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Significant headwinds still affect the South African agricultural sector as we approach the end of 2022. Some challenges, such as infrastructure, electricity, investment, logistics, disease control and service delivery, have been with us for some time, while others, such as climate change and market access, continue to affect operations and growth.
Despite these challenges, the sector remains strong thanks to the La Niña phenomenon, above-average crop performance and solid commercial performance. To cement these positives, it is important to understand the existing impact of these headwinds, learn from them and continue focusing on long-term solutions to overcome them.
On the back of two record export years, we are anticipating a dip in net agricultural exports for 2022.
This dip in exports has been influenced by the reduced production of key crops, animal diseases and changing regulations in European Union (EU) markets, as well as the floods in KwaZulu-Natal in April and strikes at Transnet ports in October.
These challenges have affected the sector despite the emergency measures being implemented, investment in rebuilding infrastructure damaged by the floods and sharing of loads across other ports.
This has been further complicated by the outbreak of foot-and-mouth disease – a challenge prevalent since 2021 – that continues to affect the industry in 2022. As a result, exports have been restricted with key markets placing limitations on beef, wool and livestock.
These headwinds remain a challenge that can be overcome only by consistently engaging with authorities in key markets, improving disease management, continuously investing in new infrastructure, and maintaining and repairing existing equipment and infrastructure.
It is also important to consider the challenges introduced by changing legislation in the EU regarding citrus imports, controlled pests – such as the false codling moth – and continually dealing with other phytosanitary issues, such as citrus black spot. These challenges, along with improved market access, require intervention by the South African authorities to strengthen relationships with importing countries, which is vital for this export-driven sector.
Finally, factors such as the war in Ukraine, the ongoing impact of Covid-19, disrupted supply chains, spiralling input costs and global food price instability threaten local stability and well-being. According to the UN’s Food and Agriculture Organization, the cost of food and growing insecurity can potentially cause unrest on the continent.
Rise to meet the challenges
These are serious threats that must be met with consistent and continued investment into the stability of the local agricultural sector, from both the public and private sectors alike. Dedicated approaches are key to not only managing the risk of food cost and instability, but also to addressing the ongoing challenges of load shedding, input costs and crime. The agricultural landscape is complex, and resolving these complications demands that cogs in the agriculture wheel turn together to build a more sustainable future.
Watch an interview with Nedbank’s John Hudson about Nedbank’s involvement in climate smart agriculture:
Nedbank has placed investment in the agricultural sector at the core of its strategy and is committed to providing farmers, agribusinesses, entrepreneurs and organisations with the expertise and financial acumen they need to thrive in complex times. – By John Hudson, Nedbank’s National Head of Agriculture
Do you want just any financial partner, or do you want the right partner to grow your agribusiness? To find out more, send an email to agriculture@nedbank.co.za or visit www.nedbank.co.za/agriculture.
