Food prices set to decline from third quarter

THERE may be more water in South Africa’s well this season, but consumers are unlikely to feel the effects until at least the third quarter, agricultural economists say.

While the El Nino weather pattern that devastated agriculture ended in June last year, its effects will continue to be felt in varying degrees for at least two years, despite the appearance of the La Nina phenomenon, which is associated with wet conditions.

In its Agricultural Outlook 2017 report, Absa said rainfall predictions for the coming season had improved substantially.

However, it said the drought’s cumulative effect would still have a negative effect on the new season, even if good rains fell.

Agricultural Business Chamber economic and agribusiness intelligence head Wandile Sihlobo said food inflation was likely to remain high in the first few months of the year and would slowly start to decline once harvesting began in about April.

“In the third quarter, consumers will really start to benefit.

“Food inflation in November was 11.6%. It could come down to between 7% and 9%,” he said.

He said the worst was over and the agricultural sector was “starting to see some green shoots”, particularly in maize production.

The Crop Estimates Committee reported total maize production for 2014-15 at 9.96 million tons.

Production for 2015-16 is estimated at 7.2 million tons.

Sihlobo said forecasts by private bodies for 2016-17 were for total maize production between 11 million and 13 million tons. – BDlive