Rising interest rates and wetness place a dampener on a potentially excellent agriculture season
Published: 2nd Feb 2022
Johannesburg, Gauteng, SA (27 January 2022): After a bullish start to the 2021/22 agriculture season with prospects of another excellent season despite cost pressures, the sector faces a further challenge of increased cost of debt following the South African Reserve Bank’s (SARB’s) decision to raise its repo rate by 0.25% and subsequently the prime lending rate to 7.5%. Although likely to be cautious, expectations are for further increases of 125 basis points through to 2023.
Thus, farmers face higher debt serving costs from rising interest rates which will erode profit margins in the sector in an environment of higher input costs emanating from the massive upswing in fuel, fertilizer, pesticides, and herbicides experienced during the current season. The past record low interest rates afforded farmers an opportunity to do the necessary replacement and replenishment of the machinery and equipment which saw the total tractor and combine harvester sales for 2021 lifting sharply by 26.4% and 44.9% respectively year-on-year (y/y).
A further dampener to what was supposed to be an excellent agriculture season is that much needed seasonal rains on the back of the La Nina weather pattern flooded crops, caused damages in other areas, and delayed planting.
The latest National Crop Estimate Committee Report (CEC) shows a mixed picture on planting of summer crops. The preliminary planting estimate shows a contraction of 5% y/y to 2.61 million hectares in the area under maize, the biggest crop for the country. Although it is still early days, this might yield a crop of 15.3 million tons which is sufficient for the country given the bulging carryover stock. On the positive side, gainers were sunflower and soybeans with area planted increasing by 21% and 10% respectively y/y.
Commodity prices remain relatively strong and should somewhat help offset the cost pressures on the sector. We hope for a few weeks on sunshine to allow the crops to recover and deliver another good harvest, paving a way for a better agriculture season and help limit food inflation pressures.
Tags: Paul Makube
Footwear Industry Articles
- History: British United Shoe Machinery : Harking back to the days of the great BUSM
Barry Turner joined British United Shoe Machinery (BUSM) in Port Elizabeth in the 1970s, when PE was still a major footwear manufacturing centre and BUSM was the preeminent machinery and component supplier to the footwear industry. He got in touch with S&V last year looking for fellow BUSM old boy Johannes (Hannes) Harding, who, with ...moreTemu and Shein: Their marketing is overwhelmingThe only equitable and workable solution is via duties.“I saw my wife’s Shein invoice in November. For a mixed parcel, it included 20% duty,” he said. “So the duty our business pays for imported clothing, which is 50% to 60% of our buy, must either be dropped to 20%, or the duty Shein and Temu pay must be increased ...moreMasterplan at a halt – for now, anywayCape Town, W. Cape, SA – The R-CTFL Masterplan – at its most visible level – has come to a halt.The government-funded contract for the project co-ordinators, B&M Analysts (BMA), ended at the end of last year, and has thus far not been renewed.That has meant that the weekly and monthly PMO meetings, the interface betw ...more
Leather Industry Articles
- State eyes Sh175bn annually from revamped leather industryBusiness DailyNairobi, Kenya (06 January 2025) – The State is eyeing a Sh175 billion annual turnover from a revamped leather industry, up from the current Sh15 billion, a top official said.Deputy president Kithure Kindiki, while inspecting work on the planned Kinanie Leather Park in Machakos County on Monday, said the leather indust ...moreSATEO’s Mark Oosthuizen to step downPort Elizabeth, E. Cape, SA – Mark Oosthuizen, the long-serving secretary and legal counsel to the SA Tanning Employers’ Organisation (SATEO), has retired.In an email, he wrote: “Yes, I can confirm that after much soul searching and medical advice, I have come to realize that I am not in position to give my clients the s ...moreLeather & Hide Council of America backs Congressional Slow Fashion Caucus
Stay Slow. Stay Real. Enjoy the Journey.03 December 2024 – The Leather and Hide Council of America (LHCA) has pledged its support to the Congressional Slow Fashion Caucus. The caucus, founded by district of Maine congresswoman Chellie Pingree, Washington district’s Marie Gluesenkamp Perez and California's Sydney Kamlager-Dove ...more
PPE Industry Articles
- Flexible epoxy coating provides modular constructions with hours of fire protection
Pittsburgh, PA, USA – PPG’s Steelguard 951 epoxy intumescent fire protection coating is designed for advanced – read high value – manufacturing facilities, including semiconductor plants, electric vehicle battery facilities, data centres and other commercial infrastructure.It provides up to 4 hours of fire protecti ...moreAI solution shows truck drivers where to park
Berlin, Germany (02 September 2024) – Parking spaces are in short supply at rest stops along Germany’s highways. Truck drivers are required by law to observe certain rest periods, so when they cannot find parking, they often simply park off to the side of an entrance or exit or on the shoulder, all of which are very ...moreThe importance of supporting local manufacturing to preserve South Africa’s footwear industry
Pinetown, KZN, SA – At Neptun Safety Footwear, our commitment to local manufacturing goes beyond producing quality footwear—it’s about building a sustainable, self-reliant economy in South Africa. We are passionate about growing local industries, not just for the jobs they create today but for the future they secure for ...more
© S&V Publications
