Farmers in South Africa face energy cuts and a weak rand

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Winter is a crucial season for South African agriculture, with a few of its key area crops being produced in the course of the chilly months of June, July and August, and maturing after that, with harvesting in December. Preparation of the land for winter crops begins in April, which can be the identical time harvesting of the summer time crops begins.

Farmers within the Western and Northern Cape, Free State, Limpopo and different winter crop rising areas are making preparations for rising winter wheat, canola, barley and oats.

All the nation’s wheat manufacturing takes place in the course of the winter months, making the winter season an necessary contributor to the nation’s wheat wants. South Africa produces roughly 60% of its wheat necessities and imports the stability. It additionally produces, on common, about 90% of its barley annual consumption. Home manufacturing of oats is about 64% of annual consumption. The nation is independent in canola manufacturing. Barley, oats and canola are all winter crops.

This 12 months, the outlook for winter crops is clouded by a troublesome working setting, particularly the areas which are beneath irrigation.

The 2 largest headwinds are energy cuts and greenback energy. Nonetheless, there are additionally positives which ought to take the strain off meals value rises which have hit shoppers onerous. These positives embody a fall in the price of inputs, like fertiliser and agrochemicals, in addition to good harvests from the summer time season simply ending.


The primary contributing issue is the rise in recurring energy cuts which can have an effect on irrigation. South Africa’s agriculture has by no means confronted a interval of energy cuts as extreme as the present ones.

The agricultural sector typically is closely reliant on sustainable vitality. For instance, current work by the Bureau for Meals and Agricultural Coverage (BFAP) exhibits that roughly a 3rd of South Africa’s farming revenue is straight depending on irrigation. This exhibits that disruptions in energy provide usually places in danger a substantive share of the South African agricultural fortunes.

Of all South Africa’s area crops, wheat has the most important manufacturing – about half – beneath irrigation. Of the opposite key area crops, about 15% of soybeans, 20% of maize and 34% of sugar manufacturing are beneath irrigation.

The potential disruption of irrigation would result in poor yields, and in the end a poor harvest. Such an eventuality would result in a rise in wheat imports.

Trade role-players and the federal government are alert to the issue and are monitoring the influence intently via a ministerial activity workforce. As well as, Eskom, the ability monopoly, together with the federal government, are exploring potentialities of lowering energy cuts that are anticipated to spike in the course of the winter when demand normally rises.

The second headwind is that South African farmers haven’t benefited totally from the decline over the previous 12 months within the US greenback costs of a few of their key inputs comparable to agrochemicals. That is due to the weakening of the South African rand towards the greenback, shaving off a few of the advantages of the value decline in US greenback phrases.

Thirdly, farmers are experiencing decrease commodity costs in contrast with final 12 months. However a drop in enter costs is offering a obligatory monetary cushion.

There are positives

On the plus aspect, the world plantings for all South Africa’s main crops are anticipated to be above the five-year common space. That is in line with Crop Estimates Committee, a authorities and business physique that displays crop manufacturing.

Secondly, enter costs have come off from final 12 months’s highs. For instance, in February 2023, important agrochemicals comparable to glyphosate, acetochlor, and atrazine had been down in rand phrases by 32%, 18%, and a pair of%, respectively in comparison with February 2022. These value declines have continued via to March 2023.

These declines would have been increased had the South African Rand not weakened towards the US greenback over the identical interval. That’s as a result of in US greenback phrases, the costs of the exact same agrochemicals are down by 30% from February 2022. Costs of pesticides and fungicides have additionally declined notably from final 12 months’s ranges.

Additionally price noting is that in February 2023, important fertilisers comparable to ammonia, urea, di-ammonium phosphate and potassium chloride had been down 6%, 36%, 28% and 14% in rand phrases, respectively. Once more, in US greenback phrases, the value decline was extra notable, which speaks to the influence of the comparatively weaker South African rand on imported merchandise.

These value adjustments in inputs are important as they influence huge parts of the grain enter prices. For instance, fertiliser accounts for a 3rd of grain farmers’ enter prices, whereas different agrochemicals account for roughly 13%.

A 3rd optimistic issue is that the climate situations for the winter crops additionally stay optimistic. In its Seasonal Local weather Watch replace revealed on 03 April 2023, the South African Climate Service famous that the winter crop rising areas of South Africa will obtain rains.

A fourth optimistic issue is that the summer time crops, that are nearing the harvest course of, are in moderately good situation. I usually count on an ample harvest in most summer time crops, which is aligned with the view of the Crop Estimates Committee.


From a shopper perspective, developments are broadly optimistic and bode properly for some moderation in shopper meals value inflation within the second half of the 12 months, when the decline in commodity costs might start to filter into the retail costs.

The one main threat is electrical energy stability. That is as a lot a threat for farmers as it’s for shoppers.

Nevertheless, I’m hopeful that the federal government’s interventions, such because the load curtailment and diesel rebate, to restrict the harm of the electrical energy disaster to meals manufacturing will assist.

If the federal government’s proposed interventions assist throughout irrigation intervals – afternoons and evenings – South Africans can count on a beneficial winter season. The discount in energy cuts may also be significantly helpful for meals processors.


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