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Johannesburg – The weakening rand during 2015 and 2016 helped boost demand for vegetable exports during the period.
According to the Absa Agricultural Outlook for 2017, the rand weakened as much as 29.4% during the first quarter of 2015 and the second quarter of 2016. This coupled with the increase in prices for staple products such as maize as well as its low production volumes, helped contribute to the greater demand for vegetables, stated Wessel Lemmer, economist at Absa.
Subsequently, the increased demand in vegetables drove up their prices.
Potato prices are expected to come down from May onwards. At August 2016, potatoes were trading at R40.72 per 10kg. Improved weather conditions are also expected to be beneficial for production.
Tomatoes which are the second-largest traded vegetable, after potatoes, reached prices as low as R34.88 in August 2016. This is down from R58.75 recorded in August 2015. The price of tomatoes is expected to decline to reduce the oversupply.
Onion prices increased from R23.17 per 10kg in September 2015 to R61.62 by June 2016. prices fell to R55.42 in August 2016. Onion prices, which do not correlate with the rand’s movements or the white maize prices, are expected to increase in 2017.
READ: Sharp drop in food prices could be on cards
Previously Fin24 reported that there may be a sharp fall in food prices during 2017. The alleviation of drought conditions could slow down food price inflation, according to John Loos, household and property sector strategist at FNB.
However according to the agricultural report the price of beef may be higher during 2017 as farmers rebuild herds following the drought.
Mutton prices are not expected to change but if weather conditions deteriorate, forcing producers to reduce stock, prices may come under pressure.
ALSO READ: Poultry producers to face tight margins in 2017
Poultry prices are also expected to remain bearish in the face of abundant supply in the meat market. Poultry producers will be facing "tight margins" in 2017, mainly due to competition from low cost imports, higher process in feed supplies and the return of the US to the export market.
