overview on south african agriculture and agribusiness
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Overview on South African Agriculture and Agribusiness
USA NAMPO Exhibitors
15 May 2011
John Purchase
Content
• Introduction• SA Agriculture• SA Agribusiness• Prospects & Challenges
Introduction• Well developed commercial sector and subsistence oriented sector –
dual economy• Only ~12% of land area arable, of which 22% high potential• ~1.3 million hectares under irrigation• Water major limiting factor – SA semi-arid• Deregulation & market freedom • Number of competitive advantages - Near world-class infrastructure - Counter-seasonality to Europe - Biodiversity - Trade agreements - Competitive input costs - Access to latest technology & innovation
Role of Agriculture in SA Economy• Strategic sector – provides food, fiber, wine &
beer, satisfying two basic needs of man (+ others!)
• Has provided national food security since the start of the 20th century (Pop: ~4,0 million), right through to the 21st century (Pop: ~49,0 million, ~60% in urban areas)
Contribution of Primary Agriculture to GDP (Source: Statssa)
2
3
4
5
94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 06 07 08 09
%
Graph: ABC
SA economic growth: Tradable goods sectors lag the non-tradable goods sectors
Source: StatsSAGraph: ABC
Source: AMT, 2011
FAO Food Price Index
Source: FAO
Inflation
Source: AMT, 2011
Exchange rate
Source: AMT, 2010
SAARF LSM Segments: Proportion of SA adult population and average monthly household
income in 2009
Source: SAARF (2010a) & BFAP, 2010
LSM class mobility: All adults during the period 2004 to 2008
Source: SAARF AMPS data for the period 2004 to 2009, as quoted by BFAP
SA Resource Situation• Land issue: sensitive now, awaiting Green Paper• Energy crisis and energy security situation• Electricity price hikes (31% + 25% pa next 3 years)• Scarce high potential agricultural land to mining, esp.
Mpumalanga, and urban development• Water and water quality crisis• Climate Change effects create uncertainty• Soil degradation/erosion• Resources for sustainable expansion?!• Greater competition for resources
Global warming: Effect?!
Content• Introduction• SA Agriculture• SA Agribusiness• Prospects & Challenges
Commercial Agric Census 2007Indicator 1993 2002 2007
Farming units 57 980 45 818 39 982
Gross Farm income (R x1 000 000) 19 620 53 329 79 544
Employees Remuneration (R X1 000 000) 3 637 6 216 8 611
Paid employees 1 093 265 940 820 796 806
Expenditure (R X1 000 000) (Current & Cap) 16 377 45 038 54 072
Market value of assets (R X1 000 000) 66 905 98 428 178 647
Farming debt (R X1 000 000) 15 295 30 857 37 090
Ratio between Farming Debt and GFI (%) 78,0 57,9 46,6
Source: StatsSA
Performance of SectorGross Value of Production in R million
0
10000
20000
30000
40000
50000
60000
70000
2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09
Field Crops Horticulture Animal Production
R'm
illio
n
Source: DAFF, 2010.
Performance of Sector
0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09
Ra
nd
X1
00
0 0
00
Seasons
Gross and Nett Farming Income
Gross Farm Income Nett Farm Income
Source: DAFF, 2009.
Net farm income
Source: AMT, 2011
Cost price squeeze
Source: AMT, 2011
SA Agricultural Sectors1. Field crops - Maize (Corn), wheat, sugar, sunflower, soybean, groundnuts, dry beans, etc.2. Horticulture - Wine/Viticulture, Citrus, Deciduous fruit, sub-tropical fruit, table grapes, vegetables3. Animal production - Poultry, beef, dairy, mutton, wool, mohair, ostrich, game/venison
Field crops• Maize – major importance, net exports, GM• Wheat – also staple food, net imports• Sugar – net exports, move into Africa• Soya – growing importance, cake imports, GM• Sunflower – growing importance, S/D balance• Groundnuts – net exports, but declining• Dry beans – net imports, also from China
Horticulture• Totally deregulated market• Viticulture & Wine – major export industry• Citrus – 2nd biggest global exports, growing• Deciduous fruit – major net exports• Table grapes – major net exports• Sub-tropical fruit – net exports• Vegetables – S/D balance, some
imports/exports
Marketing• Fresh Produce Markets (FPM’s) play major
role as basic price discovery mechanism and wholesale market
• However, reduction in trade from 64% to 53% of total production from 1994 to 2004
• Marketing following global trend of retailers (supermarkets), processors and wholesalers procuring directly from producers – shortening/integration of supply chain
SA Wine Production, Consumption & Exports
Source: BFAP, 2010
Vegetables
Value of total production in 2009:US$1.2 billion
Source: DAFFGraph: ABC
FruitValue of production (2009):
Deciduous fruit: US$0.9 billionCitrus: US$0.7 billion
Viticulture: US$0.4 billion
Exports (2009):Wine: US$728 millionCitrus: US$667 million
Table grapes: US$380 millionApples: US$365 million
Source: BFAP, 2010
Animal Production• Value of production in 2009: - Broilers R22.5 billion - Beef R13.3 billion - Fresh milk R9.1 billion - Eggs R6.6 billion - Mutton R3.1 billion - Pork R3.1 billion - Wool R1.1 billion
SA Meat consumption
Source: BFAP, 2010
Content• Introduction• SA Agriculture• SA Agribusiness• Prospects & Challenges
SA Agribusiness• Strong input sector: Seed, fertilizer, crop
protection and veterinary chemicals, animal feed, packaging, agricultural machinery, fuel, etc.
• Financial sector: Major banks, DFI’s, insurance companies, auditors, agribusinesses, etc.,
• Storage, trade and agro-logistics• Agro-processing and packaging• Retail Sector
South African Agricultural Trade
(Source WTA & GTA, USDA-FAS)
(US$ billions) 2007 2008 2009
Agricultural exports $4.0 $5.2 $5.2
% of total SA exports 5.7% 6.5% 8.3%
Agricultural imports $4.2 $4.7 $4.2
% of total SA imports 5.3% 5.2% 6.4%
Major agricultural products exported:
(US$ millions) 2007 2008 2009
Wine $673.6 $753.9 $727.5
Citrus $613.1 $711.4 $667.1
Corn $32.1 $510.3 $444.6
Table grapes $364.5 $387.6 $379.7
Apples $329.5 $367.3 $364.7
Sugar $276.1 $217.9 $386.7
Major export destinations (2009)
United Kingdom
Netherlands
Zimbabwe
Kenya
Mozambique
Germany
United States
China
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
Major agricultural products imported:
(US$ millions) 2007 2008 2009
Rice $302.1 $463.9 $458.8
Wheat $261.6 $444.6 $282.0
Soybean cake $209.8 $311.9 $297.1
Palm oil $195.7 $299.3 $232.1
Soybean oil $212.0 $288.5 $106.9
Whisky $212.5 $202.9 $201.6
Major countries imported from (2009)
Argentina
Brazil
Thailand
Germany
Malaysia
China
Netherlands
Indonesia
United States
0% 2% 4% 6% 8% 10% 12% 14% 16%
Content
• Introduction• SA Agriculture• SA Agribusiness• Prospects & Challenges
South African Agriculture:
Prospects and Challenges
Challenges• Government: - Food security, both household and national - Access to safe, nutritious and affordable food for all - New Growth Path: Job creation, Shared Growth & Opportunities - Empowerment of PDI’s, e.g. AgriBEE, EE, etc. - Land Reform & Rural Development - Industrial Policy Action Plan II: Agro-processing - Competitive environment (Competition Act) - Sustainable resource management, e.g. CC - African development, JADAFA, etc.
Challenges• Private Sector: - Profitability and competitiveness - Transparent and reliable markets (Integrity!) - Engage Govt ito enabling policy environment: Create confidence for long term investment - Need for inclusive Strategic Framework/Plan - Sustainable transformation - Institutional and value chain support (R&D, SPS matters, resource base management, trade facilitation, training & skills development, crop estimates, agro-logistics, Act 36 of 1947, etc.) - African opportunities
Overall Prospects• Much greater food security awareness, both globally and locally
– very positive. Priority for G20, Paris.• Awareness by government to work closer with Private Sector • Greater awareness by all of the need to support both commer-
cial and developing agriculture. Better implementation NB!• Substantial markets: locally, regionally, globally, and especially
to the East. Need market development, though!• General commodity and agribusiness infrastructure is good
basis – build on this & other institutional capacity.• New technology/expertise through especially multinationals. • New global investors looking to Africa for food production – major development.
Conclusion• Healthy and robust agro-food industry• Technologically advanced, globally competitive• Challenges: Agro-logistics, climate change,
water availability and quality, environmental sustainability, food safety regulations, R&D, etc.
• Opportunities: Growing population, consumer spending trends, new markets (esp to East), etc.
• Major contributor to Food Security, growth and employment in RSA.
THANK YOU
www.agbiz.co.za
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