As South Africa’s agricultural sector faces a year of uncertainty, a roundtable event hosted by Nedbank Agriculture brought together banking and economic leaders to discuss how innovation, sustainability, and resilience will shape the future. Despite the ongoing climate and economic challenges, the hybrid event highlighted opportunities for growth and adaptation.
Zhann Meyer, head of agricultural finance at Nedbank CIB, echoed these sentiments, noting: “2024 was a tough year, and it is reflected in our bank performance. Demand for credit has been down, and it’s been a year of consolidation and caution.”
He shared his insights on the increasing importance of climate-smart agriculture in sub-Saharan Africa and the role that innovative financial models play in supporting farmers across the continent.
Reflecting on the challenges faced by South African farmers due to unpredictable weather patterns and climate change, he added, “South African farmers lost about 19% of our maize produce last year. I think this speaks to the resilience of South African farmers because one has to look north of Limpopo.”
Related stories
- Nedbank & Pals lead MPU farmers towards responsible leadership
- Nedbank’s tech-infused vision ushers in new era for agriculture
Resilience amidst regional crop losses
He continued to highlight the extent of crop losses across other African nations, citing Zambia’s experience of losing half of their crop, resulting in the country having to import maize for the first time in 21 years. Meyer noted South Africa’s resilience in comparison to other African nations.
“Unfortunately, Zimbabwe didn’t fare any better. They lost two-thirds of their crop. South Africa consistently supplies enough food for itself, and even some for export, even in those years. One needs to understand that South Africa is unique in terms of its resilience and its food security position,” Meyer said.
He pointed to the bank’s role in supporting sustainable farming practices, including the launch of a groundbreaking sustainability bond.
“It was a two-billion-Rand bond, 180% oversubscribed, and a significant portion of that bond is allocated to climate-smart agriculture,” he shared.
The bond supports projects like shade netting, new irrigation systems, and dams, all aimed at enhancing farmers’ sustainability and ability to produce.
John Hudson, national head of agriculture at Nedbank in South Africa, highlighted innovative financing models, such as weather-based index insurance and the virtual farmer programme, which uses remote sensing and moisture probes to provide automatic insurance payouts.
“We are moving away from traditional balance sheet models to income-statement-focused solutions,” he explained, ensuring farmers can mitigate risks and remain on their land.
Despite significant production challenges, improved prices, rising exports, and effective disease management brought some relief, setting the stage for a promising 2025, according to insights shared by agricultural economist and director at the Bureau for Food and Agricultural Policy, Tracy Davids.
According to Davids, field crops faced sharp production shocks, particularly white maize, which dropped nearly 30% in volume, and soybeans, which fell by over 30%. Yellow maize also saw a 15% decline. Soybeans, however, faced a double hit of lower production and weaker year-on-year prices, influenced by global market trends.
Winter crops, including wheat and barley, similarly recorded reduced production volumes and weaker prices, while canola stood out with a significant production increase.
Positive revenue growth and strong exports
According to Davids, livestock industries performed well in nominal revenue terms, with beef and sheep leading the way. Egg prices remained high, even as production lagged due to residual effects of the 2023 avian influenza outbreak.
Recovery was notable in poultry, with chicken production volumes rebounding in the latter half of the year. Export performance also drove profitability, with beef exports surpassing 2023 volumes by 16% in just 11 months, while sheep exports achieved similar growth.
“The ability to export high-value cuts to global markets when domestic consumer pressure is high significantly boosts profitability,” Davids said.
Economic opportunities and risks shaping Mzansi’s agriculture
Chief agricultural economist at Agbiz Wandile Sihlobo unpacked the factors shaping global and local trends, including trade policies, climate conditions, export dynamics, and the looming impact of legislative changes, such as the Expropriation Act.
Sihlobo highlighted key international developments, including the slowing Chinese economy and shifting trade policies in the United States. “Trade policy coming out of the US will have a lot more impact on global growth than any other aspects,” he said.
He shared the optimism reflected in South Africa’s agricultural export performance. “In 2024, we exported about half of what we produce, amounting to $13.2 billion. This year, we are likely to hit a record of over $14 billion,” he said.
“Sustainability in South African agriculture relies on two aspects: investments in science to boost farm productivity and the effort we are putting into exports, policy certainty is critical to maintaining investor confidence,” Sihlobo said.
READ NEXT: Expropriation Act fires up debate as legal battles loom
Sign up for Mzansi Today: Your daily take on the news and happenings from the agriculture value chain.
