Agricultural prospects are not good

The short-term outlook for South African agriculture, including poultry, is not good. That means the country’s food security remains at risk.

Continuing power outages known as load shedding, rising input costs, a huge electricity price hike and a stagnant economy do not bode well for South Africa’s farmers.

In its analysis of GDP data for the fourth quarter of 2022, the independent Bureau for Food and Agricultural Policy (BFAP) noted weak agricultural growth after two years of being the strongest performing sector of the South African economy.

Agricultural growth was reduced to only 0.3% in 2022, and the challenges the sector faced have continued this year.

“Severe cash flow constraints, together with the far-reaching impact of load shedding, is likely to affect marketable volumes and consequently also revenue performance of many agricultural products in 2023.”

Agricultural production costs increased by 14% in the last quarter of 2022, with much higher increases in components such a fertiliser, fuel and chemicals.

“Animal feed prices also remain at record levels,” the BFAP said.

It noted the impact of increased frequency and duration of load shedding.

“This affected production processes of the more intensive industries such as poultry and dairy as well as irrigation of crops, orchards, and vineyards. Through the value chain, it influenced timing and throughput of product at packhouses, processing facilities and cold storage facilities.”

Despite the poor sector performance, the gross value of production (GVP) of animal production grew by 13% in the quarter – a 26% rise for pork, a 19% rise for poultry and a 9% rise for beef.

“Poultry production volumes however declined, largely due to prolonged cost pressures, as well as persistent load shedding that affected slaughter schedules in December, resulting in supply challenges to some food service outlets,” the BFAP brief stated.