Load shedding likely to remain a challenge in 2023
The impact of load shedding has serious implications for the agricultural sector as well as the wider economy of South Africa. Not only are consumers facing higher food prices, but numerous other economic pressures, such as the concerning trend of rising crime rates, remain a challenge, which means the risk of instability in the country is a real threat.
Electricity is an essential factor in the oilseeds supply chain – from irrigation systems and crushing facilities, to grain storage facilities, feed mills, poultry production and slaughter facilities, among others. The industry is indeed resilient and will make plans wherever possible. However, this comes at significant cost which will have to be recovered from the consumer who is already buckling under the pressure of high prices.
The privatisation of energy generation to add to the current Eskom production is a step in the right direction. This has, however, been left far too late and positive effects will be limited in the short term. Moreover, the necessary policy structures for recovery are long overdue.
International markets
Transnet is a critical component in the export of agricultural products. An efficient grain export programme requires a percentage of transport on rail. Record maize and soya bean crops are creating a surplus that needs to be exported, and this exportable surplus of over four million tons of maize and soya beans require efficient transport to the ports.
Numerous commodity sectors have underperformed in terms of exports due to the poor performance of rail to our ports, despite high international commodity prices. On the positive side, soya bean exports have progressed well despite the port constraints (more demand than supply of export infrastructure). The ports of Maputo and East London also had to be utilised in 2022 for the export of grains, despite being much less cost-effective than Durban.
Trading companies have excelled in creating export markets for soya beans considering South Africa has become a new (small) global player in consistent soya bean exports. Southeast Asia is also proving to be the most accessible market.
Despite the numerous challenges we face in 2023 there are many positives we can draw from. These include excellent crop expectations due to, once again, favourable weather conditions and favourable prices for producers, as well as decreasing fertiliser prices.
We are also privileged to bring you another excellent issue of Oilseeds Focus. Enjoy this edition and feel free to send feedback.
Enjoy this issue of Oilseeds Focus.
December 2023