Agricultural Market Viewpoint with Wandile Sihlobo

Brazil is a major producer of coffee, accounting for nearly 40% of global coffee production. Other major producers are Vietnam 17%, Colombia 8%, Indonesia 6% and Ethiopia 6%, amongst others.

Brazil is also a major coffee exporter to the U.S. Consequently, the 50% tariffs that will take effect on August 1 will likely cause Americans headaches. Brazil's coffee is inescapable due to its significance in global coffee production.

Coffee prices have been relatively high since the start of the year due to unfavourable weather conditions in Vietnam and Brazil, which have weighed on global supplies. The U.S. tariffs will pose a challenge for American consumers.

We are watching the impact of all this on the global coffee prices, which have surged recently on the back of the U.S. tariffs and the preexisting challenges of unfavourable production conditions in South America.

As South Africa, we import coffee, and Brazil can surely have room to increase supplies to South Africa. I know our domestic tea and coffee producers won't like me saying this. But hey, we have a decent demand for coffee (just like we do with other "substantive beverages” like whiskies, where we spend over US$300 million on imports annually).

Anyways, if one looks at South Africa's coffee imports by volume, we imported, on average, about 23,921 tonnes per annum in the past five years. Brazil and Vietnam accounted for 54% of South Africa's coffee imports. Other suppliers of coffee to South Africa include Uganda (8% of SA's imports), Tanzania (7%), Colombia (4%), Guatemala (4%), Ethiopia (3%), and Honduras (3%).

So, if Brazil can offer competitively priced, high-quality products, it can take a market share from the likes of Vietnam and many African suppliers. The South African consumer is not asking for much – just high quality and a better price.

In these times of export diversification, while South Africa is a small importer, it certainly can take a few more tonnes of coffee imports from Brazil.

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Richard Humphries and Sam Mkokeli produce this podcast.

Wandile Sihlobo is the chief economist of the Agricultural Business Chamber of South Africa. Wandile Sihlobo website

The close observers of this letter will recall that when I first argued for South Africa to place temporary restrictions on the imports of poultry products from Brazil, the idea wasn’t for us to be protectionists. Instead, we wanted to ensure that Brazil controls the avian influenza outbreak before we could resume the imports. This decision was not unique to South Africa, but a standard global practice, and at the time, the EU and China had already placed temporary bans on Brazil’s poultry imports.

We also had haunting memories of the 2023 avian influenza in South Africa, which led to significant financial losses for poultry producers and higher prices for eggs and other poultry products for consumers. At the same time, we were seeing the perverse spread of the various strains of bird flu in the U.S. and parts of the UK, which had crossed from poultry to dairy, and then to humans. Having witnessed such cases, it only seemed fair to ensure that South Africa takes a careful approach to the imports.

After it was established that the ban was only in a few areas, South Africa started applying a regionalised poultry import restriction and opened some regions for imports. This was to ease the poultry supplies in the domestic market, while ensuring there were careful considerations for the potential spread of the disease. This was also on the back of the recognition of the importance of Brazil in South Africa’s poultry imports. South Africa imports roughly 20% of its poultry products, which is about 350,000 tonnes a year, and approximately 70% of those imports are from Brazil.

Having received convincing data on the successful containment and eradication of the disease, the South African authorities have sufficient confidence to lift the ban on Brazil’s poultry product imports. This was effective on July 4, 2025. With imports now back on a regular schedule, it is fair to assume that the fears of a meat price inflation uptick should subside. The resumption of imports bodes well for moderating food price inflation that we hold for the year. Wandile Sihlobo website

In the current world of trade fragmentation, one area the BRICS countries should consider focusing on more in their deliberations this year is deepening intra-BRICS trade. For South Africa's agriculture, this has been a central input in various discussions for some time, reflecting our desire to expand export markets to the BRICS countries, as well as the potential that lies in this region.

Currently, South African agricultural exports to the BRICS remain relatively low (at less than 10% of our agricultural exports to the world, which are US$13.7 billion as of 2024). The BRICS group is not a trade bloc, which partly explains our low agricultural penetration.

However, this may be an opportune time to change this reality and explore a more ambitious agricultural trade arrangement that aims to address the low intra-trade challenge in agriculture within this grouping.

What has proven to be a constraint in the past is not the low demand, but rather the relatively high import tariffs and some non-tariff barriers (phytosanitary barriers) within this group, which continue to distort agricultural trade.

The BRICS countries represent a substantial agricultural market, with annual imports exceeding US$300 billion.

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Richard Humphries and Sam Mkokeli produce this podcast. Wandile Sihlobo website

There are some glimpses of positivity that often arise from the agricultural data, which are worth highlighting. Indeed, these do not suggest that all is well with South Africa's agriculture; we continue to struggle with animal disease challenges in cattle farming and the poultry industry.

However, if one is in horticulture or field crop production, the operating conditions are more favourable. The message I continue to receive from farmers of various fruits, vegetables, grains, and oilseeds, as well as other field crops, suggests a promising agricultural season. The yields are up from last year's drought period.

For a moment, I was worried that the excessive rains throughout April would cause quality damage to some crops. At the start of the harvest season, particularly in some grains, that was indeed the observation of some farmers. But things seem to have changed quite significantly. I've heard that the quality of crops, especially soybeans, is not as bad as we anticipated, although there are indeed areas with challenges.

Nevertheless, what is also encouraging is seeing a continuous upward revision of the harvest. For example, on June 27, the Crop Estimates Committee (CEC) released its fifth production estimate for the 2024-25 season in South Africa, lifting the expected harvest.

While there are five more estimates to come in the following months, when we reach the fifth estimate, we generally have more confidence in the size of the crop, as well as its quality, as some areas would have delivered a sizable share of their crop to the silos.

The CEC raised South Africa's 2024-25 summer grains and oilseeds production by 3% from the May 2025 estimate to 18,43 million tonnes. This represents a 19% increase from the previous season.

A closer look at the data reveals that the monthly upward revisions were primarily in maize (+1%), soybeans (+14%), and dry beans (+4%). Meanwhile, the rest of the other crops were roughly unchanged from the previous month.

More specifically, South Africa's maize harvest is now forecast at 14.78 million tonnes, which is 15% higher than the crop for the 2023-24 season. Of these 14.78 million tonnes, about 7.65 million tonnes is white maize, and 7.13 million tonnes is yellow maize. Importantly, these forecasts are well above South Africa's annual maize needs of approximately 12.00 million tonnes, implying that South Africa will have a surplus and remain a net exporter of maize.

Regarding oilseeds, the soybean harvest is estimated at 2.65 million tonnes, representing a 43% year-over-year increase. The annual uptick is primarily due to improved yields resulting from favourable rainfall. A significant portion of the soybean crop has already been delivered to commercial silos, and the quality is generally encouraging. Importantly, this is the second-largest harvest on record, and it is not even final. The record harvest of 2,77 million tonnes was recorded in the 2022-23 production season. This ample harvest also means South Africa will remain a net exporter of soybeans and soybean products. We are far from the time when we were a net importer of soybean products for animal feed, mainly oilcake. We are now in a net exporter position.

Sunflower seeds are up 15% from the previous season and are estimated at 727,800 tonnes.

The groundnut harvest is estimated at 63,510 tonnes (up 22% y/y), sorghum production is estimated at 137,970 tonnes (up 41% y/y), and the dry beans harvest is at 74,299 tonnes (up 47%). The base effects and favourable agricultural conditions boosted the yields.

In essence, South Africa is experiencing a recovery season for its grain and oilseed production, although some areas may face quality challenges. We see the benefit of the solid harvest in generally softening commodity prices, which are now at lower levels than last year, boding well for the moderating food price inflation for the year.

Richard Humphries and Sam Mkokeli produce this podcast. Wandile Sihlobo website

Maize demand in the Southern African region is expected to remain strong in the 2025-26 marketing year, which commenced in May (this marketing year corresponds with the 2024-25 production season). One of the countries that imported most maize in Southern Africa in the 2024-25 marketing year was Zimbabwe. The country accounted for 56% of South Africa's maize exports of 2.3 million tonnes that year.

In the 2025-26 marketing year, Zimbabwe's maize demand is expected to be smaller but remain substantial. The previous season presented unique challenges, primarily the mid-summer drought. This led to a 60% decline in Zimbabwe's maize production, leaving the country with only 635,000 tonnes of harvest. This was far below the 2,0 million tonnes Zimbabwe required for its domestic annual consumption. Thus, imports played a crucial role in meeting domestic needs.

But the current season has brought some recovery. Zimbabwe's 2024-25 maize production is forecast at 1.3 million tonnes, according to recent data from the Pretoria-based unit of the United States Department of Agriculture (USDA). This is just more than twice the output from the previous season. This recovery is primarily driven by improved weather conditions and an increase in the area that farmers managed to plant for maize. Still, Zimbabwe's potential maize harvest of 1.3 million tonnes will not be sufficient to meet the country's domestic needs of 2.0 million tonnes, leaving it to import the balance.

In the last marketing year, South Africa supplied nearly all of Zimbabwe's maize imports. However, in the 2025-26 marketing year, there may be some changes, with Zambia becoming an exporter again. Zambia, the second largest maize producer in the Southern Africa region, has seen a recovery in its 2024-25 maize production, now estimated at 3.66 million tonnes, up from 1.5 million tonnes in the previous season, according to Zambia's government data. Similarly to Zimbabwe, and South Africa, this increase in the harvest is due to favourable weather conditions and decent area plantings. The harvest is underway in the country. This means Zambia could return to being a net exporter of maize, as its domestic maize consumption is about 2.8 million tonnes, far surpassed by the expected harvest of 3.66 million tonnes.

Listen to the podcast for more insights.

Richard Humphries and Sam Mkokeli produce this podcast. Wandile Sihlobo website

South African farmers and agribusinesses continue to exhibit resilience and optimism. The Agbiz/IDC Agribusiness Confidence Index (ACI) -- a sentiment indicator of business conditions in the sector -- although declining from the high levels it reached at the start of this year, remains at encouraging levels.

After a notable uptick in the first quarter of 2025, the ACI fell by 5 points in the second quarter of the year to 65. Any level of the ACI that is above the 50-neutral point signals optimism.

Regarding the slight decline, most respondents identified the uncertain global trade environment, lingering geopolitical tensions, and the domestic animal disease challenge as key factors constraining the sector.

Despite the slight quarterly decline, the current level of the ACI implies that South African agribusinesses remain optimistic about business conditions in the country. The better summer rains and improvements at the ports, which have enabled exports with minimal interruptions, are among the positives.

This survey was conducted in the second week of June, covering various agribusinesses operating in all agricultural subsectors across South Africa.

A crucial point to remember when reviewing the Index is that sustained optimism, at levels above the 50-neutral market, is fundamental, especially in the long run, for fixed investment in the agriculture and agribusiness sectors.

The ACI also serves as a leading indicator of agricultural growth prospects over time. We can thus expect slightly better farming output data for the second quarter of the year. The favourable production conditions for field crops, wine grapes, and various fruits and vegetables will be the primary drivers of the sector's performance.

Indeed, we are yet to see the full impact of the Foot and Mouth Disease that is currently challenging the sector. This has started to impact the sentiment and is likely to continue in the coming months.

In essence, the ACI results for the second quarter of 2025 indicate that the sector's mood remains upbeat about the recovery this year. Still, the results also show that the recovery will likely be uneven as some key subsectors struggle with animal disease.

Notably, the dominance of geopolitical concerns in respondents' views illustrates the strong dependence of South Africa's agricultural sector on export markets and the need to diversify these markets. China, India, Saudi Arabia, and Egypt are among the key markets we should target for expansion.

Still, as we drive diversification, we must work vigorously to retain access in various markets across the EU, UK, Africa, Asia, the Middle East, and the Americas, among others.

Also significant are the collaborative efforts between business and government in addressing biosecurity issues in South Africa's agriculture, as well as efforts to promote more efficient network industries, better municipal management, and the implementation of the Agriculture and Agro-processing Master Plan, which is crucial to the long-term growth of the sector.

Listen to the podcast for more insights.

Richard Humphries and Sam Mkokeli produce this podcast. Wandile Sihlobo website

We are yet to receive more details on China's intentions to lower import tariffs for various African countries. What is worth emphasising for now is that, from a South African agricultural perspective, this would be a welcome development.

China has profound importance in global agriculture. In 2023, China was a leading importer, accounting for 11% of global agricultural imports, with imports valued at US$218 billion. The leading suppliers of farm products to China are Brazil, the U.S., Thailand, Australia, New Zealand, Indonesia, Canada, Vietnam, France, Russia, Argentina, Chile, Ukraine, the Netherlands, and Malaysia.

However, China has been on a journey to diversify its agricultural exports beyond these suppliers, which has accelerated following the U.S. initial tariffs in 2018 and is ongoing in 2025.

South and Latin American countries, as well as Australia, have been the primary beneficiaries of China's diversification strategy so far.

But South Africa must also be part of this conversation. And what the Chinese authorities have signalled is a starting point for a deeper conversation on agricultural trade.

The first step will have to be for South African authorities to approach China to present a range of products that can be exported, and then build from there.

South Africa remains a negligible player in the Chinese agricultural market, accounting for a mere 0.4% (US$979 million) of China's agricultural imports of US$218 billion in 2023. These exports include a variety of fruits, wine, red meat, nuts, maize, soybeans, and wool.

However, there is room for more ambitious agricultural export efforts.

The South African agricultural sector, comprising organised agriculture and researchers, consistently emphasises the need to lower import tariffs in China and remove phytosanitary constraints on various products.

There is now a pathway to have a productive conversation about this matter and move with speed. Of course, once more details are available on tariffs, we will also need to examine the phytosanitary issues related to agriculture.

Overall, this is welcome news.

Listen to the podcast for more insights.

Richard Humphries and Sam Mkokeli produce this podcast. Wandile Sihlobo website

In a year where trade has dominated the headlines since the U.S. started imposing higher tariffs against its trading partners, agricultural export activity is worth paying close attention to.

Encouragingly, the start of the year has remained positive for the sector. In the first quarter of 2025, South Africa's agricultural exports totalled US$ 3.36 billion, up 10% from the same period a year ago. This is a function of both higher volumes of various product exports and better commodity prices.

The products that dominated the exports list in the first quarter were mainly grapes, maize, apples, pears, apricots, cherries, peaches, wine, wool, fruit juices, nuts, dates, avocados, pineapples, and beef, among other products.

While the ports remain a challenge and require further improvement and investment, the agricultural export season in the first quarter experienced less friction than in the recent past..

South Africa does not engage in one-way trade. The country imports various agricultural products. In the first quarter of 2025, South Africa's agricultural imports totalled US$ 1.94 billion, a 19% increase year-over-year. The increase resulted from higher value and volume of major products South Africa imports, such as wheat, palm oil, rice, poultry, and whiskies.

Listen to the podcast for more insights.

Richard Humphries and Sam Mkokeli produce this podcast. Wandile Sihlobo website

The Southern Africa region is far better regarding food supplies today than a year ago. For example, Zambia's 2024-25 maize crop has bounced back. The government forecasts the harvest to be 3,66 million tonnes, up from 1,5 million tonnes the previous season. This is because of favourable weather conditions and the decent area plantings.

The harvest is underway in the country, and the message we are hearing about the quality of the crop remains encouraging. This also means Zambia could return to being a net exporter of maize as its domestic maize consumption is about 2,8 million tonnes, far surpassed by the expected harvest of 3,66 million tonnes.

Importantly, one can expect the domestic maize prices to continue moderating as the harvest continues, thus easing the general food price inflation.

Zambia is also not the only fortunate country in the Southern Africa region. The entire region received better rains, even excessive rains in some areas. We continue to hear encouraging news of the better grain harvest in Zimbabwe. For example, Zimbabwean farmers likely planted 1.7 million hectares of maize this year, slightly lower than last year but decent.

We will know more about the yields in the coming weeks and months. What is clear at the moment is that Zimbabwe will, too, have a better maize harvest compared to the 2023-24 drought year.

The South African story is even more optimistic. For example, South Africa's 2024-25 maize harvest is forecast at 14,66 million tonnes. There is an increase in white and yellow maize, with harvests now at 7,75 million tonnes and 6,91 million tonnes, respectively.

Overall, the maize harvest of 14,66 million tonnes is up 14% year-on-year, primarily benefiting from expected yield improvements on an annual basis. Importantly, these forecasts are well above South Africa's yearly maize needs of about 11,8 million tonnes, which implies that South Africa will have a surplus and remain a net exporter of maize.

The 2024-25 season is a positive change for Southern Africa's staple crop, maize. Importantly, it is encouraging to see Zambia bounce back. This country is vital in maize supplies to the region as the second largest producer after South Africa.

Listen to the podcast for more insights.

Richard Humphries and Sam Mkokeli produce this podcast. Wandile Sihlobo website

One of the themes that dominated the White House Press session this evening was agriculture – the idea that the farming sector in South Africa is under siege and people are running away. But this could be no further than reality.

The South African farming sector or farming community is not under siege. And yes, the country has devastating crime incidents, which should remain a major worry for all.

However, it is necessary to state that there is no land expropriation without compensation in the country, that the recent Expropriation Act has been massively misrepresented, and that property rights remain intact. Land Reform is still under the market principles of the willing buyer-willing seller.

The agricultural sector, which some have portrayed as a victim, has actually made enormous progress over time, contributing significantly to the country's overall economic growth. The sector has more than doubled in value and volume terms since 1994.

This expansion was broadly shared across all major subsectors of the South African farming economy, including horticulture, field crops, and livestock.

South Africa has seen growth in its agricultural exports over time, reaching a record US$13,7 billion in 2024. South Africa is now ranked the world's 32nd largest agricultural exporter, the only African country in the top 40 in terms of value.

Listen to the podcast for more insights.

Richard Humphries and Sam Mkokeli produce this podcast. Wandile Sihlobo website