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The dire forecasts that the El Niño weather system would bring drought to large swathes of SA’s important crop-growing regions during the summer months have yet to come true. This means plantings have been good, and food price pressures should ease for consumers, at least in the near term.
“While El Niño would typically bring drought, this year has been the complete opposite – rains,” Wandile Sihlobo, chief economist of the Agricultural Business Chamber, said in response to questions.
“The agricultural conditions across the country are favourable, and we think SA will have yet another decent harvest.”
The year-on-year cost of the average basket of foods that households prioritise rose 4.9% in January, far from last year’s peak in February at 17.4%, according to the latest report from the Pietermaritzburg Economic Justice and Dignity Group.
A muted ascent
While prices are still climbing, they’re climbing far less quickly. The foods that people buy for their families before spending more broadly include maize meal, rice, cooking oil, white sugar, samp, potatoes, frozen chicken portions, tea, and white and brown bread. It’s these items that the Pietermaritzburg Economic Justice and Dignity Group (PMBEJD) measures to show the financial pressure that households may be experiencing.
Sihlobo said the expected large domestic agricultural harvest, combined with softening international agricultural prices and a recovery in the domestic meat livestock and poultry industries, would all be key catalysts for moderating food inflation this year.
Considering these factors, along with the base effects, he said: It is possible to see food price inflation cooling to around 6% to 7% in 2024 from an average of 11% in 2023.
It may turn out even better. Gina Schoeman, MD, SA economist, and head of research at Citi, said her organisation sees consumer price inflation on food down to 4.5% by year-end with maize prices, which affect bread and cereals, easing off along with the cost of fruits and vegetables, which have been volatile in the recent past.
In South Africa’s December figures for consumer prices, food and non-alcoholic beverages didn’t contribute to the inflation outcome, with Stats SA showing costs being unchanged month-on-month. What has also helped consumers not feel as much pressure at the tills as they might have, according to Annabel Bishop, was the fact that international agricultural food commodities prices in dollars fell 3.1% in December from November, as shown by the Economist commodities index.
Image By: Pietermaritzburg Economic Justice and Dignity Group/Sharlene Rood
The rand also saw only a fractional weakness of 0.4% against the dollar over the same period, she added. The rand’s relative stability will have helped moderate the prices of imported foodstuffs.
Increased summer planting
The current agricultural conditions have been described as excellent, and Sihlobo said he believes farmers planted the intended area of 4.5 million hectares for the 2023/24 season, up 2% from the same time last year. The Agricultural Business Chamber expected favourable yields across the country, even in the North West where rainfall has not been as high as in other regions.
As January comes to an end, what will be vital is ideal rain in February, which is a pollination period that’s key to yield development, Sihlobo said.
El Niño, with its full name being the El Niño-Southern Oscillation, is a cycle that sees a fluctuation in the normal wind and sea temperature patterns over the tropical Pacific Ocean basin that causes the disruption of atmospheric systems on a global scale. For SA, El Niño typically results in droughts, particularly in the central to eastern regions, an increase in heat waves and associated wildfires. But just because the expected lack of rainfall hasn’t yet come to pass, it doesn’t mean it won’t.
The dryness could start from around March, Sihlobo said, referring to SA Weather Service estimates. Still, he said, that will be post-pollination and “have a minimal negative impact on the crop”.
