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Excessive heat could result in higher food prices this year

| Economic factors

By: Given Majola - IOL

The excessive heat across South Africa currently is a significant concern for the farming sector, according to the Agricultural Business Chamber (Agbiz).

The agricultural organisation’s chief economist, Wandile Sihlobo, said the 2023/24 summer crop season started on a favourable footing.

“We received widespread rains, which was unusual in an El Niño season, which would typically start with drier weather conditions. According to data from the Crop Estimates Committee, the farmers managed to plant a sizeable summer grain and oilseed area of 4.4 million hectares, up by 0.4% from the 2022/23 season.

“For a while, it appeared as though South Africa was on track for yet another excellent harvest. But since the start of February, the rain has been scant across the summer crop-growing regions of South Africa, thus raising concerns about the yield potential of the crops,” Sihlobo said.

He said that perhaps they should not have been completely surprised by the current difficulty. This was as at the end of last month, the South African Weather Service (Saws) warned about such a possibility, stating that its “multi-model rainfall forecast indicated mostly below-normal rainfall over most of the country during this month to June, except for some central parts of South Africa during March to May where enhanced probabilities for above-normal rainfall is predicted”.

Agbiz said the significance of February cannot be overemphasised in South Africa’s agriculture.

Significant summer grains such as maize, sunflower seed, and soybeans were in the pollination stages over this month where the crop should ideally have higher moisture levels to boost yields.

“The crop is entering this growth stage with limited moisture across the major growing regions in Free State, North West, and Mpumalanga, amongst other provinces. These conditions have raised fears about the possible yield loss. Indeed, in various regions we visited these past few weeks, the crops were visibly strained.”

According to the organisation, in conversations with farmers and agricultural analysts, the consensus was that the last two weeks of February were critical for the crop.

“This means South Africa must receive widespread rains this week or next week for the crop to recover from its current worrying state. Also making the challenge worse for South Africa’s farming sector is the excessive heat. Even areas that receive frequent patchy rains suddenly evaporated with the high temperatures.”

Sihlobo said while the immediate concern was mainly for summer grains and oilseeds, the higher temperatures and limited rain is also a challenge for other sub-sectors, such as horticulture and livestock.

“The vegetable and fruit areas are primarily saved because nearly all production is under irrigation and can thrive even with frequent load shedding. Notably, the dam levels in various regions are healthy, having improved from the past few years’ heavy rains and the good showers at the start of the season.

“The irrigation regions of summer crops certainly will also benefit from the better dam levels. Still only about 20% of maize, 15% of soybean, 34% of sugar cane are under irrigation, with majority rain-fed,” Sihlobo said.

“The livestock industry, over time, could also feel the impact of the current harsh temperatures if there is no relief from rain to help boost the grazing veld.

“Still, the conditions are manageable so far, with the veld benefiting from the last few years of rains and a favourable start to the season,” he said.

At the end of this month, the Crop Estimates Committee (CEC) will release its revised 2023/24 area and first production forecast for summer crops.

So far, Agbiz said it was unclear how much of the current heat strain on crops the CEC would factor into their estimates.

“Even our initially optimistic crop forecast of above-average yields in maize, soybeans, and sunflower seed is now highly uncertain because of rainfall scarcity. Perhaps the key figures that will provide a better sense of the summer crop harvest is the March 2024 release, when the committee has fully considered the weather events and how much of the crop would have successfully pollinated.”

Sihlobo said that in essence, while the country started the 2023/24 summer crop season with optimism and even estimated that harvest would be decent at above-average levels, the outlook was now challenged by the excessive heat and limited rainfall across the major crop-growing regions.

“Still, it is not too late, but the next two weeks are vital for the crop. The season’s outcome will not only affect the farming output but also have implications for food price inflation, for which we had generally held a positive view of possible moderation because of potential supply recovery and base effects, amongst other factors. The next two weeks are critical for the crop outlook.”

According to the National Agricultural Marketing Council (NAMC) Market Intelligence Report (December 2023) on Grains and Oilseeds, Thulani Ningi, Naledi Radebe and Thabile Nkunjana wrote that globally the 2023/24 production of wheat was expected to decline from record levels this year due to lesser crops in Kazakhstan, Argentina, India, and slightly offset by a greater crop in Russia.

“In 2023/24, Brazil’s wheat production is predicted to fall, although exports are predicted to rise marginally. Due to unfavourable weather brought on by the current El Niño phenomenon, Australia’s wheat production is now expected to drop. Ukraine’s 2023/24 wheat production surpasses previous year’s prediction of rising yields, despite a decrease in harvested area (USDA, 2023).”

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