AGRICULTURAL NEWS - As predicted, 2016 has been an extremely challenging and tumultuous year for the agribusiness environment and farmers alike, Agbiz CEO, Dr John Purchase, said Friday, 25 November 2016, at a media briefing in Pretoria.
“Not only did the prevailing drought of the previous years continue its devastation over much of the country, but a declining economy and resultant constrained consumers led to dampened demand and declining output.”
Tinashe Kapuya, head of international trade and investment intelligence at Agbiz adds: “In real terms, South Africa’s overall agricultural trade balance, despite remaining positive, fell sharply by as much as 22% and 11% in the first and second quarter of 2016, respectively.”
Political economy
Dr Purchase says that given additional policy uncertainty and the country’s deteriorating political economy, agricultural Gross Domestic Product (GDP) and agribusiness confidence were in significantly negative territory for the most part of the year.
In addition to domestic uncertainty were unexpected international events, such as Brexit and the election outcome in the United States, both of which will likely carry longer term implications for South Africa’s key agricultural export markets.
However, Dr Purchase says in the last quarter of 2016 there was evidence of some recovery in the Agbiz/IDC Agribusiness Confidence Index, and with good rains falling in key production areas, this has indicated a potential turnaround situation. The situation around the country’s broader political economy, however, remains a major concern.
Given deep and fundamental political divisions in government and the governing party, threats of rating agency downgrades to sub-investment grade, as well as given an especially uncertain global political and economic environment, these ‘green shoots’ could prove to be but an empty promise. Thus, the agro-food food system and consequently also the country’s food security remains at risk.
Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, says political and policy uncertainty are likely to remain key concerns in the agricultural sector over the foreseeable future.
Tinashe Kapuya, head of international trade and investment intelligence at Agbiz adds: “In real terms, South Africa’s overall agricultural trade balance, despite remaining positive, fell sharply by as much as 22% and 11% in the first and second quarter of 2016, respectively.”
Political economy
Dr Purchase says that given additional policy uncertainty and the country’s deteriorating political economy, agricultural Gross Domestic Product (GDP) and agribusiness confidence were in significantly negative territory for the most part of the year.
In addition to domestic uncertainty were unexpected international events, such as Brexit and the election outcome in the United States, both of which will likely carry longer term implications for South Africa’s key agricultural export markets.
However, Dr Purchase says in the last quarter of 2016 there was evidence of some recovery in the Agbiz/IDC Agribusiness Confidence Index, and with good rains falling in key production areas, this has indicated a potential turnaround situation. The situation around the country’s broader political economy, however, remains a major concern.
Given deep and fundamental political divisions in government and the governing party, threats of rating agency downgrades to sub-investment grade, as well as given an especially uncertain global political and economic environment, these ‘green shoots’ could prove to be but an empty promise. Thus, the agro-food food system and consequently also the country’s food security remains at risk.
Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, says political and policy uncertainty are likely to remain key concerns in the agricultural sector over the foreseeable future.
