verwag
2023 was 'n moeilike jaar. Dit het noukeurige stuurmanskap geverg en in baie opsigte was dit 'n jaar van konsolidasie en herstel, veral vir uitvoere. En hoewel daar 'n mate van verligting van insetkoste was, word boere steeds met vele uitdagings en verhoogde risiko gekofronteer.
Aan die positiewe kant het die Agbiz/Nywerheidsontwikkelingskorporasie van Suid-Afrika se Agribesigheidsvertrouensindeks met 6 punte teruggespring na 50 punte in die derde kwartaal, nadat dit vir 3 opeenvolgende kwartale onder die 50-punt-kerf was. Dit dui daarop dat landboubesighede geleidelik aanpas by langdurige uitdagings wat saketoestande raak, soos verswakkende infrastruktuur, mislukte munisipaliteite, verskerpte geopolitieke spanning en aanhoudende beurtkrag.
2023 was 'n mengelmoes van seëninge en uitdagings
Verskeie sektore soos koring, sojabone en mielies – wat goed op dreef is om die naasgrootste oes op rekord te lewer – het uitstekende oeste gelewer, maar afwaartse druk het 'n impak op kommoditeitspryse. Suid-Afrika se verdienste ten opsigte van landbou-uitvoere sal na verwagting vanjaar verswak in vergelying met die 2022-rekord van VS$12,8 miljard, wat deur 'n sterk landbouseisoen en hoër wêreldpryse gedryf is. Kommoditeitspryse het gemiddeld met sowat 11% gedaal, terwyl streng regulasies oor sitrusswartvleksiekte in die Europese mark en voortdurende beperkings op die uitvoer van sommige veeprodukte weens bek-en-klouseer uitvoerdienste waarskynlik sal knou.
Veesiektes bly ook 'n bekommernis, veral die onlangse voëlgriepuitbraak, wat verreikende gevolge vir die produsent en verbruiker inhou. 'n Verslag wat in Mei deur 'n regering-aangestelde taakspan vrygestel is, het gewaarsku dat Suid-Afrika se veeartsenykundige en dieresiektebeheer geskend en in 'n krisis gedompel is, wat die lewensvatbaarheid van die land se veebedryf bedreig. Volgens die verslag is van die grooste probleme swak instandhouding van laboratoriuminfrastruktuur, toerusting en navorsingsfasiliteite; 'n gebrek aan beheer oor die beweging van diere uit besmette gebiede; onbekombaarheid van entstowwe vir aanmeldbare siektes; swak en onwetenskaplike besluitneming deur amptenare; power samewerking tussen nasionale en provinsiale regerings; en stadige reaksie op noodsituasies. Ongelukkig blyk daar geen vasgestelde plan te wees om die krisis te hanteer nie, en tot dusver is geen poging aangewend om die aanbevole regstellende aksies te implementeer nie.
Wat wag vir 2024?
Ongelukkig sal baie van die gewone uitdagings daaraan verbonde om sake in Suid-Afrika te doen voortduur. Onsekerheid oor kragvoorsiening duur voort, maar baie landboubesighede het reg in eie hande geneem en genereer nou hul eie krag. Onderliggende infrastruktuurkwessies – paaie wat op die rand van ineenstorting is en spoor- en hawestelsels wat van die swakste ter wêreld is – sal waarskynlik nie aangespreek word nie, want onsekerheid en verlamming in 'n verskiesingsjaar beteken beperkte vordering.
Druk rondom huishoudelike voedselsekerheid sal waarskynlik tot in 2024 voortduur, en enige voedselprysstygings sal geweldige druk op reeds uitgerekte huishoudelike begrotings plaas. Dit verg 'n delikate balans om, te midde van stygende produksiekoste en biosekuriteitskwessies, 'n gesonde en volhoubare voedselsektor te handhaaf en terselfdertyd ook toegang en bekostigbaarheid van voedsel vir almal te verseker. En dit is nie iets wat die landboubedryf alleen kan oplos nie – dit vereis 'n robuuste ekonomie wat groter werks- en groeigeleenthede bied.
Die uitvoeromgewing sal waarskynlik, weens verskeie redes, ook 'n uitdaging bly. Ons het breedvoerig kommentaar gelewer oor Suid-Afrika se moontlike uitsluiting van die Wet op Groei en Geleenthede in Afrika en die negatiewe uitwerking wat dit op die landbousektor kan hê, en intussen verskerp die regulasies in EU steeds. Daarbenewens word verwag dat geopolitieke spanning tot in 2024 sal voortduur met die Rusland-Oekraïne- en Israel-Palestina-konflikte wat weinig tekens van herstel toon. Ons is dus van mening dat daar dringend aandag gegee moet word aan die verbetering van logistieke doeltreffendheid, die bevordering van Suid-Afrikaanse produkte in uitvoermarkte, en die handhawing van stewige verhoudings met bestaande kritieke uitvoermarkte terwyl uitbreiding na nuwe markte verseker word.
Te danke aan verbeterde grondvog van vorige reënvalseisoene sal El Niño gelukkig minder van 'n impak hê as wat aanvanklik verwag is. Die Suid-Afrikaanse Weerdiens voorspel egter bo-normale minimum en maksimum temperature vir die somer. Hierdie voorspelling kom te midde van waarskuwings van die Wêreld Meteorologiese Organisasie dat El Niño wêreldwyd, tesame met klimaatsverandering, rekordtemperature in die volgende 5 jaar tot gevolg sal hê. Dit was reeds die geval met hittegolwe wat vanjaar die noordelike halfrond getref het. Dit voorspel niks goed vir gewasse en vee nie, en waterverlies deur verdamping en verhoogde veldbrande hou bykomende bedreigings in.
2024, wat sekerlik sy eie hoogte- en laagtepunte sal hê, word as 'n bepalende oomblik vir Suid-Afrika beskou. Sedert Covid-19 is landbou 'n hoogtepunt en ondanks al die uitdagings waarvoor ons te staan kom, is daar bemoedigende tekens dat dit so sal bly. Dit is egter belangrik om die gulde geleenthede wat die bedryf bied te benader vanuit die die werklikheid dat dit moeilik is om in Suid-Afrika besigheid te doen. Dit is nie maklik nie, maar daar is altyd hoop. Met al die uitdagings wat ons as bedryf en as land moes teenstaan, is ons stoer van gees met murg in ons pype.
Deur dit alles glo ons die privaatsektor sal volhard – met of sonder die regering.
