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South Africa Agribusines Report Q3 2009Published by: Business Monitor International Published: Jun. 19, 2009 - 44 Pages Table of Contents
AbstractSince the end of apartheid in the 1990s, the South African government has tried to make improvements inagricultural productivity. The highly regulated nature of the industry has gradually been replaced by amore liberal entity, while subsidies and other notable price supports have been ousted, in favour of morenatural market dynamics. This has seen the country emerge as a more competitive producer and exporterof various goods. In BMI's latest South Africa Agribusiness Report we focus on how the industry canfurther realise its potential during and beyond these testing economic times.Grains are forecast to perform strongly throughout the outlook period, with wheat set to record a five yearoutput growth rate of 32%. Output will wane slightly in 2009 before picking up again from 2010 andbeyond. Consumption will grow at a significantly slower rate, as the price of wheat related products rise,so as to lead consumers to cheaper staple alternatives. Corn is the most widely produced grain with eachof the last two harvests producing bumper crops. We find it unlikely that we will witness a thirdconsecutive year of output growth in 2009, although beyond this we see solid pick up in both supply anddemand contributing to growth of 19.89% and 10.89% respectively to 2013. 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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