South Africa Sees Benevolent Harvest Forecast Mitigating Food Price Surge

The South African food sector and consumers may be sighing with relief as forecasts for the year 2024 suggest a potential moderation in the high food prices that troubled the country last year. In 2023, food price conversations dominated globally, with South Africa experiencing its share of heightened prices, particularly in the first half of the year. However, as the year drew to a close, the rate of price increases showed some slowdown.

December 2023’s data on consumer food inflation marked further deceleration, plummeting to 8.5% from 9% the preceding month, defying expectations of an increase to 9.3%. The softening of prices was noticed across various food products, with bread, cereals, oils, fats, and vegetables leading the deceleration.

The Agbiz’s sentiments point toward a continued trend of price moderation in 2024 for an array of products within the national food basket. One of the critical factors contributing to this is the expectation of alleviation from animal disease-induced risks to meat supplies, such as the avian influenza that plagued the poultry industry in 2023. Thanks to joint efforts by industry stakeholders and government interventions, there appears to be a rebirth in poultry production. These efforts included importing fertilised eggs and other egg forms to reestablish poultry stock and supplement baking processes, advancing the eventual reduced dependency on whole eggs.

Furthermore, the government has strategically prepared to counter poultry product supply shocks by enabling the importation of poultry products if necessary—though this is not expected in the near future. Government policy and a favourable agricultural climate combine to reassure that produce like fruits and vegetables should see price stabilization in the coming months. Despite the setback on potato farms in the northern regions due to the pepper ringspot virus, there's an anticipation of improved yields in 2024.

Interestingly, weather conditions in South Africa have played along beautifully despite the El Niño period. Farming conditions are currently described as favourable, and there is a positive sentiment regarding the planting of a 4.5 million hectares agricultural area for the 2023/24 season, a 2% increase from the previous year. This optimism extends to expectations of favourable crop yields throughout the country, and all eyes are now on the rainfall in February, which is crucial for crop pollination and yield development.

Moreover, the global context cannot be ignored when considering food prices. The FAO Food Price Index, a critical measure of monthly agricultural commodity prices, confirmed a decline in indices, reflecting a global dip in commodity prices for sugar, vegetable oils, and meat. A continuation of this downtrend is anticipated provided the global crop yields remain positive.

While global geopolitical tensions pose a residual risk to energy costs and shipping routes, the domestic agricultural outlook for South Africa holds promise and could be a buffer against significant disruptions to food prices in 2024. The stage seems set for a year where, should the forecasts hold true, South African consumers might enjoy some respite from the food price escalations witnessed in the past year.