South African farmers were still facing trade distortions, such as the case for the EU where the uncompetitive phytosanitary measures on citrus, and although global and domestic logistics challenges had lessened, they still impeded operations, according to FNB Commercial.
Paul Makube, a senior agricultural economist at the bank unit, said beyond that, farmers operated under high debt servicing costs as interest rates remained relatively high despite the recent pullback of inflation to the SA Reserve Bank’s target range of 3% to 6%.
He said the sector was constantly adapting to the changing landscape and expanded despite tough conditions.
“More work is needed to unlock new markets and improve logistics in terms of rail and ports all of which are achievable through increased collaboration with government and the relevant state-owned enterprises,” Makube said.
FNB Commercial said the long-term outlook was still positive on the back of the renewed impetus to open the export market following the conclusion of deals for exports of avocados to China and the reopening of the Saudi Arabian market for South African meat.
The sector should take advantage of the recent success of the BRICS summit in South Africa to explore this market with six additional members.
“Citrus exports have so far been good with 127.1 million cartons shipped as of week 34 of the 2023 export season relative to 120.7 million cartons in 2022. The stringent EU regulations on plan safety in particular the Citrus Black Spot (CBS) and the False Codling Moth (FCM) continue to limit growth in exports which saw the Citrus Growers Association (CGA) lowering its estimate from the initial 165.6 million cartons to 157.2 million cartons as of 1st September 2023. This reflects tough trading conditions,” he said.
John Hudson, Nedbank's head of agriculture, said despite a tough operating environment, South Africa agricultural exports remained robust in the second quarter of this year, which was good news and demonstrated the sector's resilience despite the challenges faced on many fronts.
“Although agricultural exports in the first half of the year were marginally up year on year, it is likely that export earnings will drop off in the second half and if we look at the full year it is unlikely to top 2022 which was a record year. This is largely down to lower commodity prices and the stringent phytosanitary regulations imposed by the EU,” Hudson said.
Meanwhile, the East London Terminal handled its first soya beans export vessel last week when St Columbia started loading 30 000 metric tons destined for Malaysia. Terminal performance saw an average of 207 tons per hour against a target of 90 tons per hour, with minimal interruptions over the planned six days of loading.
The terminal’s agricultural volumes were said to have continued to increase this year after nearly two years of the grain elevator’s temporary closure due to a severe decline in agricultural bulk volumes regionally.
Terminal manager Naliya Stamper said while they started with maize and wheat vessels early on in the year, it was a big achievement for them to handle soya bean exports as they had not previously formed part of their agricultural exports. She added that the terminal had collaborated with both industry, local and regional stakeholders to unlock further economic opportunities for the Eastern Cape region.
BUSINESS REPORT