Re­cent rains bring good news

Food prices set to mod­er­ate

The Star Early Edition - - NEWS - Manyane Manyane

SOUTH Africa’s agri­cul­tural sec­tor is on the road to re­cov­ery af­ter the re­cent rains, ac­cord­ing to an­a­lysts.

Paul Makube, a se­nior agri­cul­tural econ­o­mist at FNB, said last year was tough for the in­dus­try.

“The drought had an im­pact on the econ­omy with South Africa’s gross do­mes­tic prod­uct (GDP) de­cel­er­at­ing. We an­tic­i­pate that (food) prices will mod­er­ate now in 2017 as the new sea­son pro­duc­tion out­look im­proves with the rains across the pro­duc­ing ar­eas,” he said.

Makube said the maize crop was ex­pected to re­cover by almost 60 per­cent to more than 12 mil­lion tons for the 2016/17 pro­duc­tion year. Sugar and hor­ti­cul­ture were also ex­pected to im­prove.

He said this would boost the avail­abil­ity of ex­portable pro­duce, par­tic­u­larly fruits. Beef prices were ex­pected to re­main high due to col­lec­tion re­build­ing this year, while pork and poul­try pro­ducer mar­gins would likely im­prove due to the de­clin­ing feed prices, es­pe­cially in the sec­ond half of the year. He said wheat had al­ready re­cov­ered 6 per­cent year on year at 1.88 mil­lion tons.

“This to­gether with the abun­dant global sup­ply out­look, with pro­duc­tion and stocks of 749 mil­lion tons and stocks of 235 mil­lion tons re­spec­tively will main­tain down­ward pres­sure on do­mes­tic prices as South Africa re­mains the net im­porter of wheat,” Makube said.

He said the sec­tor was slowly sta­bil­is­ing. “The year ahead will still be try­ing, but the sil­ver lin­ing is that we are start­ing to see a lit­tle re­lief from the re­cent rains.”Fran­cois Stof­berg, an econ­o­mist at Ef­fi­cient group, said food in­fla­tion would de­crease as a re­sult of re­cent rains. “The de­crease will hap­pen mostly for veg­eta­bles and fruits. But meat will re­main ex­pen­sive as farm­ers are still re­build­ing,” he said.

Wandile Sihlobo, an agri­cul­tural econ­o­mist at the Agri­cul­tural Busi­ness Cham­ber, said yes­ter­day that some prices had al­ready re­cov­ered and were 50 per­cent lower than they were last year.

“This shows food in­fla­tion is com­ing down. We also ex­pect meat prices to come down, be­cause farm­ers will now go back to nor­mal slaugh­ter­ing,” Sihlobo said.

But Sihlobo said the real re­cov­ery was ex­pected to­wards the end of this year.

“Maize pro­duc­tion will likely be be­tween 11.7 mil­lion and 13 mil­lion tons and that is likely to im­prove the GDP,” Sihlobo said.

PHOTO: SIM­PHIWE MBOKAZI

The re­cent rains have sta­bilised South Africa’s agri­cul­tural out­look. Ex­perts are of the opin­ion that the coun­try’s food prices will mod­er­ate this year, af­ter last year’s dry weather sent prices up.

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