Wandile Sihlobo’s Post

Transcript

Since the start of the year, South Africa's agricultural conditions have been roughly mixed. I think if one looks at the broad economic figures, you would think that we have had a fairly positive year. But I think when you dive deeper into various sub sectors of agriculture, the picture is mixed. The folks that are in the grains and they're all sits industry, they've struggled with the Midsummer drought. But if you talk to folks that are in the horticulture that is vegetables and fruit, they've had a reasonably better start to the year and of course I would say. Those that are in the poultry and in the livestock industry, this has been a period to offer recovery. And of course, when you take then the step back and say how has the South African agricultural sector from an economic indicators perspective looking like you realize that we've registered a solid start on the economic performance at least in the first quarter of this year. And that has been in part because of that good output in the fruit and vegetable side, recovery in the poultry and the livestock industry and of course the base effect because at the end of last year. We have seen a contraction that is what is delivered that good performance for the first quarter of 2024 if you were to look at the gross value figures of South Africa's agriculture. And that solid picture of the performance is what you also see when you consider how much we exported to the world as a country. We've made the point repeatedly that if you look at South Africa's first quarter exports 4 to the 2024, they are up 6%. When a year on year basis and of course in terms of the trade balance that is up roughly 20%. And if you dive deeper and say what was on that basket of the exports of South Africa, you realise that fruit, wine, wool, beef and indeed even maze from the previous season where some of the products that were that were at the top of that particular basket. And this is what is delivered this performance that we see. But if you take a step back from all of those economic figures. Say, but how is the sentiment in the sector and how are the people in the agricultural sector feeling about the business conditions at this moment? I think you will appreciate that folks are still fairly downbeat and this is really something that we have seen since the start of the year. The mood in South Africa's agriculture has been downbeat throughout various sub sectors of it. But what's more striking about the figures that we are releasing at this moment for the second quarter of 2020? War is that South Africa's Agri business confidence has dropped to its lowest level since 2009. And you may ask and say what is so different this time around in the second quarter compared to the first quarter? And I think there's a number of things that that the respondents to this survey have told us. One of the effects that they have mentioned is that they are still lingering concern about some of the factors that they've been complaining about for some time municipalities. For example, they still underperforming. There are still lingering animal disease challenges. We continue to see that there's not a lot of improvements that is being made on the roads infrastructure, but also globally the environment, the tension, the rise in geopolitics and the impact of that on trade. And thinking about trade in the context of the point that I just made, that as South Africa would participate aggressively in export markets with what we produce. So we do want to see an environment that can continue to absorb the products. That we export. But some of the distinct things of course is this story of the drought that have been repeating that you have these underlying factors, but you also have a drought that affected the grains and they all sits industry more adversely compared to other sub sectors of agriculture. What's also uniquely for this unique about this particular moment is affect that we were in an election period and we did the survey right after the election outcomes before the formation of the government. Of national unity. And in that particular period, then there was heightened uncertainty about what will the political direction of South Africa be. And now if you combine then the political uncertainty, the effects of drought and these underlying factors that I've mentioned, I think that everyone will understand why the agribusinesses, the farmers and many other folks that are in the industry that we survey in the sentiment felt that perhaps at the period of this survey they were. Quite uncomfortable about the business conditions in the country. And this is indeed a sentiment, not the actual economic indicator. And what we're trying to portray here is that the economic figures have somewhat been painting a positive figure than what we continue to see when we're measuring the sentiment in the sector. There is that disconnect, but appreciating the fact that the sentiment index is a lead indicator for investment if it remained depressed for quite some time. Would begin to worry about the fixed investment in the sector and indeed the long term growth of this sector. This is a Composite Index and it comprises about 10 sub indices that are underneath it figures like unemployment issues that we measure, we look at the agricultural conditions, we look at the turnovers of businesses as well as a capital investments that are in the sector. That's the menu of some of the sub indices that underpin this particular sub index. But that's the data that we continue to make. Available in Ackbar's website so that one can ever flavor of what really we are measuring when we talk about this Composite Index. The ACT is IDC Agri Business Confidence Index. But I do think that this story of the export is important and maintaining their infrastructure and ensuring that we continue the good work that Transnet organised business on organised agriculture already doing. That needs to continue even in the new administration because it is fundamental to what we are doing as South Africa's agriculture. Already we are exporting about half of what we produce and I think that if we aim in the long term to increase the volume of production. We need to ensure that the logistics in South Africa are performing effectively. It's a one thing to emphasize the underperformance at Transnet and at the ports that we have seen and also to celebrate the improvements that they are making. But I think we should do that not forgetting that the municipalities also need to fix the rural roads because before everything else go to the ports, it has to be transported on the roads. And I think there's still a room for improvement there and the new administration needs to pay attention on that. Some of the other aspects that are important to us is the fact that as the new administration come in, in this environment where the sentiment is depressed, they begin to address the fundamental aspects that can change the mood of their group businesses. What can change the mood in the sector outside of the factors that we don't control? Is the implementation of the Agriculture and Agro Processing Master Plan, and I think that all stakeholders agree that we need a relentless focus on the implementation of this. We don't need the introduction of new other plans. Continuously releasing with title deeds the land that the government owns is one of the other important aspects. Addressing the animal diseases. Working with the private sector in that effort is something that needs to continue. And of course, Department of Agriculture making with the Department of Trade and Industry. Or widening the export access to various countries that we are in. We've made the point about logistics, but we also need to diversify the markets that we're exporting to beyond the African continent, beyond what we enjoy in the EU, but making sure that we have broad access in China, in India, in Saudi Arabia. Those are some of the important markets that is South Africa we have to focus on. But I think outside of those agricultural focus points, we have to tap in on what the Operation Vulindlela folks are saying. They are talking about the improvements in the network industries, which is particularly the roads, the railway line, the water infrastructure as well as policies. That is the menu of all of the aspects that need to be addressed. And lastly, I do think that the issue of rural crime is also important. Stock theft and all other sorts of crime that make life difficult for some of the fellow S Africans that are thriving and doing business in rural South Africa is something that the Department of Agriculture working with other ministries. Must resolve and I think if we do this then we stand a chance of changing the sentiment, making sure that there's a long term investments in the sector and of course be able to attain growth and job creation and continue to be a country that is food secure and seeing vibrancy in rural economic side of South Africa.