Despite mild El Niño risk, SA farmers in better position

Image: 123RF

As SA’s 2022/23 summer crop season draws to a close, the focus is shifting towards the 2023/24 production season, which commences in October.

The preliminary insights suggest an El Niño could bring below-normal rainfall, however, SA could still have a decent season.

The improved soil moisture after four consecutive seasons of rain will help support crop and horticulture production as well as grazing conditions.

Though there is no evidence of an El Niño summer ahead, one factor that concerns us is the possibility of extreme heat.

Various countries in Europe and regions of the US have experienced extreme heat this summer, which has proved challenging for agriculture at certain times.

When the 2023/24 summer crop season starts in SA, monitoring temperatures and the impact on crops thereafter will be necessary.

The weather outlook is clearly a downside risk to production for the upcoming summer crop season, though not severe for the reasons we have outlined above.

These include better soil moisture after a rare consecutive four years of heavy rains.

The favourable soil moisture conditions will act as a natural cushion for agricultural activity even if the rains are below average (typically about 500mm).

What will be necessary, however, is for the showers to fall in critical periods, such as seed germination and pollination stages of growth, which are all essential for crop growing.

It would not be SA’s first time in such a fortunate position.

The summer of 2018/19 had an El Niño weather event. Still, the rains fell in critical periods, and SA attained a decent crop harvest, with commercial maize at 11.2 million tonnes.

Other field crops and horticulture also achieved decent yields that year.

Notably, the 2018/19 season was not preceded with four years of favourable rainfall that improved soil moisture.

Therefore, the current position is better than the most recent El Niño periods for crops and the livestock industry.

Notably, we are not the only ones holding this optimistic view.

In the past few weeks, the International Grains Council (IGC) forecasted SA’s SA2023/24 maize production at 15.6 million tonnes, down marginally from the current crop of 16.4 million tonnes.

Moreover, the US Department of Agriculture’s Pretoria office recently released their forecast, placing SA’s 2023/24 maize production forecast at 15.8 million tonnes, marginally above the IGC’s figures.

These institutions have assumed a mild El Niño and that soil moisture is currently good.

Still, while we are optimistic about the upcoming season, we doubt the crop could be this large and see 13-14 million tonnes as more likely.

Beyond the weather outlook, the farmers are also ready as they continue to receive high volumes of tractors ordered in the past few months, on the back of income from the favourable seasons.

For example, in the first six months of 2023, SA’s tractor sales amounted to 4,061 units, down marginally by 2% from the corresponding period in 2022.

Given the past few years saw solid sales, one wouldn’t have assumed to continue seeing numbers like this in 2023.

Admittedly, these orders were made in the past few months when farmers were still enjoying the gains of the past few seasons’ ample harvests combined with higher prices, thus improving profitability.

But they also signal farmers’ confidence about the sector’s outlook beyond the El Niño worries.

Also worth noting is that farmers will be on the fields with much better input costs in 2023 than in the past season.

For example, most agrochemicals prices are down by roughly 15% year-on-year.

In addition, fertiliser prices are down by about 50% compared to 2022.

This softening of input costs makes production conditions far better for farmers if we consider that fertiliser accounts for a third of grain farmers’ input costs, and other agrochemicals account for roughly 13%.

In conclusion, we are transitioning into the 2023/24 summer crop season, which starts in two months.

There is a lot of uncertainty about the outlook. Still, gauging all these factors together, one could still be optimistic that the upcoming season will be decent.

In the coming weeks, we will have more regular temperature updates, which will give us an opportunity to assess the evolution of the El Niño risk and its likely impact.

Wandile Sihlobo, Agricultural Business Chamber of SA (Agbiz) chief economist and Stellenbosch University agricultural economics department senior lecturer.


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