Positive signs for agriculture at Nampo

Business boomed at the Nampo Harvest Day in Bothaville. The cloud of negative sentiment which often hovers over the agricultural sector was dispelled by a sense of purpose and industry.

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Johan Pienaar, deputy executive director of Agri SA, said investment in the agricultural sector had increased by 36% between 2010 and 2011. “An additional 2 000 tractors were bought last year compared to the previous year, which is a positive agricultural indicator.”

Farmers were told that the next 20 years would be the best the agricultural sector had ever experienced. “Demand for agricultural commodities is increasing rapidly due to growth in emerging markets. Farmers in Africa are perfectly positioned to make use of opportunities as the continent is one of the few with land to spare,” said Ernst Janovsky, head of Absa Agribusiness.

He explained that the tropical conversion zone from Mozambique to Angola had more arable land than the Mid-West in the US, but only 1% of this land was cultivated. Sudakshina Unnikrishnan, Barclays Capital’s vice-president for commodities research, said that soya beans presented prospects for farmers as land under soya bean cultivation has been declining since 1937. “This will lead to a scramble for soya in years to come as demand picks up.”

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Unnikrishnan said the biggest demand came from China who has, so far, managed to stay self-sufficient. “But their stocks are running low which will put pressure on world supply. Higher prices will follow.” She said that the US was expecting its biggest maize harvest in 75 years and as a result a decrease in the maize price was expected by the end of the year.
Further challenges included the decrease in government spending due to high debt levels.

“This means that consumers will have to spend more money on things like healthcare and will have less disposable income for food. This pressure on the consumer will retard economic growth,” said Janovsky. He added that the
rand was expected to move sideways going forward and would hover between R7,50/US$1 and R8,50/US$1.

“Increased productivity, economies of scale and implementing technology will be the only way for farmers to survive. Unfortunately this is contrary to what the government is proposing as they are pushing farmers to farm on a smaller scale,” said Janovsky.