Outlook for agrifood market 10 years on

The Bureau for Food and Agricultural Policy (BFAP) South Africa has released its 2014-2023 gricultural outlook.
According to the experts at BFAP, oranges remain the single largest component of global citrus imports because of a steady increase throughout the past decade. Oranges have continued to dominate the market in the past 10 years with a growth of 36% in export volumes for the period between 2002 and 2013.BFAP is an organisation made up of 45 public and private sector analysts and experts who together,pool their knowledge and resources to inform decision makers in the food and beverage market in South Africa and surrounding markets. The research by BFAP has been deemed very valuable as it provides in-depth analyses of future policy and market scenarios as well as the impacts they will have on farms and farm profitability.
For the next 10 years, BFAP says,internationally there will be higher demand for soft citrus imports, especially oranges. Currently SA is the largest citrus exporter in the world behind Spain and the largest exporter from the southern hemisphere. The seasonality of citrus products and the time during which SA is able to supply enhances its competitiveness in the global market.
More than 70% of the domestic crop was exported in 2013, accounting for roughly 14% of global citrus exports.
Despite a declining share in the past decade, the European Union remains the most important destination for South African citrus exports – 43% of total citrus exports were destined for the European Union (EU) in 2013.
Internationally, improved weather conditions in key production regions has led to substantially higher production volumes in 2014 for all products except lemons and limes, which have been negatively affected by frost in Argentina. Consequently, prices in the EU have softened considerably in 2014 and, as the EU traditionally leads the global market,other regions are expected to follow.
“In 2013 the EU threatened to ban South African citrus imports, citing the threat posed by the Citrus Black Spot fungus. The European Commission’s standing committee on plant health endorsed stricter requirements for South African citrus in 2014, resulting in additional testing requirements both in the orchard and the packhouse which will be costly to the industry.
Nevertheless, compliance with the additional requirements is expected to allow the industry to retain access to its most important export market.
Given the uncertainty related to the long term sustainability of these measures,diversification into other possible markets to reduce the dependence on EU markets will benefit the industry in the long run,” says Lulama Ndibongo-Traub of BFAP.
BFAP says it expected to see a continuous expansion of 1.4% per annum in SA’s orange plantation through the next decade. Changes in relative prices will lead to an increase in lemons and soft
citrus plantations; grapefruit plantations are projected to increase by only 2.4% during the next 10 years.
In 2013, meat prices reached record levels.A recent substantial decline in feed costs has set the scene for renewed profitability in the meat sector. The demand for meat products remains firm, driven largely by emerging regions characterised by rapid income growth, as well as growing and increasingly urbanised populations.
Ndibongo-Traub confirmed BFAP agreed with other analysts that there will be a continued expansion of global meat consumption in the next decade, led by poultry as the cheapest, most accessible meat which remains free of the cultural barriers that affect pork consumption in various regions. Poultry is expected to account for almost half of additional meat consumed through the next decade, followed by pork (29%), beef (16%) and sheep (6%).
“Chicken consumption in South Africa is projected to surpass 2.6 million tons by 2023, approaching 50kg per capita. Production is expected to expand to almost two million tons by 2023, resulting in 680,000 tons of chicken being imported by 2023. The general duty on imported chicken was increased in
2014, supporting higher prices; however, imports originating from the EU remain duty free under the Trade Development and Cooperation Agreement (TDCA),reducing the impact of higher tariffs in the domestic market,” she said.
Milk and dairy products
According to BFAP, the instability of the dairy market globally has caused some dramatic shifts in the market. Tracy Davids of BFAP explains: “A typically cyclical pattern is common in dairy markets, as producers respond to higher prices before the increased supply forces prices down again; however, the steepness of the cycles in recent years is indicative of dramatic shifts in exogenous drivers, with multiple factors on the supply and demand side often combining to cause substantial price variations. While fluctuations in demand have been attributed to an unstable economic environment, constantly changing climatic conditions in key production regions have impacted on the supply response.
“The South African dairy market is divided into two segments: liquid milk products (including pasteurised milk,UHT milk, yoghurt and buttermilk) which accounts for just under 60% of total dairy
consumption; and concentrated products (including cheese, butter, milk powders and condensed milk) which make up the balance. Although the producer price for raw milk is exceptionally volatile, the
nature of concentrated dairy products allows international trade to correct short-term imbalances in the market,resulting in more stable prices. In the long run, nominal prices of concentrated dairy
products are expected to increase over the baseline period. However, only cheese is expected to increase at a rate greater than the expected inflation rate, resulting in a marginal increase in real terms. The prices of butter, skimmed milk powder and whole milk powder are expected to increase at an average of 5.5%, 5.4% and 5.3% per year respectively, resulting in relatively constant real prices.
Ndibongo-Traub concluded: “The South African agricultural sector has always operated in an uncertain
environment and the future will be no different. The impact of adverse weather conditions on global food prices has been evident in the past three years and changes in the macroeconomic environment could potentially result in a very different outlook.”
– Kgaogelo Mamabolo
Bureau for Food and Agricultural Policy (BFAP);www.bfap.co.za