Are farming stocks heading for tough times?

SIMON BROWN: I’m chatting now with Anthony Clark. You’ll find him of course on Twitter at Small Talk Daily. Anthony, I appreciate the time. A tweet that you and Wandile Sihlobo were putting out – I think it was over the weekend – was around [our having had] what, four years of La Niña weather, which is nice rains. We’ve had great crops, we’ve had great prices. Farmers have done excellently. The forecast is for El Niño, which means dry weather, potentially even drought.

We as a country are self-sufficient. Anything above 11/12 million tonnes a year we export, but it means that farmers will see less revenue, and if there’s less revenue there’s less money in the system that goes into the likes of the fertiliser companies, tractor companies, and farming co-ops like Kaap Agri, TWK, Senwes, etc. So there is a ripple effect.

ANTHONY CLARK: Interestingly the answer is yes. Again, to be technical for a second, if it’s hotter on land, it generally means the seas are colder. That’s to do with the oscillations regarding the difference between El Niño and La Niña. So as I wrote in a report about a month ago, I’m anticipating that the fishing sector should do quite well for the last two years because of the warmer weather on the land.

SIMON BROWN: That’s a good point. This is not a crisis. We’re not looking at multi-year droughts, anything like that. But there are some silver linings to the clouds. Since early November, 2022 most prices of soft commodities, which I call white maize, yellow maize, soya and sunflower, have fallen quite rapidly. As I speak to you right now, yellow maize is down 27%, white maize 30%, and soya 27% – literally in the last four-and-a-half months. Now, it takes time for these lower Safex prices to feed into the producers who manufacture our food, then it takes time before that food gets onto the shelves.

SIMON BROWN: That’s a good point. I watch the maize price because of course with Astral it’s a huge input. And there’s that sort of zone they really like, which is around, what, R2 200/R2 400 a tonne. But R60 million a month for diesel – that takes all the shine out of any benefit they get from a lower maize price.

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