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South Africa Agribusiness Report Q4 2009Published by: Business Monitor International Published: Aug. 6, 2009 - 45 Pages Table of Contents
AbstractSouth Africa is a major agricultural producer and increasingly self-sufficient across an array of farmedgoods. As the first country in Africa to adopt GM production on a large scale, commercialisation isdriving the industry forward, improving farm incomes and export opportunities. In BMI's new SouthAfrica Agribusiness Report we examine industry dynamics in the context of the currently uncertain globalclimate and the challenges that it brings.Despite its diminishing contribution to overall GDP, agriculture remains paramount to economicprosperity in South Africa, employing nearly a third of the population. Since the end of apartheid, thegovernment has done its best to build upon the comparative advantages that clearly exist. The industry,once highly regulated, has gradually been replaced by a more market-led sector. Subsidies and othernotable price supports have been ousted in order to let this dynamic develop. Grains are forecast to perform strongly throughout the outlook period, with corn, wheat and sorghumoutput all notable. Corn is the most widely produced grain with each of the last two harvests producingbumper crops. We find it unlikely that we will witness a third consecutive year of output growth in 2009,although beyond this we see solid pick up in both supply and demand contributing to growth of 3.23% to2013. The strength of corn production in South Africa in 2008 was boosted by robust exports to neighbouringZimbabwe, which has emerged as the biggest export market for South African corn. As Zimbabwe dealswith chronic food insecurity - brought about by drought, hyper-inflation and mass displacement - it hasimported nearly half a million tonnes of corn from its neighbour. Kenya, suffering from its own socioeconomicproblems, has also had to import 139,046 tonnes of South African corn since the beginning ofthe current crop season which began in May 2008; we believe such fundamentals will underscore futureproducer incentives, as well as the strong performance of domestic poultry production. Despite the gains made in agricultural productivity in recent years, there remain various issuescounterproductive to the further development of the industry. Infrastructure is of poor quality and inurgent need of modernisation if South Africa is to alleviate its reliance on food aid to feed the 40% of thepopulation, who are unemployed and living in poverty. There are claims coming from increasinglydissatisfied factions in the predominantly small hold rural community that the government has notinvested adequately enough to improve this situation, instead becoming complacent as the food aid rollsin. Subsequently, transportation and water facilities among other things are particularly underdeveloped,to the detriment of the majority. The industry is classified as exhibiting typical dual economy characteristics; a local subsistence sectorjuxtaposed with a well developed commercial sector. The fact that large-scale commercial farming iscontrolled by a white minority will do little to quell the unrest of the majority population who characterisesmall-scale and subsistence production. Increasingly, capital intensive production is likely to prevail,while the jobs in labour intensive farming become obsolete, potentially resulting in growingunemployment and civil unrest; racial tension is never far from the surface. However, South Africa's agricultural season runs counter-cyclical to that witnessed in the NorthernHemisphere, allowing it to facilitate timely exports to EU and US markets. In addition to traditionalexports, the region's more niche products may prove to be more popular among health consciousconsumers at home and abroad. Rooibos red tea, ostrich meat and biltong are examples of local fair thatare becoming increasingly desirable throughout the world. Get Full Details About This Report >> |
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