South African producers should closely monitor the African market and increase supplies where market conditions allow. This is according to Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa (Agbiz).
In his weekly agricultural market viewpoint, Sihlobo advised agricultural role players to tread carefully when it comes to exploring new market opportunities.
“Although we continue to argue that South Africa should expand its agricultural export markets to new frontiers such as India, China, Bangladesh, Saudi Arabia, and South Korea, among others, the export drive should not be at the expense of the existing markets,” Sihlobo said.
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Keep a close eye on Africa
This is especially important when the demand for South African agricultural products will likely increase in the 2023/24 marketing year within the African continent.
“For Zimbabwe, production forecasts are yet to be made available. Still, Zimbabwe would require sizeable imports if the crop drops below the previous season’s harvest of 1.6 million tonnes, given its annual maize needs of 2.1 million tonnes,” Sihlobo said.
He added the possible suppliers to Zimbabwe will be Zambia and South Africa. Although Zambia’s maize production forecasts are yet to be released, there is an expected 15.6 million tonnes for South Africa, up 1% year-on-year.
This, Sihlobo said, should enable South Africa to export at least 3 million tonnes of maize in the 2023/24 marketing year.
In the previous season, countries such as Zimbabwe, Zambia, and Tanzania had decent supplies of grains and other foodstuffs on the back of a reasonably good harvest, although lower than the bumper crops of the previous season.
Reports from the Famine Early Warning Systems Network suggest that dry and hot weather conditions in the earlier part of the 2022/23 production season negatively impacted crops in southern Angola, Zimbabwe, Mozambique, and northern and eastern Madagascar.
Moreover, there are growing concerns that the higher fertiliser prices have led to lower usage by farmers in these countries, which would ultimately undermine the yields.
What about Kenya?
According to Sihlobo, another country that is worth keeping an eye on is Kenya. The latest estimates from the United States department of agriculture place Kenya’s 2023/24 marketing year maize imports at 750 000 tonnes. This is up slightly from the previous season’s maize imports of 700 000 tonnes.
“The primary hope for Kenya is to import maize from Tanzania and Zambia, which collectively accounted for 98% of Kenya’s maize imports in the 2021/22 marketing year.
“South Africa has minimal participation in the Kenyan maize market because of the prohibitive anti-genetically modified crop regulations.”
The new Kenyan administration under President William Ruto attempted to clear genetically modified white maize for imports and cultivation. But in February 2023, lobby groups took legal action to block genetically modified white maize seeds planned for release to farmers by the Kenya Agricultural and Livestock Research Organisation (KALRO) in March and April 2023.
“We used maize as an example, but if maize crops faced production challenges, then one can assume that there are similar challenges in other crops and vegetables.
“This means South African producers should closely monitor the African market and increase supplies where market conditions allow.”
Keep warm relations
Sihlobo cautioned that major exporters of the produce from South African farms, along with government officials, should maintain close engagement with counterparts across the rest of the African continent as this is not only a diplomatic consideration but also a commercial matter.
“We should actively engage with existing markets to stimulate the continued expansion of South African agricultural exports. The engagement should focus on the EU and Asia, both crucial regions for export growth, and the rest of the African continent,” he said.
The African continent remains the largest export market for South Africa’s agriculture. In the record agricultural exports of US$12.8 billion in 2022, the African continent accounted for 37%.
Sihlobo said, “As we advance this trade relationship with the Southern African Development Community and the rest of the African continent, there will need to be various industry and government engagements to keep warm relations.”
Such an approach would help to avoid erroneous policy decisions, such as what Namibia and Botswana did in 2022 by blocking vegetable imports from South Africa, Sihlobo said.
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