BFAP annual agricultural baseline report released
17 August 2018
The impact of policy uncertainty around land reform and the drought, were the central focus of this year’s BFAP report which was released at an event in Somerset West today.
The Bureau for Food and Agricultural Policy’s (BFAP) Baseline 2018-2027, which is co-funded by the Western Cape Department of Agriculture,presents an outlook of agricultural production, consumption, prices and trade in South Africa’s agricultural sector, within the context of the current uncertainty regarding land reform policies.
The report is a benchmark of what could happen under a particular set of assumptions rather than a forecast of what will happen.
This year’s report has specifically focused on the issue of land reform, in the midst of policy uncertainty and conversations around expropriation without compensation.
The researchers suggest that without a focused land reform policy framework which supports growth and food security, and which is well executed and supported by strong institutions, the inequalities created in the past will only increase. It also states that investor confidence is key to the continued growth of the agricultural sector which is already under pressure as a result of macro-economics and weather and disease related problems.
It calls for an urgent and comprehensive agricultural census and land audit to ensure that land reform decisions are made with up-to-date and correct information.
It also states that any land reform policy must ensure that the core of commercial agriculture be supported to ensure that its role in the economy, job creation and food security is not compromised. A healthy commercial farming sector is vital to help support a burgeoning small holder farming sector too.
The researchers state that a key element of success in land reform is a system of public private partnerships aimed at supporting a mix of farm sizes and scales.
Minister of Economic Opportunities Alan Winde said “Farmers prove every day how resilient they are- we’ve seen it through the drought. But there absolutely must be policy certainty around the issue of land reform and I am pleased that the BFAP report has highlighted the need for an informed and measured approach to land reform which takes into account all the intricacies of the South African agricultural landscape. The Western Cape government has long insisted that the only way to successfully address land reform is through public private partnerships, which is why we have a 62% land reform success rate, using the commodity approach.”
The agricultural sector:
The BFAP report found that agricultural GDP peaked in South Africa in 2017, spurred on by record crops for maize and soybeans, favourable export prices as a result of reduced production in the northern hemisphere and a return to profitability for livestock farmers following the 2015 and 2016 droughts.
However, GDP is expected to decline in 2018, as a result of the impact of the Western Cape drought on fruit exports, and the impact of diseases such as avian influenza and listeriosis, particularly on livestock farmers.
Food price inflation:
Rising oil prices and a depreciating exchange rate mean that the cost of fuel and fertilizer have increased and fast growth in the agricultural sector will not be simple.
Food price inflation is expected to increase until the end of 2019, stabilising at around 5.5%. The largest contributors to food price inflation will be meat, oils, breads and cereals.
What this means for the consumer:
The BFAP report models a “thrifty balanced food basket” of 29 items which consumers may be likely to buy and which combine all the food groups. The below table shows how the price of each of the baskets has increased in 2018, and its projected increases for the next year.
This year’s VAT increase has also hit consumers. The BFAP researchers determined that the price difference in the thrifty basket at 14% VAT and at 15% VAT for the four person family was R6.35 per month. This equates to 16 single servings of maize meal.
The BFAP researchers also considered the affordability of various meat products.
Pilchards, per single serving unit are still the most affordable meat option for South Africans (although the price per single serving rose by 12% between 2015 and 2018). Polony is the second most affordable meat (which increased by 17% between 2015 and 2018), followed by Individual Quick Frozen chicken portions. These however, work out 183% more expensive per single serving than pilchards.
Looking forward, the BFAP report indicates that chicken consumption is expected to expand by 27% by 2027 due to it being a fairly affordable, healthy meat source. Beef consumption is expected to grow by 24% by 2027.
Minister Winde said “I don’t think we’ve ever had a BFAP report like this one- the drought and the uncertainty around land reform have been a preoccupation in the agricultural industry and this report deals with those realities.”
He however indicated that there were some areas of excellence that should be highlighted.
“South African wine export volumes grew by 4.7% in 2017, with strong growth in export volumes for the USA (up 145%), China (up 16%) and the UK (up 8%). Exports to Africa grew by 4%, with exceptional growth in export volumes to Angola (102%), Zambia (79%) and Senegal (59%). The majority of South African wines are made in the Western Cape and the increases in exports to China and Angola are proof that our Project Khulisa goals are starting to pay dividends.”
“There are also glimmers of opportunity- we see from the report that the area planted to barley in the Western Cape has increased and with irrigated barley facing competition from longer term crops, beer companies are increasingly looking to our province for locally sourced barley.”
Spokesperson for the Ministry of Economic Opportunities
(Responsible for the Departments of Agriculture and Economic Development and Tourism)
Tel: 021 483 3550
Cell: 072 372 7044