Economy should lift its head – Ernst Janovsky
Head of Absa’s agribusiness division Ernst Janovsky is cautiously optimistic about the local agricultural economic outlook for 2009 and expects a slight increase in the demand for agricultural products in the new year. He said the decline in fuel prices and the potential lowering of interest rates could increase consumer spending.
“I expect red meat, pork and poultry prices to rise somewhat because of the greater availability of cash to consumers,” he said. “This is good news for primary producers. Red meat prices, for example, remained constant during the past two years and consumers paid the same prices at the end of 2008 as at the end of 2007.”
Local commodity prices will probably remain on export parity but high grain volumes, particularly for maize, are expected.
However, international markets, except in the Eastern Bloc, Asia and India, are weak causing a decline in the international food demand and constraining the international import market.
For example, chicken exports from South America to Russia have dropped dramatically and exporters are looking for new markets, posing a possible threat to the South African poultry industry. International grain prices are also dwindling.
Janovsky foresees a 2009 maize price of between R1 400 and R1 700. “The good news is that most farmers hedged at R1 700/t, and many hedged at R2 000/t. Unfortunately the current plantings had to be done at high input prices, which has definitely impacted on profitability. Although the price is weak, the expected high volumes will make up for it.”
“I expect poultry and pork imports to increase from March 2009, with the potential increase in consumer spending. I’m reasonably positive about red meat prices,” Janovsky concluded. – Annelie Coleman
