Agricultural stocks could buffer against high food inflation - economist

Cape Town - The outlook on food inflation will not change significantly in the near to medium term, because of the buffer of large stocks from the previous agricultural season.

This was according to Wandile Sihlobo, economist at the Agricultural Business Chamber (Agbiz).

"Overall, a clearer picture of SA’s 2017/18 grain and oilseed production will unravel later this month when the National Crop Estimate Committee releases its preliminary planting estimates data," he said in the latest Agbiz newsletter.

Fin24 reported earlier that in November inflation eased to 4.6%, according to Statistics SA. This is 0.2 of a percentage point lower than the corresponding annual rate of 4.8% in October.

Food and non-alcoholic beverages contributed 0.1 of a percentage point in November. The index increased by 0.4% month on month.

• READ: Inflation eases to 4.6%

In Sihlobo's view the agriculture sector in SA can expect a mixed outlook in 2018.
 
The eastern parts of SA - generally Mpumalanga, KwaZulu Natal, the eastern Free State and the northern parts of the Eastern Cape - received good rainfall during the festive season. Crops are generally in a fair condition. But in some areas crops were affected by hail.

The central and western parts of the country received very little rainfall in the last few weeks of 2017 and also experienced a drier start to 2018. This led to delays in summer crop planting activity, particularly in the North West, and the western parts of the Free State.

These provinces collectively account for 68% of the intended maize planting area of 2.47 million hectares in the 2017/18 season. They also account for 86% of the 665 500 hectares intended for sunflower seed production in the 2017/18 season, Sihlobo pointed out in the Agbiz newsletter.
 
"The optimal maize planting window has already passed, so even if SA was to suddenly receive widespread showers, there would be minimal improvements in planting activity in these particular provinces. Any maize planted outside the optimal window risks being affected by frost later in the season, which in turn, increases the likelihood of poor yields," said Sihlobo.

He added that South Africa is still well supplied in the short to medium term regarding maize.

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