Making predictions on what agriculture in South Africa will look like in 2023 is not easy considering the sector’s unpredictable nature. However, indications from the experts are that farmers are likely in for a less chaotic year, with some relief on infrastructural challenges and cuts in shipping costs.
With 2022 behind us, leaders in agriculture are cautiously optimistic about what 2023 has to offer.
Good news first…
When it comes to the new false coddling moth (FCM) regulations issue, the fruit industry expects there to be movement in favour of Mzansi’s citrus farmers.
The FCM regulations, deemed “unjustified and discriminatory”, were passed by the European Union (EU) mid-season. This subsequently placed significant financial strain and risk on growers in the country.
“We hope for movement on the issue around the new false coddling moth regulations imposed by the European Union in the past citrus season which is now at the World Trade Organisation,” Fhumulani Ratshitanga, CEO of Fruit South Africa told Food For Mzansi.
In a previous article, Ratshitanga explained that the key reasons behind reduced profit levels on fruit farms included, among others, exorbitant input costs, spiking diesel prices, load shedding, annual container terminal disruptions, and shipping costs.
“[However, we expect] some relief on shipping costs… and some relief on infrastructure and ports challenges,” she said.”
According to Justin Chadwick, chief executive officer of the Citrus Growers’ Association of Southern Africa (CGA), freight costs increased by over 150% over the past two years. This alone had a devastating impact on growers’ profit margins, putting many local businesses at risk.
“However, the early indication of a normalisation of container movement seen around the world should also bring about a balance in container supply and demand and some relief in shipping rates in 2023,” Chadwick said.
Transportation of agricultural goods
Meanwhile, Ratshitanga added that they were also expecting movement in the outstanding market access application to the United States and Asian countries.
Mzansi’s fruit industry has its eyes set on key export markets such as India, China, Japan, Vietnam and the Philippines.
She, however, cautioned that the implementation of the agriculture and agro-processing master plan remained key to the growth of the citrus industry and that implementation needed to be sped up.
Theo Boshoff, CEO of the agricultural business chamber of South Africa (Agbiz), said finding pragmatic solutions to the factors that weigh on the industry’s confidence would be a top priority for them.
Some global factors, he pointed out, are beyond the country’s sphere of influence.
“Still many, if not all our domestic challenges, are related to a lack of capacity and service delivery by institutions that the sector requires.
“Many of these issues cut across economic sectors, and as such a collaborative approach focusing on strategic partnerships will be key,” Boshoff said.
According to Boshoff, the rail infrastructure remained a critical component of the agricultural sector. However, close collaboration is needed to ensure that the challenges faced by those using this mode of transport, are addressed with speed.
“Bilateral meetings between Transnet freight rail and the grain sector are being scheduled to map out volumes that could feasibly be moved from road to rail, conducting an audit of rolling stock and assessing the status of infrastructure.
“Parallel meetings are being arranged for the fruit, nut, and wine sectors to determine the capacity requirements on both rail and ports. A third smaller committee comprising of Agbiz staff, Transnet, infrastructure South Africa and financiers, will meet to unpack the possible investment models,” Boshoff said.
Tough times not over for farmers
While a few positive developments seemingly await the sector, Agri Enterprises chief executive officer Omri van Zyl warns that tough times are inevitable. As a result, the sector’s role players should be cognisant of this.
“From a geo-political and logistics view, input prices will remain high, putting pressure on farmers and the agriculture value-chain.
“Energy security is one of the biggest threats to agriculture, and we see several alternative energy solutions emanating. This includes solar and wind among others,” he said.
In terms of South Africa’s energy crisis, agriculture should engage in new technologies as well as new partners to forge new energy solutions for the agriculture value chain, Van Zyl added.
“One constraint will remain grid-capacity, and it is therefore key that public private partnerships and other solutions are negotiated with Eskom.”
Despite these challenges, Van Zyl expressed his excitement about agricultural development in the months ahead for farmers.
“On the development finance side, the Land Bank should be able to fire up its development book.
“Entities like the industrial development cooperation, Motsepe Foundation and development finance institutions are keen to get commercially viable transformation projects underway,” he said.
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