Following a weak performance with a 1% y/y decline in Q1 of 2024, South Africa’s average electricity generation rebounded strongly at the beginning of Q2 of 2024.
The country experienced no loadshedding for a full month in April 2024, and although the generating system remains vulnerable the 52-week outlook indicates the reduced unplanned outages.
Senior Agricultural Economist at FNB Commercial Mr Paul Makube said the positive development on the fuel front is that the prices of diesel declined in May 2024 with the 0.05% and 0.005% sulphur grades cut by 30 and 36 cents per litre respectively relative to the previous month. However, the 37 cents per litre increase in the two grades of petrol (ULP & LRP) does not bode well for the consumer.
“Diesel is a critical input in farming operations such as generating electricity during loadshedding and distribution of livestock and animal products to and from markets across the country. Stable electricity supply means uninterrupted operations and reduced costs of running diesel generators for poultry businesses, piggeries, abattoirs, and other intensive production systems.”
Makube said that stable to lower energy costs help cushion livestock farmers in terms of reducing margin pressure in an elevated raw feed input price environment.
“The price of yellow maize has already surpassed R4,200/t recently while white surged to a high of R5,100/t. This has already forced feed millers to look for cheaper imports from Argentina for processing in the coastal areas,” he said.
Meanwhile, headline PPI accelerated slightly to 4.6% y/y in March 2024 from 4.5% in February and increased by 1.1% m/m.
For agriculture, Makube said, the annual PPI jumped 6.2ppts from February to 8.5% y/y in March 2024 and was monthly up by 2.9% m/m after falling by 2.8% m/m in February.
The PPI for live animals accelerated faster to 1.8% m/m from -0.7% previously, and annually increased by 5.4ppts from the previous month to 12.6% y/y. See figure 1 for further details.
He said Livestock slaughter accelerated early in 2024 on worsening El Niño conditions.
“The El Niño-induced midsummer drought was a big constraint for pasture build-up ahead of winter. This forced producers to start offloading excess stock in anticipation of a constrained feed supply in the winter ahead. Meanwhile, raw feed input prices were also escalating on the back of a tightening summer harvest outlook.
“Although data comes in with a lag of 2 months, the latest trend on cattle slaughter shows an10.6% y/y increase in the first two months of 2024 relative to a 1.1% decline recorded for the same period in 2023,” explains Makube.
He said the total cattle volumes for the season to FEB 2024 (STD) which starts from November to October increased by 7.1% y/y to 925 thousand head in the 2023/24 slaughter season (figure 2a). In February 2024, cattle slaughter rose by 7% m/m and 13.8% y/y to 210,974 head.
“We saw a similar trend for sheep and pigs with total volumes for January and February 2024 lifting by 5.3% (compared to 4.2% in 2023) and 0.5% (compared to -2.6% in 2023) y/y respectively. The STD total sheep slaughter shows a modest increase of 7.4% y/y at 1.72m head. Monthly volumes rose by a whopping 23.1% y/y at 400,460 head (figure 2b). For pigs, the STD total slaughter shows a 1% y/y increase to 1.25m head,” says Makube.
Regarding Foot-and-mouth disease (FMD), Makube said a few reported cases lately with one outbreak in the EC, Humansdorp area. The farm has been placed under quarantine and biosecurity measures implemented. Neighbouring farms and related areas were placed under precautionary quarantine, pending clinical and serological investigation to determine their FMD status, according to Department of Agriculture, Land Reform and Rural Development (DALRRD)
“The update indicates that a total of 9 outbreaks occurred since 2019 of which four have been resolved and closed with the World Organization for Animal Health (WOAH) while 5 remain open. Currently, there are three (3) Provinces with unresolved outbreaks in the previous FMD free zone, while all other outbreaks in the previous FMD free zone have been resolved and closed with the WOAH.”
