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Paul Makube
Although still recording atrade surplus in Q2 of 2024, it was slower than expected as the total value of agriculture exports eased by 0.1% y/y to US$3.37 billion according to the recently updated Trade Map data. At US$1.47 billion, South Africa’s agriculture trade surplus shrank by 6% y/y in Q2 of 2024. The downbeat agriculture exports show a modest reversal from an impressive Q1 gain of 6% y/y with the trade surplus having surged by a whopping 20% y/y during the same period.
A combination of weak import demand amid a depressed global commodity price environment contributed to the lackluster exports in Q2 of 2024.
Although operating conditions remain tough on the logistics side, there was a rebound in port performance relative to the previous year as stakeholders from Transnet and the agriculture sector continued to collaborate closely to ensure a smooth transit of products to international markets.
Major horticulture commodities shipped were citrus, whose export season gained momentum in Q2, avocados, apples and pears, grapes, dates, and pineapples. For field crops, major export products were maize and sugar, and wool in the livestock category while other product included wines and fruit juices.
After an initially optimistic outlook, the citrus export estimates were downgraded consistently during the current season with the latest figures showing a drop of 10.7% from the original estimate, and down 1.7% y/y at 162.3 million (15kg) cartons. Although unscathed by El Nino as water reservoirs were at their best levels for irrigation, inclement weather with severe frost hit some production areas of Limpopo, while parts of the coastal provinces of the Eastern Cape and Western Cape experienced excessive winds and flooding conditions, respectively.
On the back of a sharp reduction in harvest, SA’s maize exports fell sharply by 36% y/y in Q2 of 2024 at 483,626 tons with the cumulative total for the marketing season to date (May to 9 August 2024) down by 45% y/y largely due to declines for yellow maize. Strong demand for white maize on the continent saw volumes of exports surging by 109% y/y Q2 of 2024 at 241,813 tons with the cumulative total for the marketing season to date up 104% y/y at 396,867 tons.
The above trends indicate that agriculture’s quarterly GDP outcomes may soften in the next update. Nonetheless, it is not all doom and gloom as we have recently experienced a sustained electricity supply in the past few months which has reduced operational costs for irrigation, cold storage, and other intensive agriculture operations such as poultry, dairy, and piggeries.
The recent transport Logistics Committee’s announcement of a timeline for the Private Sector operators to gains access to the country’s rail network by October 2024 increases optimism about the improvement of operating conditions for the sector. The interest rate outlook also points to a cut of about 25 basis points or more before the end of the year which will go a long way in reducing debt servicing costs for farmers. Finally, the weather outlook has turned the corner with La Nina on the way for the 2024/25 summer rainfall season which indicates potential bumper crops in the year ahead.
Paul Makube, Senior Agricultural Economist, FNB Commercia. He writes in his personal capacity.
