Growing of Cereals and Other Crops in South Africa 2023

Challenges

Drier summer seasons and possibly drought is anticipated, affecting the outlook for summer grains. Poor economy.

Introduction

South Africa’s cereals and related crops industry has enjoyed three strong production years, underpinned by favourable weather conditions and high international producer prices. Several global crises caused sharp rises in grain and oilseed prices, driving the value of South African crops higher at a time of record production volumes. Oilseed production has been strengthened by processing investments, particularly in soya beans, leading to import substitution. Drier summers ahead will likely favour sunflower seeds and soya beans. As international prices decline and the weather becomes less favourable, grain producers face numerous challenges from the economic and political climate, particularly the electricity crisis and poorly-performing ports.

Opportunities

Digital transformation can improve efficiencies and reduce operating costs. Development of a local industrial hemp value chain. Export markets, particularly Asia. Growth potential of canola, preferred by consumers for its health qualities. Improved profitability and liquidity can help improve resilience. Increased local production of oilseeds. Increased malt barley production to meet the demand of a new SA Breweries malt processing plant. Increased trade with the rest of continent through the African Continental Free Trade Area.

Outlook

Cereal producers are in the throes of a fourth boom season after higher-than-average rains, the introduction of new seed varieties, and sustained high international commodity prices. Disruptions to grain and oilseed supply from the Black Sea region seem to have stabilised while improved weather conditions in the United States and Brazil have led to increased global stocks of summer and winter cereals, which will put downward pressure on producer prices. The impact of worsening growing conditions and reducing producer prices is expected to be exacerbated by sticky input costs. Grain and oilseed producers are well-capitalised and may invest in improved yield to mitigate against margin pressure. Drier summers will favour oilseed production.

Report Coverage

This report on growing cereals and other related crops includes information on cereal grains such as maize, wheat, soya beans, dry beans, sorghum, oilseeds, barley, oats and hemp. It includes information on where crops are grown, the size of the industry in terms of revenue and production, state of the industry, notable players, trade, technology and innovation, input costs and the industry’s outlook. There are profiles of 20 companies including grower associations such as Grain South Africa and SA Canegrowers, agricultural companies such as AFGRI, BKB, Kaap Agri and Senwes, and hemp industry players such as Afrimat Hemp and Hemp Africa SA.

Trends

Debt reduction and improved cashflow. Increased demand from the animal feed industry. New regulations for commercialisation of hemp led to uptake of hemp farming. Reducing consumer buying power is leading to increased demand for cereals. Significant investments in oilseed crushing, caking, and refining leading to rapid import substitution. Summer crops have attained record production levels over three wet seasons at a time of high international commodity prices, resulting in improved profitability. Winter grains have benefited from improved yields and higher producer prices.