Inflation: The average annual total CPI for the fourth quarter of 2017 was estimated at 4.7%, slightly lower than 4.8% in the third quarter of 2017. Employment: The unemployment rate in South Africa fell to 26.7% of the labor force in the fourth quarter of 2017 from 27.7% in the third quarter.
Global Real GDP Growth Rate
The aggregate growth forecast for emerging markets and developing economies in 2018 and 2019 is unchanged, with notable differences in the outlook between regions. In developing and emerging Europe, where growth in 2017 is now estimated to have exceeded 5%, activity in 2018 and 2019 is forecast to remain stronger than previously forecast.
Global Grain Forecast
Global production is forecast at 0.5 million tonnes, an increase of 0.7 million, mostly reflecting higher rapeseed, groundnut and palm kernel production. An increase in EU sunflower seed production is offset by lower production for Russia and Argentina.
Global Food Prices
The meat price index averaged 170.6 points in January, virtually unchanged from the slightly revised value of December 2017. The sugar price index averaged almost 201 points in January, a decrease of 1.6% (3.2 points) compared to December and a whopping 30.4% below the corresponding month last year.
Growth
The annual average headline CPI for the fourth quarter of 2017 was estimated to be slightly lower at 4.7% compared to 4.8% in the third quarter of 2017. On the other hand, food inflation was 5.1% in the fourth quarter of 2017 which is also lower than 6% reported during the third quarter of 2017. South Africa's unemployment rate fell to 26.7% of the labor force in the fourth quarter of 2017 from 27.7% in the third quarter.
KwaZulu-Natal had the highest number (836,000) of people involved in subsistence farming compared to (788,000) in the previous quarter, an increase of 6.1%. Compared to a year ago, real gross agricultural income from all agricultural products increased by 7.6% in the fourth quarter of 2017 compared to the same quarter of 2016. The country's dam levels increased significantly in the fourth quarter of 2017 compared to the fourth quarter of 2016.
There was a significant increase in average dam levels in most parts of the country in Q4: 2017 compared to Q4: 2016. Meanwhile, the Western Cape and Eastern Cape experienced decreases in average dam levels in Q4: 2017 compared to Q4: 2016. The increase can be attributed to an increase in the petrol price hike in December 2017.
Inflation
Employment
As might be expected, South Africa's unemployment rate improved in the fourth quarter, this can be attributed to a temporary boost in hiring due to the December holiday season. The 2017 fourth quarter (QLFS) also indicates that 1.9 million people were involved in subsistence farming in the fourth quarter of 2017 compared to 1.7 million people in the fourth quarter, an increase of 12.7%.
Expenditure on intermediate goods and services by the agricultural sector
Meanwhile, the number of people involved in subsistence farming in the northwest decreased by 40.3% between the two quarters.
South African fertiliser market review
Average prices of the four major international fertilizers showed an upward trend in Q4: 2017 (October to December 2017). Average prices of the four most important fertilizers in South Africa rose noticeably in the fourth quarter of 2017 (October to December 2017) compared to international fertilizer prices.
Nominal gross farm income and net farm income from agricultural products
According to the Department of Water and Sanitation, recent rainfall in Gauteng resulted in the Integrated Vaal River System (IVRS) increasing its dam levels after periods of consistent declines. The Department of Water and Sanitation highlighted that the integrated Vaal river system is currently at 71.2%, up 1.3% from 69.9% in the first week of December 2017. According to the department's weekly report released last week of November 2017, average dam levels in the Western Cape Province were at 34.7%. during the last two weeks of November compared to 54.7% during the same period in 2016.
ENCA reported that the decline in agricultural use in Cape Town has contributed to the reduction in water use. South Africa's wheat production for the 2017/2018 season is expected to decline by 23% this season, mainly due to poor yields in the Western Cape and some parts of the Free State province. Meanwhile, South Africa is a very small player in the global market with prices set by the global market.
Peanut butter consumption levels improved in Q4:2017 despite slight increases in domestic peanut butter prices in October and December 2017. Poultry production decreased 1.8% year-on-year (y/y ) in the last quarter of 2017, while it increased by 0.1% on a quarterly basis (q/q). The increase in milk production is due to a more favorable milk: feed ratio as well as better climatic conditions.
Net farm income
Private consumption expenditure on agricultural products
Compared to a year ago, total private consumption expenditure on food rose to R169.9 billion reported in the fourth quarter of 2017 compared to R166.5 billion in the same quarter of 2016, an increase of 2.1%. Expenditure on oils and fats also decreased by 4.0% between the last quarters of 2017 and 2016.
Review of South Africa’s water dam levels
Despite the rise in IVRS, the Department of Water and Sanitation warned consumers to conserve water as some water-safe people may be interpreting the current rainfall. Luvuvhu Water Supply Systems also saw a slight decline to 93.7% in the last week of November 2017 compared to 94.0% in the last week of October 2017. According to the weekly report of the Department of Water and Sanitation, dam levels in the last week of the year November 2017 saw some stability in the Western Cape where dam levels remained at 34.7%.
According to the department's weekly report published in the last week of November 2017, average dam levels in the Western Cape province were at 34.7%. According to Neilson, many of the agricultural users in the Western Cape Supply System, from which the city also receives water, have been using the water allocated to them under the agreement with the National Department of Water and Sanitation.
Grain market review
- White and yellow maize
- Wheat
- Soya beans
- Sunflower
- Sorghum
- Groundnuts
Agricultural consumption is therefore likely to drop significantly, as the agricultural sector draws around 30% of the water in the supply scheme, which is expected to drop to around 15% in March 2018 and 10% in April 2018. and likewise foreign producers will do the same. Lower prices for corn by-products will certainly benefit consumers in the long run. The surplus in corn stocks will continue to keep prices lower in the coming month.
Import projections for Bangladesh and the European Union were cut by 500,000 tonnes each in December 2017 to 6.0 million tonnes respectively, on slower-than-expected trade in Bangladesh, as well as a slower pace of purchases and higher production in the European Union. The decline in prices of black bread (600 grams) can be attributed to the reduction of some costs in the value chain. In the Western Cape Province; which is one of the largest producers of wheat in South Africa, 325 000 hectares of wheat have already been planted of which 200 000 hectares are planted in the Swartland.
Local and international prices are expected to rise in the long term as international production is expected to decrease by 6%; while local production is expected to fall by 48% in 2018 compared to 2017, see table 2.
Fruit and vegetable market review
Moreover, with the fluctuating and decreasing supply over the years, there are new opportunities for the South African groundnut industry to regain their position in the export market. In addition, although avocado supply fell dramatically, leading to higher prices, the expansion of the industry would likely be more aggressive if there were no restrictions on the supply of new trees from nurseries. In Q4: 2017, average prices for carrots and potatoes fell by 7% and 5% respectively in the fresh produce markets, while average prices for onions, cabbage and tomatoes increased by 64%, 19% and 3%.
Onion growers in the Western Cape planted fewer onions than usual, while some planted no onions at all. On the other hand, the quantities of potatoes and carrots delivered to fresh produce markets in the fourth quarter of 2017 increased by 5% and 2%, respectively, compared to the fourth quarter of 2016.
Meat industry review
A decrease in the number of meat slaughtered in the fourth quarter: 2017 may be the result of tight supplies that have been the main driver behind the steady price increases over the past few months. As depicted in Figure 43, suckler calf purchases, calf carcass sales and live sales increased by an average of and 26.2% respectively between October and December 2017 compared to the same period in 2016. This may be due to due to an increase in demand for beef over the festive season.
Meanwhile, however, average weaner calf prices remain high due to improved demand and reduced available supplies. The tightening of inventories has been the main driver behind steady increases in prices over the past few months.
Poultry industry review
While yellow corn as a proxy for feed prices fell 37% year-on-year and fell 3.6%.
Egg industry review
The impact on prices was felt more in the Western Cape due to the culling of layer chickens and subsequent supply shortages on the region's shelves, the FNB Senior Agricultural Economist reported. There are several factors affecting the industry such as production conditions worsened in summer crop production areas in November due to below expected rainfall, heat and windy conditions. Although agricultural production bounced back on the back of the largest ever maize crop, there remain concerns about the impact of the ongoing drought in the Western Cape on fruit, citrus, grape and wheat production, among others.
Globally, catches from the wild have stabilized while the aquaculture sector has expanded rapidly and is now on track to be the main source of fish in the near future (Schmidt, 2015). Developing countries continue to play a significant role in the international supply of fish and fish products. Real GDP growth rates, 2017 (Q4) in the advanced economies of the following countries: Canada, France, Germany, Italy, Japan, the United Kingdom and the United States increased.
Available online: http://www.grainsa.co.za/new-horizons-for-the-south-african-groundnut-industry.
Milk industry review
Trade of agricultural, forestry and fisheries
Fisheries trade
Fisheries trade balance in Q4: 2017 decreased significantly compared to Q4: 2016, from a positive trade balance of R 642.56 million to a negative trade balance of R 132.96 million. Both fisheries and the aquaculture sectors face competition in a global market and may have unforeseen environmental and trade impacts, particularly in relation to overfishing in the wild. The top three imported fishery products in Q4:2017 include sardines/sardinella/brisling (prepared, preserved and not ground), sardines/sardinella/brisling or sprat (frozen) and frozen shrimp and prawns each accounting for and 11.1 % of the total import value, see figure 54.
160413 Sardines/Sardinella/Brisling Prep/Pres, Not Minced 030353 Sardines, Sardinella, Brisling Or Sprats, Frozen 030617 Shrimp and Prawns, Frozen, Nesoi. 160413 Sardines/Sardinella/Brisling Prep/Pres, not minced 160419 Fish, prepared or preserved, whole or in pieces Nesoi Figure 55: SA top five exports of fishery products.
Forestry trade
Chamber of Agricultural Business (Agbiz) 2017: Agbiz International Trade and Investment Intelligence: SA agricultural trade balance increased to R38.6 billion in October 2017: Available online: https://agbiz.co.za. Department of Water and Sanitation, (2017) Available online: http://www.dws.gov.za Agricultural Portal (2016): South African groundnut market brief. Safex:https://www.jse.co.za/downloadablefiles?RequestNode=/Safex/PriceHistory/S Pot months for all wheat products.
Available online: https://www.ictsd.org/bridges-news/biores/news/identifying-current-and-emerging-fisheries-trade-issues. Statistics South Africa (Stats SA), (2017): Quarterly Labor Force Survey, 4th quarter 2017: Available at http://www.statssa.gov.za.
