Global overview of the agricultural, forestry and fisheries economy
Global grain forecast
Global wheat consumption for 2015/16 has been reduced to 2 million tonnes as major wheat consuming countries such as India, Egypt, Iraq and the Philippines have significantly reduced their consumption. Global consumption of coarse grains for 2015/16 has increased to 0.5 million tonnes higher with an increase in maize demand for South Africa, India and an increase in barley imports for China. World rice consumption for the same period is increased to 0.6 million tons as consumption in India, China and Indonesia rises.
Global food prices
According to the South African Reserve Bank, inflationary pressure increased in the first quarter of 2016. Income from animal products decreased slightly in the first quarter of 2016 by 4.4% compared to the last quarter of 2015. While spending on oils and fats decreased by 9.5% in the first quarter of 2016 compared to the same quarter of 2015 .
The state of the domestic economy in agricultural, forestry and fisheries
Inflation
The increase in the rate of commodity price inflation mainly reflected the delayed response of food price inflation to the severe drought conditions and the sharp depreciation in the exchange rate of the rand towards the end of 2015 as investor confidence receded. In the first quarter of 2016, local consumers paid an average of 6.5% more for goods and services compared to the first quarter of 2015. In the first quarter of 2016, consumers paid more on food items compared to the same quarter in the previous year.
Employment
The figure below shows that employment in the agricultural sector increased slightly in the first quarter of 2016 compared to the previous quarter. The figure above shows that employment increased in five provinces and decreased in four other provinces in the first quarter of 2016 compared to the previous quarter. The first of 2016 (QLFS) also showed that 1.7 million people were involved in subsistence agriculture in the first quarter of 2016 compared to 1.6 million in the previous quarter, an increase of 5.3%.
Expenditure on intermediate goods and services by the agricultural sector
The decrease in total spending in the first quarter of 2016 was attributed to the decrease in spending on seeds and plants (26.6%), fertilizers, fuel fertilizers and farm services also decreased by and 15.2%. The decrease in total expenditure in the first quarter of 2016 can be attributed to reduced activities in most crop-producing areas due to the impact of drought. The nominal real gross income from all agricultural products falls from R54.7 billion in the last quarter of 2015 to R51.7 billion in the first quarter of 2016, a drop of 5.6%.
Compared to a year ago, real gross farm income from all agricultural products increased from R46.0 billion in the first quarter of 2015 to R51.7 billion reported in the same quarter of 2016, an increase of 12.4%. Private consumption expenditure on food decreased in the first quarter of 2016 to 143.9 billion REA from 148.6 billion RRE in the previous quarter, a decrease of 3.1%. The price of yellow corn has increased by 60.6% in the first quarter of 2016 compared to the same period of 2015 and is 14% higher than in the previous quarter.
The price increase came as a result of the drought that caused a decrease in yields. The price of sorghum increased by 65% in the quarter compared to the same period of 2015. The price of poultry increased by 4% in the first quarter compared to the same period of 2015 and is 8% higher than in the quarter of seen. last quarter of 2015.
In the first quarter of 2016, South Africa exported 20 million liters of milk and cream, 2% less than the 20.3 million liters exported in the first quarter of 2015. In the first quarter of 2016, the total import value of agricultural products increased with 26%. between the first quarter of 2015 and the first quarter of 2016. The top three imported fishery products in the first quarter of 2016 were sardines/sardines, tuna and horse mackerel.
Nominal gross farming income and net farm income from agricultural products
Private consumption expenditure on agricultural products
Compared to a year ago, total private consumption expenditure on food increased to R143.9 billion reported in the first quarter of 2016 compared to R131.5 billion in the same quarter of 2015, an increase of 9.4%. The retail maize price of 2.5 kg and 1 kg maize increased by 28.3% and 53% respectively in the same quarter. The increase in the price of white maize is also due to a weaker exchange rate, which made imports expensive.
The price of soybeans in the first quarter of 2016 is 26% higher than in the same period in 2015, the price increase is the result of the expected production decrease of 31% compared to the same period in 2015. South Africa is not self-sufficient in crop production and international prices for the crop were higher during the quarter. Poultry production is expected to be impacted by the change in brining regulations.
In the first quarter of 2016, total egg production was 213.2 million cartons, a production increase of 0.8% compared to the 211.5 million cartons produced in the first quarter of 2015. Despite an increase in egg production between the first quarter of 2015 and the first quarter of 2016, local egg production decreased by 0.98% between the fourth quarter of 2015 and the first quarter of 2016. In addition, negative growth is expected in the first quarter of 2016 while producers scale back their production because lower prices and higher feed costs make production unprofitable.
The top three forestry products imported in the first quarter of 2016 include printed books, etc., barrels, barrels, tubs, etc. and a paper or cardboard cover, see Figure 45.
Review of the primary agricultural markets
Fruit and vegetable market review
The greatest impact of the drought was seen in December 2015 and January 2016, when excessive heat adversely affected the quality, shelf life and availability of fruit and vegetables in South Africa. The overall fresh produce industry will continue to be affected, with shortages and higher prices expected in the coming months. Additionally, RSA Group believes that the fresh produce industry will see a stronger impact from mid-February 2016, while fresh produce buyers are aware of the very high purchase prices they are in for.
Local fruit production is currently under pressure and less fruit will be available in the coming months. Less available fruit will translate into an increase in imported fruit products, which is likely to result in higher fruit prices. South Africa produces a variety of vegetables, with carrots, onions, potatoes, tomatoes and cabbage being the main locally sourced vegetables.
Supply and demand affect prices as most produce is sold in fresh produce markets (ARC, 2015). Market plantations, which have been severely affected by the drought since October, are no longer available, resulting in higher vegetable prices. Reduced planting will affect marketable yield, and reduced planting in 2015 will affect marketable yield in May, June or July 2016.
In addition, if there is continuous rain and a fairly warm winter season, the market can expect an increase in volume and a decrease in prices.
Meat industry review
Poultry industry review
Imports of bird eggs fell by 95% between the first quarter of 2015 and the first quarter of 2016. The MPO chief economist indicated that a drop in producer prices in 2015, a sharp increase in grain prices, dry weather conditions and the expected scarcity of roughage may have been the main contributors to decrease in the production of milk. Meanwhile, exports of milk and cream between the fourth quarter of 2015 and the first quarter of 2016 fell by 25%, from 24.5 million liters to 20 million liters.
And milk and cream imports fell by 99% between the first quarter of 2015 and the first quarter of 2015. The loss of maize exports and the shift to imports results in a larger deficit in SA's trade account. South Africa's agricultural trade balance increased by 15% between the first quarter of 2015 and the first quarter of 2016.
During the first quarter of 2016, South Africa produced more fishery products with the increasingly dominant aquaculture sector. When comparing imports of sardines/sardines, tuna and jack and horse mackerel in the first quarter of 2015 to the first quarter of 2016, imports of sardines/sardines, tuna and jack and horse mackerel were lower in the first quarter of 2016 in comparison with the first quarter of 2015, see Figure 41. Furthermore, exports of hake fillets and cuttlefish and squid increased by 25% and 47% respectively between the first quarter of 2015 and the first quarter of 2016 while world supplies of cuttlefish and squid were somewhat. tight in 2015 (FAO, 2015).
Furthermore, selling adequate volumes still remains a challenge, while the country is likely to see a boom in the export of pulp products in 2016 due to the weaker rand dollar exchange rate (DAFF, 2015). The top three exported forest products during the first quarter of 2015 were chemical wood pulp (solvent grade), kraftliner (uncoated, bleached, in rolls or sheets) and wood in chips or particles (non-coniferous), see figure 44. Agriculture, Forestry and Fishing Industry slowed for five consecutive quarters with a 6.5% decrease in (Q1) of 2016. The decline in the industry was mainly the result of the decline in the production of agricultural crops (56.3 %), animal products 4.4% and horticultural products contributed by drought.
Eggs and dairy industry review
Trade of agricultural, forestry and fisheries products
South Africa will have to import half of its grain in 2016, posing a major challenge, especially with the depreciation of the rand. While the sharp increase in agricultural commodity prices and the rise in food price inflation will impact consumers, lower production volumes will affect South Africa's trade balance. While demand for agricultural commodities has fallen in South Africa, SA winemakers have a different story to tell.
In addition, Hortgro indicated that South Africa won quarantine approval to sell more deciduous fruits and nuts to Indonesia, increasing the export potential for SA produce to Indonesia. The outlook for South Africa's economy in 2016 remains dismal; however, concerted efforts are being made to revive growth momentum. The three main agricultural products that contributed a significant amount to the total import value include maize (11%), wheat (7%) and rice (5%), see Figure 39.
South Africa is feeling the effects of the drought as the maize crop is expected to be 7.16 million tonnes, which is 46.7% below the annual consumption of 10.5 million tonnes. Meanwhile, the head of the University of the Free State's agricultural economics department, Johan Willemse, noted that South Africa imported about 60% of its wheat requirements in the 2015/2016 season and due to the drought, will was supposed to import about 2.2 million tonnes at the end of October 2016, of which the Crops Assessment Committee estimated to be about 1.5 million tonnes. The recent large increase in the export price of fresh fish to Southeast Asia may have adversely affected consumer demand for tuna.
The drought has had a serious impact on the timber industry, which employs 170,000 people across the value chain and 66,000 in forestry alone.
Conclusion
Fresh plaza News (12 February 2016): South Africa: Fruit and vegetable prices rise 30% due to drought: Available online: http://www.freshplaze.com/article/153276/South-Africa- Fruit-and-veg- price-up-30-percent-due-to-drought. Statistics South Africa (Stats SA), (2015): Quarterly Labor Force Survey, Quarter 1, 2016: Available at http://www.statssa.gov.za.
