South Africa's Agricultural Prospects for 2021 - 'A primary agriculture perspective' Agri SA - Fertasa
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AGRI SA I FERTASA ANNUAL CONGRESS
South Africa's Agricultural
Agri SA
Presentation Heading
Prospects for 2021
‘A primary agriculture perspective’
Christo van der Rheede
Executive Director: Agri SA
Presenter I Date
Agri SA © 2021
AGRI SA I FERTASA ANNUAL CONGRESS
Contents
1. Number of Commercial Farmers 6. Agricultural Challenges
2. Natural Resources • International fertilizer Prizes
• State of Agricultural Land • Crime
• State of Water • Climate Change
3. Agriculture Growth in 2020 • Access to affordable finance
• Policy Uncertainty
4. Impact of the Pandemic
7. List of References
5. Agriculture Outlook 2021
• Tractor Sales
• Maize
• Livestock
• Citrus
• Deciduous Fruit
• Fiber
Agri SA © 2021 2
AGRI SA I FERTASA ANNUAL CONGRESS
Number of Commercial Farmers in SA
• Farms/ farming units involved in commercial agriculture industry in
2017 was 40 122.
• In 2017, the top 10 district municipalities by income contributed R148
billion to total income (44,5% of total income).
• The top 10 employment districts accounted for 374 671 employees
(49,6% of total employment).
• The largest proportion of farms was in
• livestock farming (13 639 or 33,9% of the total),
• followed by mixed farming (12 458 or 31,1%) and
• field crops (8 559 or 21,3%).
• The province with the highest number of farms in 2017 was
• Free State (7 951 farms or 19,8% of the national total), followed by
• Western Cape (6 937 or 17,3%),
• North West (4 920 or 12,3%) and
• Northern Cape (4 829 or 12,0%).
• The provinces with the lowest number of farms in 2017 were
• Gauteng (2 291 or 5,7%), Source: Stats SA
• Mpumalanga (2 823 or 7,0%) and
• Limpopo (3 054 or 7,6%).
Agri SA © 2021 3
AGRI SA I FERTASA ANNUAL CONGRESS
Number of SA Farmers Registered with SARS per Province
12 000
11 000
10 000
9 000
Number of farmers
8 000
7 000
6 000
5 000
4 000
3 000
2 000
1 000
0
2013 2014 2015 2016 2017 2018 2019 2020
EASTERN CAPE 5 107 4 500 4 441 4 595 4 773 4 867 5 982 4 035
FREE STATE 8 016 6 731 6 217 6 105 6 076 6 166 5 994 4 608
GAUTENG CENTRAL 7 386 2 990 3 139 2 850 2 762 3 016 4 236 2 765
GAUTENG NORTH 6 610 5 232 5 284 5 779 6 051 6 553 8 172 5 569
GAUTENG SOUTH 2 129 1 582 1 583 1 730 1 783 1 879 2 258 1 633
KWA-ZULU NATAL 4 726 3 849 3 734 4 071 4 470 4 883 7 397 5 142
LIMPOPO 1 923 1 701 1 927 2 261 2 576 2 764 3 850 2 586
MPUMALANGA 3 290 2 923 2 938 3 103 3 422 3 744 4 957 3 810
NORTH WEST 3 112 2 773 2 896 2 876 2 899 2 942 3 005 2 203
NORTHERN CAPE 3 236 3 038 3 022 3 025 2 995 3 121 3 130 2 268
WESTERN CAPE 11 822 9 160 7 700 7 729 7 975 8 053 7 746 4 934
Source: SARS (2018,2020,2021)
Agri SA © 2021 4
AGRI SA I FERTASA ANNUAL CONGRESS
Natural Resources: State of Agricultural Land
• According to the terrestrial ecosystem account
the extent of South Africa’s mainland is nearly
122 million ha.
• Cultivated land cover showed an overall
decrease between 1990 and 2014.
• Net decreases in commercial crops and secondly
timber plantations, which together decreased by
over 440 000 ha.
• Urban and mining land cover increased, by
approximately 154 000 and 43 000 ha,
respectively.
• Area under mines increased by 15,9%,while
urban areas increased by 5,6% between 1990
and 2014.
• Urban townships the largest absolute increase at
more than 70 000 ha.
• This is linked to a growing and urbanising
population, with people moving to cities and Source: Land and Terrestrial Ecosystem Accounts,1990 to 2014
areas of economic growth.
Agri SA © 2021
AGRI SA I FERTASA ANNUAL CONGRESS
State of Agricultural Land
• While there was a net decrease of 3,5% in the extent of
commercial cultivation, pivot irrigated fields increased in
extent by more than 200,0%.
• This signals a shift from rain-fed cultivation to pivot irrigation
systems.
• Orchards expanded by nearly 18,0% of their 1990 area.
• Vines expanded by nearly 17,0% of their 1990 area.
• Orchards largely replaced natural or semi-natural areas or
cultivated commercial crops, but also replaced timber
plantations and vines. Source: Land and Terrestrial Ecosystem Accounts, 1990 to 2014
Agri SA © 2021
AGRI SA I FERTASA ANNUAL CONGRESS State of Agricultural Land • Eastern Cape contains more than a third of the country’s subsistence crop land cover. • Only province for which subsistence crop land cover is greater than commercial crop land cover, at around 700 000 ha and 660 000 ha, respectively . • Free State contains a third of the country’s commercial crop land cover, with more than 3,7 million ha of commercial crops, by far the highest of all provinces. • Gauteng saw large increase in urban land cover from natural or semi-natural land cover, timber plantations and commercial crops. • Mpumalanga contains more than 40,0% of the country’s timber plantations, with around 760000 ha of timber plantations in 2014. Second largest decrease in commercial crop land cover (>125 000 ha). • North West experienced the largest decrease in commercial crop land cover relative to other provinces (>235 000 ha). • Western Cape contains around half the country’s orchards and vines, with around 265 000 ha of orchards and vines in 2014, up from around 240 000 ha in 1990. • Large net increases in urban land cover and orchards and vines, replacing natural or seminatural land cover primarily in WC. Source: Land and Terrestrial Ecosystem Accounts,1990 to 2014 Agri SA © 2021
AGRI SA I FERTASA ANNUAL CONGRESS Natural Resources: State of Water • Water stress is the new normal – and many farmers have started to adapt and innovate. • Climate scientists predict that the Western Cape will become drier and experience moderate to strong warming over the next 100 years. • In some areas, such as the Little Karoo, farmers are still battling the drought that started in early 2015. • Along with rising temperatures and increasing evaporation, the implications of drought and climate change for long-term water security are serious from a food security perspective too. • In water stressed South Africa, farmers will have to get innovative in order to produce more with less, especially when it comes to freshwater availability. • Precision farming is becoming increasingly important. • Farmers are also actively engaged in water stewardship initiatives. • Efficient water management authorities are required. • Strong enforcement of water user guidelines must be applied. • Innovative water infrastructure development should become a priority. • Good collaboration between private sector and state is of paramount importance. • Equal access to water should be is a shared responsibility. Source: WWF and Western Cape Government Agri SA © 2021
AGRI SA I FERTASA ANNUAL CONGRESS
Agricultural growth in 2020
• Whilst overall economic growth in 2020 was at -5.3%,
the agricultural sector, grew at 13.1% in 2020.
Output, distance from 2019 levels
• It was declared an essential service and benefitted from 120
bumper crops and the eased lockdown regulations for 110
Index, 2019 average = 100
the sector.
2019 average
100
• The economy entered the recovery phase during the Agriculture
90 Mining
second half of 2020, after a difficult first half. Manufacturing
Construction
80
Finance
• The largest driver of growth in the second half of 2020 Trade
70 Transport
was household consumption, which benefitted from a Electricity
Government and personal services
favourable credit environment. 60
2019 Q2 Q3 Q4 2020 Q2 Q3 Q4
Sources: Stats SA and SARB
• Debt-service costs as a ratio of disposable income fell to
just 7.7% in 2020 Q4, the lowest rate since 2006.
Agri SA © 2021
AGRI SA I FERTASA ANNUAL CONGRESS
Impact of the Pandemic
• Loss of demand for products of the agriculture, forestry and
fishing sector as a result of Covid-19 amounts to
R13.5-billion.
• Lockdown restrictions disrupted transport of resources.
• Public sector services related to international agricultural
trade was hampered.
• Agriculture products consumed through restaurants were
significantly affected.
• Revenues generated by informal food markets declined
sharply during the initial lockdown. Source: Botha, R. 2021. Economic impact of Covid-19 on the agriculture sector in South Africa
• The most significant negative impact on agriculture (in
terms of lost revenues) was felt in game farming, agri-
tourism, the hospitality industry and inputs for processed
food and beverages.
Agri SA © 2021AGRI SA I FERTASA ANNUAL CONGRESS
Impact of the Pandemic
Employment and unemployment
• South Africa’s unemployment rate is now at 32.5%, 26
its highest level since the QLFS began in 2008.32 24 Total labour force
• The economic recovery resulted in 3.8 million 22
Million people
individuals returning to the labour market by the 20
fourth quarter in 2020. Unemployed
18
• Approximately 900 000 individuals, or 24%, 16
managed to find employment. Employed
14
• About 1.4 million jobs are still missing relative to
12
the first quarter of 2020.
10
• The broader definition of unemployment sits at 2008 2010 2012 2014 2016 2018 2020
42.6%. Source: Stats SA
• Agriculture was down by 75 000 people between
Oct-Dec 2019 and Oct-Dec 2020.
Agri SA © 2021AGRI SA I FERTASA ANNUAL CONGRESS
Agricultural Outlook for 2021
• Agriculture growth momentum will continue into 2021,
contributing positively to overall SA GDP outcomes
• Favourable production conditions on the back of a La Goods trade
Nina weather pattern encourages farmers to plant more 32
areas under summer crops and improve grazing for
livestock. 30
• Supplies of grain, oilseeds and horticulture crops will be Exports Imports
adequate for the year ahead.
Percent of GDP
28
• Surplus production of agriculture commodities will tame 26
food inflation and contribute towards a benign overall
consumer inflation in 2021. 24
• The implications are for interest rates to remain at record 22
lows for a bit longer, benefiting consumers and
businesses. 20
• South Africa’s inflation well-contained 2017 2018 2019 2020
Sources: Stats SA and SARB
• Strong export drive to continue due to the increased
availability of product and high international demand.
• Late rain may adversely impact crops.
Agri SA © 2021AGRI SA I FERTASA ANNUAL CONGRESS
Tractor Sales
• April tractor sales of 540 units were almost 23% more than the 440 units sold in April last year.
• Year-to-date tractor sales are now 27% up on last year.
• In April there were 43 combine harvester sales, 23 units more than the 20 units sold in April last year.
• On a year-to-date basis combine harvester sales are now 29.0% up on last year.
• Summer crop harvesting is in full swing in some areas.
• Initial indications are that crop yields are good but, in some cases, due to late rains and early frost, crop quality may have
been affected adversely.
• The excellent combine harvester sales in April reflect the need to harvest the record and near-record summer crops on the
land.
Source: South African Agricultural Machinery Association
Agri SA © 2021AGRI SA I FERTASA ANNUAL CONGRESS Maize • Commercial maize for 2019-‘20 increased by 36% year-on-year to 15.3 million tonnes. • Maize prices for 2020 remained at high levels of R3,400 per tonne. • Current estimates indicate a potential crop north of 16 million tonnes for the 2020-‘21 production season. • Maize export demands from countries, mainly China, increased last year as a result of supply chain disruptions caused by the pandemic. • Production limitations in the US due to drier conditions resulted in higher corn prices which filtered through to our maize price. • During the 2020-2021 marketing season maize exports increased by 93% year- on-year from 1.16 million tonnes to 2.24 million tonnes. • SA also experienced increases in export demand from our neighbouring countries, notably Zimbabwe. • Oilseeds, sunflower and soybean crops increased by a whopping 16% and 6.4% respectively year-on-year at 788,500 tonnes and 1.25 million tonnes during the 2019-2020 season. • Prices reached record levels of R10,000 per tonne for soybeans and just over R9,000 per tonne for sunflower. Agri SA © 2021
AGRI SA I FERTASA ANNUAL CONGRESS
Livestock
The livestock sector remained resilient, despite the Covid-19
regulations that saw the temporary closure of restaurants and
the hospitality industry.
Meat products destined for the local market were exported,
supporting prices at relatively high levels.
Demand for meat in the local market also remained relatively
strong.
At producer level, beef prices are on average 10% higher year-
on-year, 15% higher for sheep and pork and poultry is marginally
higher at 5%.
SA had a good year for the production of cattle, sheep and small
livestock such as goats.
Livestock was able to graze following the good rainfalls. This
reduced producer’s feed costs.
Farmers are also holding on to their stock to improve their
conditions before sending them to the slaughter market.
Farmers with intensive livestock feeding systems, feedlots,
poultry operations and piggeries experienced some margin
squeeze, mainly because of maize prices. Source: BFAP
Grain (maize and soya) makes up around 70% of livestock feed.
Fortunately, livestock prices remained relatively strong,
cushioning producers against excessive margin squeeze.
Agri SA © 2021AGRI SA I FERTASA ANNUAL CONGRESS
Citrus
Citrus export volumes for 2020 are projected to reach record
levels despite the impact of the initial lockdown regulations.
Citrus exports for 2020 serve as a prime example of how
government and industry are working together to address
bottlenecks caused by national and global lockdown regulations.
This average annual growth was mainly driven by citrus (3.51%),
where soft citrus (11.06%) and lemon (9.65%) exports increased
the most, avocadoes (3.45%) and table grapes (3.10%).
Citrus fruit production has increased steadily by an annual
average of 3.13 percent over the past decade, largely as a result
of substantial area expansion.
Amongst the various citrus fruits, half of the cultivated area is
under oranges and the other half is split between lemons &
limes, soft citrus and grapefruit.
The area cultivated under oranges grew from 39 588 hectares in
2010 to 44 713 hectares in 2019.
Source: BFAP and DLRRD
Agri SA © 2021AGRI SA I FERTASA ANNUAL CONGRESS Deciduous Fruit • The avocado industry has expanded from around 13 000 hectares in 2010 to almost 19 000 hectares to date. • Volume is expected to grow to 250 000 to 300 000 tonnes by 2028 to 2029. • Apple and pear export volumes grew by 41.81 and 16.70 percent respectively from 2010 to 2019. • This coincided with a growth in export value of 129 percent for apples and 106 percent for pears. • Peach & nectarine exports showed strong growth in volume and value over the last decade. • The number of export cartons was 55 percent more in 2019 than in 2010, driven by the demand for nectarines . • With a total value of more than R 60 billion projected for 2029, foreign revenue is expected to contribute 70.14 percent of the combined overall earnings in the citrus, table grape, pome and stone fruit industries. Agri SA © 2021
AGRI SA I FERTASA ANNUAL CONGRESS Fibre • The summer crop most challenged by the lockdown was cotton, with harvesting and ginning activities halted for the first three weeks of lockdown and some delays on exports for most of the initial 5-week lockdown period. • Global cotton production expanded by 3.6 percent in 2019, attributed mainly to increased output from India and the USA. • Early estimates for 2021 suggest that production levels could decline, due mostly to a reduction in the area planted to cotton globally. • The OECD-FAO projects production growth of 1.5 percent per annum over the course of the 10-year projection period, with yield gains contributing more to the increase than area expansion. • Despite a substantial decline in the area under cotton production from the 2018/19 season, cotton area is expected to continue Source: BFAP, Cotton SA trending upwards, though at a slower rate than was evident over the past 3 years. Agri SA © 2021
AGRI SA I FERTASA ANNUAL CONGRESS
Agricultural Challenges for 2021
• Fertiliser, herbicide and diesel are the three main input costs for
grain producers in South Africa.
• Increasing input cost a major concern.
• Especially fertilizer is at its highest levels in more than 24
months.
• The driving factors cited by analysts include low stock levels due
to Covid-19, rising natural gas prices and higher crop plantings in
the northern hemisphere (with particular demand for nitrogen).
Source: Grain SA
Agri SA © 2021AGRI SA I FERTASA ANNUAL CONGRESS
Crime
• During the presentation of crime statistics on 13 November 2020 for the first time the Minister of Police, Mr Bheki Cele
acknowledged that livestock theft is a serious crime.
• It has a R1.4 billion economic impact on agriculture and every case reported is one too many.
• The first Quarter of 2020/21 is illustrated in Figure 1 below. Six provinces experienced increases with the Western Cape
Province, Northern Cape and Eastern Cape the leaders.
• The non-reporting of livestock theft cases remains a huge challenge
Source: National Stock Theft Prevention Forum
Agri SA © 2021AGRI SA I FERTASA ANNUAL CONGRESS
Climate Change
• Climate change is one of South Africa’s greatest threats,
particularly with regard to the agricultural sector’s ability to
provide food for our country’s people.
• Unsustainable agricultural practices, including the over-use of
natural resources and practices that contribute to land
degradation, causes and exacerbates the effects of climate
change.
• Climate change disproportionally impacts developing countries.
• As a global phenomenon, climate change requires everybody to
collectively address the challenges associated with it.
• The agricultural sector’s inclusion and active participation in
international, regional and national climate change negotiations is
of critical importance.
• The progressive implementation of more sustainable food
production practices, including the reduction of food waste is non-
negotiable.
• We must guard against any unduly adverse financial and
economic consequences associated with climate change.
Source: Turple, et.al.
Agri SA © 2021AGRI SA I FERTASA ANNUAL CONGRESS
Access to Affordable Finance
• Accessing finance for agriculture is a challenge for some existing Department Other financial Other debt
Private
farmers and new entrants. of
Agriculture
institutions
2%
1%
persons
Agricultural
• With the Land Bank facing liquidity challenges, the commercial cooperatives0%
0%
banks have stepped in to assist commercial farmers with 7%
Land and
production and long-term credit. Agricultural
Bank
• The Agricultural Agroprocessing Master Plan Public place huge 29%
emphasis on private-partnership structured finance, to assist
developing farmers through a Blended Fund facility.
Commercial
• The Blended Fund facility will be used by the parties to provide banks
loan and grant funding to black producers or majority black owned 61%
enterprises for:
• The acquisition of primary agricultural land parcels and/or
commercially viable agricultural sector value chain operating
entities (agri-businesses). Land and Agricultural Bank Commercial banks
• Support existing operations for expansion in production on Agricultural cooperatives Department of Agriculture
privately owned or land reform farms (Brownfields and Other financial institutions Private persons
Greenfields operations); Other debt
• The purchasing of capital equipment and infrastructure
(“CAPEX”).
• Working capital and/or production loan (“Production
Facility”).
• Insurance pool provision for subsidisation of insurance cover
for the applicable farmers (capped at 6% (six percent) of
each total Grant Funding Facility amount).
Agri SA © 2021AGRI SA I FERTASA ANNUAL CONGRESS
Policy Uncertainty
Prior to the Covid-19 pandemic, the debate on land expropriation without compensation (EWC) had contributed to a significant decline in
confidence levels amongst businesses and consumers.
Capital formation having declined by more than 9% over the past four years (in real terms).
When a government embarks on a policy of expropriation of private property without compensation, the fundamental tenet of economic
freedom, as embodied in free enterprise principles, is destroyed.
Economic capital and economic output (as measured by the gross domestic product – GDP) are highly correlated and any disincentive to invest
in economic capital formation will erode a country’s GDP growth.(Botha, R F: 2018).
Examples abound of countries that have experienced economic decline as a result of policies of EWC
Agri SA agrees that there is a need for accelerated land reform, but it is also critical that any land reform, and specifically agricultural land
reform must be sustainable.
The property clause is not an impediment to land reform and
that no changes need to be made to section 25 of the
Constitution to achieve just and equitable land reform.
“According to a January report by the Special Investigating
Unit (SIU) of its probe into 148 farms countrywide over a
seven-year period, 25% of the department’s land reform
projects show signs of fraud and corruption, with hundreds of
millions of rands lost.
This number represents just the surface of the cesspool.
The SIU report also recommends that 42 individuals,
including politicians, be prosecuted under the Public Finance
Management Act.”
Foreign Direct Investment in South Africa increased by 16010
ZAR Billion in the fourth quarter of 2020.
Agri SA © 2021AGRI SA I FERTASA ANNUAL CONGRESS
Continuously empowering our farmers and
protecting and advancing their interests is critical to
ensure future food security for all South Africans! It
is not land that produces food, its expertise!
Christo van der Rheede
Executive Director, Agri SA
Agri SA © 2021AGRI SA I FERTASA ANNUAL CONGRESS
List of References
• Agri SA. 2021. Economic Intelligence Report. Centre of Excellence: Economics.
• BFAP. 2020. Baseline Report
• Citrus Growers Association - http://www.cga.co.za/
• Grain SA. 2021. Fertilizer/Agro-chemical report. April 2021
• Ministry of Agriculture, Land Reform and Rural Development - https://www.daff.gov.za/
• National Stock Theft Prevention Forum. 2021. Livestock Theft - The Picture in December 2020.
• Stats SA. 2021. Gross Domestic Product. Statistical Release. Fourth quarter 2020.
• South African Reserve Bank. 2021. Monetary Policy Review. April 2021.
• South African Agricultural Machinery Association. 2021. Tractor and Combine Harvester Sales. January 2021.
• South African Revenue Services - https://www.sars.gov.za/
• Stats SA. 2020. Land and Terrestrial Ecosystem Accounts,1990 to 2014.
• Stats SA. 2021. Quarterly Labour Force Survey. Quarter 4: 2020.
• Stats SA. 2020. Census of Commercial Agriculture 2017 Report.
• Summer Citrus South Africa - https://www.summercitrus.com/
• Turple, et.al. 2002. Economic impacts of climate change in South Africa: A preliminary analysis of unmitigated damage costs.
• Western Cape Government. 2021. Farmers in drought-stricken area receive fodder support.
• WWF. 2018. Farming For A Drier Future.
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www.agrisa.co.za
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