KEEP UP TO DATE WITH ALL THE IMPORTANT COVID-19 INFORMATIONCOVID-19 RESOURCE PORTAL

FANews
FANews
RELATED CATEGORIES
Category Economy
SUB CATEGORIES General |  Budget 2017 |  Budget 2018 |  Budget 2019 |  Budget 2020 |  Budget 2021 | 

Agriculture posts a trade surplus in the 2ndQ2021 despite ongoing Covid-19 challenges

23 August 2021 Paul Makube, Senior Agricultural Economist at FNB Agri-Business

The results of both the first and second quarter of 2021 agriculture export performance reflects the resilience of the sector despite the ongoing Covid-19 related challenges across the globe.

The agriculture sector was able to operate during the various lockdown periods due to it being considered an essential service. Weather also came to the party and allowed for an excellent agriculture season which saw record crops across most commodities with the grain and oilseed crop topping 17.07m tons which is almost 2% higher year-on-year.

Despite logistical challenges, the sector managed to move hefty quantity of produce to the rest of the world with the 2nd quarter of 2021 recording a trade surplus of US$1.5 million which is 40% ahead of the same period in 2020. The follows a 36% y/y spike in total agriculture exports in quarter two of 2021 at US$3.2 billion, bringing the total 1H2021 export value to US$6.1 billion which is 30% higher y/y.

Drilling down into agriculture export makeup, the major export commodity is citrus which saw volumes rising exponentially due to seasonal availability in 2Q2021 to 817,023 tons which is up 1.6% y/y according to the TradeMap data. This brought the 1H2021 total citrus exports to 852,964 tons, which is up 0.7% y/y. Strong demand on export markets due to the health benefits associated with citrus commodities in the wake of the Covid-19 global crisis underpinned the good export performance.

In value terms, 2Q2021 citrus export revenue reached US$626,585, which is 14.2% higher y/y while the 1H2021 cumulative total rose by 12.2% y/y to US$655,946. Of the top ten country destinations, Netherlands accounted for 20.6% and 19.8% of the total 2Q2021 and 1H2021 volumes respectively but both were still 14% down on the previous year.

Meanwhile,

• The industry’s body, the Citrus Growers Association (CGA) lately pegged its estimate of the country’s citrus exports 155.3 million cartons (15kg cartons) in its which is still way above the 2020 volumes.
• The cumulative total exports of grapefruit, lemons, and soft citrus for the year to week 30 of the export season have so far increased 15%, 1%, and 9% respectively year-on-year at 14.64m, 21.77m, and 16.01m cartons. In other fruits, apple exports are already 5% ahead of the 2020 levels at 23.54m cartons.

Data on the category other nuts, fresh or dried, whether or not shelled or peeled (excluding coconuts, Brazil nuts) showed a sharp increase of 414% q/q to 11,635 tons which is however still down by 10% y/y. This brought the total first half quantity shipped to 13,897 tons which is down by 10% y/y and further reflecting the tough trading environment and the subdued Chinese demand. China’s share of the SA product was 41% in the 2nd quarter and 35% of the cumulative year to June 2021.

Total Chines 2nd quarter imports of the SA product were substantially higher q/q, they were still 15% lower relative to the same period in 2020. The cumulative total quantity of the nut complex imported by China during the first half of 2021 was however down by 13% y/y at 13,897 tons which saw revenue falling by 14% y/y to US$109.70 million. Macadamia accounted for 58% of the 2nd quarter total at 6,701 tons (-3% y/y), and 49% of the total for the year to June 2021 at 6,784 tons (-2% y/y) and export revenue contracting by 4% y/y at US$38.49 million.

The meat category (Meat and edible meat offal) posted strong gains in exports in the 2Q2021 with volumes up 86% q/q and 96% y/y at 46,650 tons. This brought the total year to June meat exports to 71,707 tons which 46% higher y/y. Kuwait accounted for 50% and 34% respectively of the 2Q2021 and 1H2021 total SA meat exports. In value terms, a 6% q/q rand appreciation knocked quarterly value marginally by 0.1% q/q in 2Q2021 at US$67.51 million but was still 10% higher y/y. The total first half total export value was US$135.11 million which is 8% ahead of last year. Beef accounted for 55% and 41% of the total quantity of meat shipped during the 2nd quarter and the first half of 2021 respectively.

The overall good export revenue was underpinned by strong export demand despite the 2ndQ2021 Rand exchange rate appreciation of 6% quarter-on-quarter and 21% relative to the 2ndQ2020 at R14.09/ US$. The average exchange rate appreciation for the first half of 2021 was a whopping 13% relative to the same period in 2020.

Meanwhile, South Africa is likely to post another good agriculture season for 2021/22 if the recent weather forecasts of another La Nina year. La Nina is characterized by above normal rainfall conditions in Southern Africa which bodes well for agriculture in the year ahead.

Quick Polls

QUESTION

Do you believe this is the toughest period for financial advice in many years?

ANSWER

Yes, it’s hard to navigate the challenges and difficult to adapt. I’m struggling.
No, I have managed to navigate the challenges and have adapted. I’m good.
50/50. I just feel like whether we like it or not, we have to ready ourselves for change… be resilient and scale for the future. It’s not about survival of the fittest anymore but survival of the quickest. We just have to move on with life.
fanews magazine
FAnews October 2021 Get the latest issue of FAnews

This month's headlines

IFA nuggets: Prospecting for clients
FSCA weighs in as universal life policy premiums rocket
No short cuts for the short term broker
Investment lessons worth sharing
Tightening of policy wordings… likely in the future?
Subscribe now