By Dr Sifiso Ntombela.
The festive season is almost upon us and, as usual, consumer spending will rise over the next two months. The country’s economy is driven by private consumption, with roughly 64% of South Africa’s gross domestic product (GDP) generated from consumer spending.
This year has witnessed a significant rise in inflation, which peaked above 7% in March. Food price escalation, coupled with a rise in fuel prices, were among the chief drivers of the upward inflation trend. This prompted the SA Reserve Bank to sharply increase interest rates in its fight against elevated inflation.
When higher interest rates started eroding consumers’ disposable income, much attention was directed to higher food and fuel prices in the country. Indeed, agricultural commodity prices have been relatively high in 2023, impacted by global factors such as the conflict between Russia and Ukraine, and trade restrictive measures such as export bans on rice and wheat.
Rising food prices were further exacerbated by domestic challenges such as load shedding, which lowered operation capacity as affected food processing facilities and farms scaled down production. The outbreak of animal diseases such as avian influenza among poultry also put new pressure on domestic food production, causing the price of eggs and chicken meat to shoot up at retail shops.
Fortunately for South Africa, the 2022/2023 marketing season coincided with good rains in some parts of the country, which resulted in higher production of maize, sunflower, and wheat.
This helped to offset pressure on food inflation, as observed between May and August this year, when food inflation dropped from a high of 14% in March, to 8% in September. However, most South Africans still feel that food prices are high, and this could dampen spirits and deter celebrations over the festive season.
Government interventions to safeguard food affordability
The department of agriculture has focused on addressing bottlenecks and inefficiencies in food production and distribution systems to ensure consumers are able to access and afford food during the festive season, and beyond.
At the onset of the summer planting season, Agriculture Minister Thoko Didiza launched the R1.2 billion Agro-Energy Fund, which aims to provide for the acquisition of alternative energy assets to alleviate the impact of load shedding on farming operations.
Didiza also sped up the issuing of import permits, allowing agribusinesses to import fertilised and table eggs for building breeding stock and consumption, a move that has improved the availability of eggs at the shops and also moderated egg prices.
In addition, Didiza and Trade, Industry and Competition Minister Ebrahim Patel have initiated a rebate process on chicken meat, aimed at ensuring sufficient meat is available during the festive season and consumers are able to afford it.
In balancing the diverse interests of agriculture, Didiza has also scaled up efforts to open new markets for export-oriented agricultural products. In August this year, she signed a protocol for the export of avocados to China. Saudi Arabia has also opened its borders for cattle and bovine meat. China and other markets were also persuaded to reopen their borders for wool, a move that has helped sheep and angora goat farmers in the Eastern Cape, Northern Cape, Free State and other provinces.
In a drive to promote South Africa’s agricultural exports to the United States, Didiza is set to participate in the US-Africa Agoa forum during the first week of November. Among other things, she is expected to advance the interest of farmers and traders in wine, nuts, fruit and other commodities.
The focus of her ministry is not only on commercial agriculture, but also on rural areas and land reform. In the past 18 months, the department has completed the allocation of 700 000 hectares of state land to deserving beneficiaries for agricultural production. Moreover, a total of 360 000 hectares of tribal land was supported with input vouchers and mechanisation for farmers, ensuring rural areas contribute meaningfully to the agricultural economy.
About 14% of the 3.7 million tons of maize exported in 2022 was supplied by black farmers, an illustration and proof of the growth of inclusive agriculture under Didiza. It is both her and her department’s vision to continue promoting export-oriented agriculture that enhances food security and job creation in South Africa.
It must be noted that many challenges remain to truly attain an inclusive agriculture sector. Among these are the issuing of title deeds to farmers who are leasing state land, controlling outbreaks of disease, the provision of extension services, and the mitigation of higher input prices.
By Dr Sifiso Ntombela. He writes as a special advisor to Department of Agriculture, Land Reform and Rural Development Minister Thoko Didiza.