2022 BFAP BASELINE

Glancing at agriculture’s future!

by Riaan Nowers

TThe annual Bureau for Food and Agricultural Policy (BFAP) Baseline was launched in August on an online platform that provides the agricultural sector with an agricultural outlook for the next ten years. This also culminated in contact presentations in August attended by invited and interested parties.

The Baseline makes key observations relating to agricultural employment, farmlevel competitiveness and drivers within the broader global economy.

In simple terms the Baseline utilises the latest trends, policies and market information and constructs a projected picture of what the future might look like for agricultural industries given certain assumptions. This provides the sector with insights, which can assist in improved decisionmaking and planning on various levels.

The general message was that the agricultural sector remains a top performer in the South African economy, but it was made clear that uncertainty abounds. It was not surprising to hear that consumer spending is under pressure but on the positive side, it was forecasted that a slow recovery over the medium term is expected. From a consumer perspective it was also interesting but not surprising to note that the historic decline in basic food staples has reversed and that per capita meat consumption has slowed drastically. »

The outlook on field crops highlighted strong revenue gains underpinned by good local yields and high world prices, but that the normalisation in world prices will spill over into the South African market. However, sharp input cost increases have significantly increased producer risk and cash flow concerns. The current profitable cycle provides opportunity to invest in the latest technologies to ensure sustainability and competitiveness when the cycle turns.

It was also mentioned that world grain prices are expected to decline as production responds and uncertainty subsides, which will lead to deteriorating profitability.

The outlook on animal products revealed a growing revenue but profitability that is under pressure due to spiralling high feed costs. Domestic growth projections in consumption are expected to slow. Nevertheless, there is strong growth potential in beef production, but this is constrained by animal disease outbreaks and management thereof.

The Baseline called for accelerated exports to sustain growth and highlighted that animal health management is a key enabler to unlock opportunities for inclusive growth.

The outlook on horticulture revealed that the significant past investments were driving volume growth that is weighing in on prices and margins. Logistical constraints however are impeding quality of perishable products and exacerbating price challenges. It also called for the acceleration of market access expansion, which is critical to mitigate price risks and ensure sustainability. Once again, weak prices and rising input costs are putting profitability under pressure.