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Optimistic outlook for agriculture

The latest forecast released by South Africa’s Crop Estimates Committee (CEC) points to a somewhat optimistic outlook for the agricultural sector as seasonal conditions turned positive.

 The current estimates point to a sharp recovery in output of summer crops with the total maize planted area coming in up 10% year-on-year (y/y) at 2.54 million hectares (ha) and a potential 13.64 million tons using an average of 5.4 tons per ha for a relatively good season.

Not only is this positive from a GDP perspective, the estimated supplies may help tame food inflation which has been relatively contained below 3% for the better part of 2019.

The 2019/20 agriculture production season began on a negative note with delays in Spring rains and concerns over the weather outlook as forecasts indicated potential dryness across the board.

Agriculture performance was also weak as the sector fell into recession following three consecutive quarters of negative growth of 16.8%, 4.2%, and 3.6% respectively in the 1st, 2nd, and 3rd quarter of 2019.

Optimism in the sector was subdued and another bad season was going to be catastrophic for the whole value chain and the country as food inflation was likely to breach the double-digit level.

Fortunately, this was avoided as good rains replenished both soil moisture and dam levels although dryness persists in parts of the Eastern Cape and Northern Cape.

The rebound in production conditions afforded farmers to plant more area relative to the previous year and the summer grain and oilseed crops are in good shape though more follow-up rains are needed in some areas to ensure a good finish.

Article courtesy of South African Good News