Western Cape Floods and Agricultural Conditions

The Western Cape, which accounts for over two-thirds of South Africa's winter crops and a large share of wine grapes and various horticulture products, faced another heavy and destructive flood this past week. The rainfall peak was mainly the Bredasdorp in the Southern Overberg region.
Significant damages to farm infrastructure, electricity supply and road networks are reported in various small farming towns of the province, mainly the southern areas. Still, the impact of the floods on wine grapes and table grapes remains unclear as industry horticulturalists continue assessing the fields. We have seen anecdotal evidence of damages in some storage facilities and crop fields in the southern regions of the province.

Another challenge caused by wet soils has been the difficulties of tractors spraying herbicides and fertilizers, so some farmers now use drones to spray the fields. Perhaps this is a positive step toward technological advancement accelerated by unfavourable weather conditions.

Regarding the winter crops, mainly wheat, barley and canola, the focus has been on whether the excessive rains would undermine the yield potential. As best as we can tell, and from various interactions with farmers in the Western Cape, we suspect the impact on crops will be minimal, but the harvest quality may be an issue. The southern regions could have some damage, but its scale remains unclear. We maintain a positive view of South Africa's 2023/24 winter crop harvest.

On 27 September 2023, the Crop Estimates Committee (CEC) released its second production estimates for winter crops and kept wheat harvest at 2,1 million tonnes, up 1% from the previous season. Importantly, this is well above the 10-year average harvest of 1,8 million tonnes. This is supported by an expected large crop in the Western Cape and Limpopo, which overshadowed the anticipated decline in the Free State, Northern Cape and other provinces. This means that the crop conditions in the Western Cape are far more consequential for South Africa's winter wheat harvest size. Monitoring crop conditions in the coming weeks remains crucial to us.

Assuming that there will be no major changes in the crop forecast in the coming months, one can be confident that a wheat harvest of 2,1 million tonnes implies that South Africa will likely need to import about 1.6 million tonnes of wheat to meet domestic consumption in the 2023/24 season (down from the forecast 1.7 million tonnes in the 2022/23 season). Still, we must keep an eye on the CEC report of 26 October, as this would have accounted for the impact of the heavy rains in the Western Cape.

Moreover, the 2023/24 barley production is estimated at 389 920 tonnes (up 29% y/y). This will be the largest crop in three years and will mainly be supported by an expansion in the area planted and the anticipated better yields. The 2023/24 canola crop is estimated at a record 230 950 tonnes, slightly down from last month (up 10% y/y). The annual uptick is also due to increased plantings and expected better yields. The following CEC report will also provide further insights into the yield expectations of these crops and whether the recent floods have had a more severe impact than we currently see

We discuss more in this week's podcast segment.

My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/

Podcast production by: Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli
9 Oct 2023 English South Africa Investing · Food

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