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Despite 2023 being a year of consolidation and recovery, the agricultural sector in South Africa, to some extent, still faces challenges, especially in terms of exports and the easing of input costs. John Hudson, head of agriculture at Nedbank Commercial Banking, believes that 2024 is expected to have its highlights and obstacles and many of the existing challenges that the sector had to deal with are most likely to continue.
However, he says it is positive that the Agbiz/Industrial Development Corporation (IDC) agribusiness confidence index reached 50 points in the third quarter of 2023, as it suggests that agribusinesses are adapting to long-standing challenges.
Existing challenges for SA agriculture
Hudson says household food security is likely to remain under pressure in 2024 and food price increases will add huge pressure to already stretched household budgets. It remains a challenge to maintain a healthy and sustainable food sector amid rising production costs and biosecurity issues while ensuring access and affordability of food.
He adds that the uncertainty around the intensity of load shedding will remain in 2024 although many agribusinesses have taken matters into their own hands and started to produce their own power.
Poor infrastructure, such as crumbling roads and inefficient rail and port systems, will probably remain unaddressed due to uncertainty and paralysis in an election year, which will hinder any progress.
The export environment will also remain challenging because of, among other things, the negative impact that South Africa’s potential exclusion from the United States African Growth and Opportunity Act trade pact will have on the agriculture industry, especially while regulations in the European Union continue to mount. Hudson thinks that urgent focus is needed to improve logistics efficiency, intensify the promotion of South African products in export markets, and sustain solid relations with existing critical export markets while securing expansion into new markets.
He says on the positive side the El Niño effect is expected to have less of an impact than what was feared initially on agricultural conditions in terms of rainfall because of improved soil moisture from past rainy seasons. However, the South African Weather Service’s forecast of above-normal minimum and maximum temperatures this summer remains a great concern.
This forecast comes amid warnings from the World Meteorological Organization that the El Niño effect and climate change could lead to record-breaking temperatures in the next five years. “This does not bode well for crops and livestock, while water loss through evaporation and increased wildfires are additional threats. Hudson remains positive about the industry. He says despite numerous challenges, the sector has been a highlight since Covid-19 and there are encouraging signs that it will continue moving forward.
He believes agriculture is a sector with immense opportunities and there is always hope since the challenges it faced in the past have made the sector more resilient. It is also reassuring that the private sector will continue to forge the way ahead, with or without government. – Christal-Lize Muller, Plaas Media
