The year that was for agriculture and what to expect in 2024

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The year 2023 has, in many ways, been a year of consolidation and recovery, particularly for exports. And while there has been some easing of input costs, many challenges and elevated risk in the sector remain.

The year that was for agriculture and what to expect in 2024

Photo: Supplied
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On the plus side, the Agbiz/IDC Agribusiness Confidence Index rebounded by 6 points to reach 50 in the third quarter, after having remained below the 50-point mark for three consecutive quarters.

This suggests that agribusinesses are adapting to long-standing challenges such as deteriorating infrastructure, failing municipalities, intensified geopolitical tensions, and persistent load-shedding.

2023 was a mixed bag of blessings and challenges

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Various sectors such as wheat, soya beans and maize have continued to yield excellent harvests, but we are seeing the impact of downward pressure on commodity prices.

Commodity prices have on average declined by roughly 11% this year, while stringent regulations relating to citrus black spot disease in the EU and restrictions on some livestock product exports due to foot-and-mouth disease are likely to lower export earnings.

Livestock diseases remain a concern, particularly the recent avian influenza outbreak, which has had far-reaching consequences affecting producer and consumer.

A report released by a government-appointed task team in May warned that South Africa’s veterinary and animal disease controls are ‘broken’ and in a state of crisis, which threatens the viability of the country’s livestock industry.

What’s in store for 2024

Unfortunately, many of the ‘usual’ challenges of doing business in South Africa will remain in 2024. Uncertainty around load-shedding persists, but many agribusinesses have taken matters into their own hands and are producing their own power.

Underlying infrastructure issues are unlikely to be addressed as paralysis in an election year will mean limited progress.

Pressure around household food security is likely to continue into 2024, and any food price increases will add immense pressure to already stretched household budgets.

Another factor that is unlikely to improve next year is the export environment. Our potential exclusion from the African Growth and Opportunity Act (AGOA) and ever-increasing regulations in the EU remain a threat, and geopolitical tensions are expected to continue into 2024 with the Russia-Ukraine and Israel-Palestine conflicts showing little sign of resolution.

It is our view, then, that attention must be urgently focused on improving logistics efficiency, intensifying the promotion of South African products in export markets, and sustaining solid relations with existing critical export markets while securing expansion into new markets.

Fortunately, El Niño will have less of an impact than initially expected in terms of rainfall due to improved soil moisture from past rainy seasons.

However, above-normal minimum and maximum temperatures are expected for the summer, while warnings from the World Meteorological Organization indicate that globally El Niño, along with climate change, would usher in record-breaking temperatures in the next five years.

This has already been experienced during the Northern Hemisphere summer and does not augur well for crops and livestock, while water loss through evaporation and increased wildfires are additional threats.

The year 2024 is being hailed as a defining moment for South Africa and it is bound to have its highlights and obstacles.

Agriculture has been a highlight since COVID-19 and, despite all the challenges we face, there are encouraging signs that it will continue. However, it is important to view the immense opportunities in the sector through the lens of the reality of doing business in South Africa.

It is not easy but there is always hope, and the challenges we have faced as an industry and as a country have made us more resilient.

Through it all, we believe that the private sector will continue to forge the way ahead, with or without government.

Think bigger.

Think Nedbank Commercial Banking.

To find out more email: [email protected].