THE year 2021 could be characterised as one of the rarest, yet possibly most beneficial one for South African farmers, says Agricultural Business Chamber (Agbiz) chief economist, Wandile Sihlobo.
He said that the year combined ample crop harvest with higher prices, thus boosting farmers’ incomes.
“Ordinarily, a year of large harvest tends to lead to lower commodities prices, and farmers’ profits are squeezed. But for 2020 and 2021, commodity prices have remained elevated in South Africa and globally.
“The growing demand for agricultural products, specifically oilseeds in China and India, combined with lower palm oil production in parts of Asia and a poor harvest in South America, were among the key reasons for higher global agricultural commodity prices.
“As an integral part of the global agriculture ecosystem, South Africa was influenced by the global price trends, mirrored in the domestic prices,” Sihlobo said.
The farmers that benefited from this windfall saw their finances improve and began spending on agricultural equipment, among others.
For example, South Africa’s total tractor sales for the first 11 months of this year reached 6 980 units, up by 25 percent year on year (y/y). The combine harvester sales increased by 38 percent y/y over the same period, with 250 units sold.
Notably, last year was also a good year in South Africa’s agricultural machinery sales, therefore surpassing it meant that the sector was witnessing good momentum this year. Last year, the tractor sales amounted to 5 738 units, up by 9 percent from 2019. The combine-harvester sales increased 29 percent from 2019, with 184 units sold in 2020.
The 2021 season started on a positive footing, with summer crop plantings having been completed on an increased area compared with the previous year and benefiting from higher rainfall. The estimates of ample harvest materialised, not only for summer grains and oilseeds but also for the horticulture industry.
South Africa's 2020-21 summer grains and oilseeds harvests were ample, with a sterling performance in particular crops such as maize and soybeans saw production that reached 16.2 and 1.9 million tonnes. This is the second-largest harvest in maize and a record harvest in soybeans.
Other field crops also generated large yields in 2020-21 compared with the previous year. Within the horticulture subsector, the South African Wine Industry Information and Systems forecast the 2021 wine grape crop at 1.5 million tonnes, 9 percent more than the 2020 harvest.
The Citrus Growers’ Association reported a record export of 162 million cartons in 2021, up by 19 million from 2020. There was a notable 9 percent annual increase in apple and pear exports was also due to a large domestic harvest.
The country also experienced some challenging times this year, such as the July unrest in KwaZulu-Natal and Gauteng, increased theft of rail infrastructure, followed by cyberattack at Transnet, which impacted the movement of goods out of South Africa.
South Africa’s agriculture, food, and beverages exports for the first three quarters of 2021 reached $9.6 billion (R153.5bn) – up 23 percent compared with the same period last year.
The top exportable products were citrus, maize, wine, apples and pears, nuts, sugar, fruit juices, and wool, among other products. There were still ample agricultural and beverages exports ongoing since the start of the final quarter of this year.
Sihlobo said that it was for this reason that they were inclined to believe that South Africa could surpass 2020’s agriculture exports of $10.2bn which was the second-highest on record, and could even pass the record exports of 2018, which was $10.6bn.
“We think agriculture, food and beverages exports could hit a record $11 billion mark this year,” he said.
Agbiz said that looking ahead, the early indicators to 2022 were positive about the agricultural growth prospects.
Sihlobo said farmers had lifted the area plantings for summer crops, the rainfall outlook was favourable and the commodity prices remained elevated.
He said there were unique price-driving factors for crops going into 2022, but broadly, the growing demand for grains and oilseeds in China, poor crop yields in South America in the 2020-21 production season, and higher shipping costs remained the primary price drivers.
“These high commodity prices will partly offset farmers’ input costs of the 2021-22 production season,” Sihlobo said.
BUSINESS REPORT ONLINE