Following a surge to an all-time high of 75 in the second quarter of this year, the Agbiz/IDC Agribusiness Confidence Index (ACI) retracted back to 67 points in the third quarter. Still, this current level reflects favourable conditions in South Africa's agriculture sector and for agribusiness. A level above the neutral 50-point mark implies that agribusinesses are optimistic about operating conditions in the country. The optimism reflects both the large output and higher commodity prices that have benefited farming businesses in the 2020/21 agricultural production season and the favourable outlook about the upcoming 2021/22 season. The higher commodity prices and the positive weather outlook, which shows prospects of above-normal rain across most regions of South Africa, are supportive factors for agribusinesses. This third-quarter survey was conducted between the last week of August and first week of September and covered agribusinesses operating in all agricultural subsectors across South Africa. In the linked article by Wandile Sihlobo discusses the latest data.

Beyond the suffering and humanitarian crisis from Russia’s invasion of Ukraine, the entire global economy will feel the effects of slower growth and faster inflation. Impacts will flow through three main channels. One, higher prices for commodities like food and energy will push up inflation further, in turn eroding the value of incomes and weighing on demand. Two, neighbouring economies, in particular, will grapple with disrupted trade, supply chains, and remittances as well as a historic surge in refugee flows. And three, reduced business confidence and higher investor uncertainty will weigh on asset prices, tightening financial conditions and potentially spurring capital outflows from emerging markets. Read more in the linked IMF blog post.

Global food prices are poised to keep climbing even after jumping to a record in February, placing the heaviest burden on vulnerable populations while adding to headwinds for the global economic recovery. Food commodity prices rose 23.1 per cent last year, the fastest pace in more than a decade, according to inflation-adjusted figures from the United Nations Food and Agriculture Organization. February’s reading was the highest since 1961 for the gauge tracking prices for meat, dairy, cereals, oils, and sugar. Now, the war in Ukraine and sanctions on Russia are upending shipments and possibly production for two of the world’s largest agricultural producers. The linked IMF blog post provides more details.

The Expropriation Bill is currently before the Portfolio Committee on Public Works and Infrastructure. The portfolio committee started discussing the Bill clause by clause on 10 March. What was surprising, was that, when the definitions were discussed, there was no mention of the definition of expropriation, which is not only the most controversial definition but one of the most problematic aspects of the Bill. There was a lot of discussion on the definition of property and whether that definition should exclude intangible and movable property, but no discussion on the definition of expropriation. Similarly, in a legal opinion obtained by the portfolio committee from Advocate Geoff Budlender (SC), there is a lengthy exposition about the definition of property, but very little is said about the definition of expropriation. Agbiz head of Legal Intelligence Annelize Crosby discusses this subject in the linked article.

Since the start of the Russia-Ukraine war there have been rising concerns about global food security. Both Ukraine and Russia are major agricultural producers and exporters. In 2021, these countries together accounted for nearly 30% of global wheat exports, about 14% of global maize exports, roughly 32% of global barley exports, almost 60% of global sunflower oil exports, and about 14% of global fertiliser exports. The destruction of economic infrastructure within Ukraine, combined with various shipping lines avoiding the Black Sea region and the extensive sanctions that Western countries have imposed on Moscow, mean there will be limitations on the movement of the agricultural products from these countries. This will be exacerbated by other factors, such as the agreement to exclude some Russian banks from global payment systems such as SWIFT. The linked article by Agbiz chief economist Wandile Sihlobo, first published on Econ3x3, attempts to show how the conflict may affect South Africa’s agricultural sector, as well as consumers, by focusing on trade linkages of agricultural commodities and inputs prices, as well as price transmissions.

South Africa’s agricultural sector has had two consecutive years of solid growth, with its gross value-added expanding by 13.4% year on year in 2020 and 8.3% year on year in 2021. This was a period of favourable rainfall, which supported crop yields and grazing conditions for the livestock subsector. The higher commodity prices, specifically for grains and oilseeds, also boosted the farmers’ incomes in 2020 and 2021. The increased global demand for agricultural commodities during this period saw South Africa exporting $10.3 billion of agricultural products in 2020 and a record $12.4-billion in 2021. The allied industries, such as agricultural machinery, benefited from improved farmers’ incomes throughout this period. Please click here to peruse the article by Wandile Sihlobo.

 The year started with a mixed outlook of agricultural fortunes in sub-Saharan Africa. Much of the Southern Africa region had received favourable rains, albeit not at the same period, which is good for agricultural production. Still, some areas of southwestern Angola, northwestern Namibia, northern and central Mozambique, Malawi and Madagascar are dry reportedly, with fears of lower yields in 2022 compared with last year. Meanwhile, the East Africa region has experienced dryness, which negatively affected agricultural production, and the conflict in parts of Ethiopia resulted in farmers leaving some agricultural regions in fear of the war. There are reports that more than 500 000 ha of uncultured land in parts of Ethiopia have reduced the production of crops such as sesame. Read more in the linked article by Wandile Sihlobo, first published in Business Day.

European Union countries on Tuesday backed the bloc's plan to impose a world-first carbon dioxide emissions tariff on imports of polluting goods, although the finer details will need to be worked out in upcoming negotiations. The EU wants to introduce CO2 emissions costs from 2026 on imports of steel, cement, fertilisers, aluminium and electricity -- a move aimed at protecting European industry from being undercut by cheaper goods made in countries with weaker environmental rules. A three-year transition phase for the levy would begin in 2023, so EU countries and the European parliament are racing to negotiate and approve the rules this year. Finance ministers from EU countries on Tuesday agreed on their negotiating position. Read more in the linked article, first published on msn.com.

Prices of all major cereals increased in February. Wheat and coarse grain prices were pressured upward by supply uncertainties amidst potential disruptions to exports from the Black Sea region. Crop condition concerns in South America continued to lend support to maize prices. Although international rice prices also edged up during February, they remained below their year-earlier levels. In most of West Africa, prices of coarse grains continued to increase and were at near-record levels. In the Sahel, prices were underpinned by reduced outputs and conflicts, while in the coastal countries, they were supported by strong export demand and currency depreciation. Reduced cross-border trade flows and higher international prices, particularly of maize, added upward pressure on domestic prices. Read more in the FAO's Food Price Monitoring and Analyses Bulletin linked here.

"Revived growth in the fourth quarter of 2021 meant the year saw the fastest economic expansion since the commodity boom that ended in 2011. Despite the sharp downturn in the third quarter, which most observers attributed to the July violence, the economy grew faster in 2021 than in any calendar year since 2007. Even with the strong showing for 2021, the steep contraction from the pandemic in 2020 and, to a much lesser extent, the July 2021 unrest meant the GDP remained 1.8% lower than in 2019." This is an extract from The Real Economy Bulletin, a TIPS review of quarterly trends, developments and data in the real economy, together with a comprehensive analysis of the main manufacturing industries. Please click here to peruse.

Regardless of your business, South Africa sits at the very end of very long global supply lines. Even before Covid-19 and the July 2021 civil unrest bought home the importance of shortening and diversifying supply chains, South Africa’s balance of trade and ZAR volatility and weakness were already prompting a re-think as businesses pivoted to local – or increased inventories. During the Covid-19 crisis, South Africa’s agricultural sector moved quickly, successfully lobbying government to exempt farms, agribusinesses, and agricultural supply networks from many of the more restrictive Covid-19 management protocols. As a result, South Africa never ran out of food, even during the most restricted periods of global movement and supply. Russia’s invasion of Ukraine reminds us that in terms of global supply chain risk, South Africa is still vulnerable where it matters most – our food. Nico Groenewald, head of Agriculture at Standard Bank’s Business and Commercial Clients division, elaborates on this subject in the linked article, first published on africa.com.

According to the latest SATI Trade Newsletter, the northern provinces and Orange River regions of South Africa have ended their packing seasons. The Olifants River region is also wrapping up its season and it is evident that the producers of this region will reach its high estimate. The Berg River and Hex River regions are enjoying a good season and both these regions are expecting to harvest large volumes of grapes of excellent quality and condition. For more detailed information on the various regions, you can access the SATI Trade Newsletter here.

Bayer and Cinven have entered into a definitive agreement regarding the sale of Bayer’s Environmental Science Professional business for a purchase price of US$2.6 billion (2.4 billion euros), Bayer announced on Thursday. “This divestment represents a very attractive purchase price and allows us to focus on our core agricultural business and the successful implementation of our Crop Science Division growth strategy,” said Rodrigo Santos, Member of the Board of Management of Bayer AG and President of the Crop Science Division. Environmental Science Professional is a global leader offering environmental solutions to control pests, diseases and weeds in non-agricultural areas such as vector control, professional pest management, vegetation management, forestry, and turf and ornamentals. Please click here to peruse.

Justin Chadwick, CEO of the Citrus Growers' Association of Southern African, shares the latest news in the citrus industry in his weekly update - From the desk of the CEO. Please click here to peruse.