Good news for agribusiness likely to be short-lived

Kaz via pixabay

Recent agricultural machinery sales data showed that 23 combine harvesters were sold in March 2017, up 21% from the previous month and 64% from the corresponding period in 2016.

However, the chamber said the optimism in the agricultural machinery market may be short-lived as the weaker rand could increase the cost of equipment.

In addition, escalating farm debt could also prevent some farmers from investing in machinery. In 2015, the total real farm debt was at R142bn, which was a record in a database that began in 1980, the chamber said.

Wandile Sihlobo, the head of economic and agribusiness research at Agbiz, said the growth in combine harvester sales reflected the positive prospects of summer crop production.

The overall summer crop production is estimated at 16.7-million tonnes, which is a 78% annual increase. The most notable increases are in maize and soybeans. Total maize production is estimated at 14.3-million tonnes, which is the second-biggest crop on record after the 1980-81season. Soybeans were set to be the biggest on record, estimated at 1.2-million tonnes, said Sihlobo.

Junk status likely to hurt agribusiness

Agbiz warned on Friday that the decision by S&P Global Ratings to downgrade SA's sovereign debt to junk status was likely to hurt agribusiness and consumers would have to pay more for food. President Jacob Zuma's decision to sack finance minister Pravin Gordhan and his deputy, Mcebisi Jonas, has been cited as one of the reasons S&P decided to downgrade SA's credit rating.

"The dramatic political developments of the past week and the downgrade are "seriously bad news for the agricultural and agribusiness sectors of our country's economy, and for food security," Agbiz CEO John Purchase said.

"Consumers must realise that the consequences of these irresponsible political developments will in time manifest themselves in higher food prices, and severely compromise the good food security status of our country. It is especially the poorest of the consumers that will suffer the most," Purchase said.

Source: BDpro