How will local and global conditions impact the agricultural industry?
AgriTrends offers insight from industry experts, enabling agribusiness stakeholders to navigate the future. The AgriTrends 2023 Autumn Edition looks at the impact of renewed Chinese growth, shifts in consumer spending, persistently high production costs, the effects of load-shedding, and the need for renewable energy. Through shared insight, the industry can continue to navigate disruptions and uncertainties and grow a stable future for South African agriculture.
Since the previous edition of our AgriTrends in October 2022, the environment and markets in which we operate have changed drastically and sentiments within the South African agricultural industry have turned negative. Globally, the lift of the Chinese zero-COVID policy has resulted in a more positive outlook for global economic growth, whilst locally, more frequent and elevated stages of load-shedding have complicated the way we do business and depressed economic prospects for the year, with economic growth likely to be below 1%. In this version of AgriTrends, we devote our first chapter to the coverage of the implications of higher Chinese growth and touch on what this could mean for agricultural commodity markets and roleplayers in South African agriculture specifically.
In Chapter 2, we consider the effect of high-interest rates on the consumption of meat in South Africa as pressures on consumers' disposable income are weighing on red meat prices. At the lower end of the meat protein price spectrum, poultry products are however still showing firm prices.
This is on the back of higher world prices and a weakening exchange rate. These divergent price trends in meat products are bound to result in short-term consumption shifts as consumers seek bang for their buck. Such consumption shifts were also apparent in 2022 when pork made inroads in the market share of the broader meat complex in the months in which pork was more affordable than chicken. Uncertainty in meat and livestock markets will also be further amplified by supply factors. Most notable here is the effect of load-shedding on production throughput and cost, where our intelligence shows backlogs at abattoirs. This will result in longer feeding times and fewer production cycles within a year for subsectors, such as poultry. Positives related to livestock production are that feed prices are easing and in this regard, our section covering grains explores how the current factors at play could affect the timing and quantum of downward trends in wheat and maize prices.
