Staff Reporter
ECONOMIC analyst from Simonis Storm Securities, have said that it remains to be seen whether the La Nina phenomenon will bring adequate, timely and sufficient rain which Namibian crop farmers need, especially in the North.
“Last year, due to late rainfalls, the maize triangle experienced major crop harvest losses (over 60% drop in harvests). We therefore remain fairly negative on observing improved crop production figure for 2023. At the same time, nationwide dam levels have not materially increased and still fall short of dam levels recorded a year ago,” Theo Klein, Economic analyst said.
He added that the agricultural sector contracted by 1.5% during the first three quarters of 2022, compared to the same period in 2021. Klein noted that the 14.2% contraction in 3Q2022 is the largest decline since 2Q2019.
The biggest contributors the 3Q2022’s decline include livestock farming (↓ 18.9% y/y) and crop farming coming off a high base, only growing by 2.7% y/y in 3Q2022 following an expansion of 10.5% y/y in 3Q2021.
Klein further explained that the foot and mouth disease in Botswana and South Africa prevented exports to Namibia’s usual markets in 3Q2022. “Weak to moderate growth in crop farming and improved livestock production support a sluggish growth outlook for the agriculture sector,” Klein summarised.
During December 2022, total livestock slaughtering contracted by 10.1% as butchers lost 12.4% market share to export abattoirs. At the same time, livestock exports increased by 7.8% on average, with goat live exports increasing 40.7% y/y in December 2022, but cattle and sheep contracting by 15.8% y/y and 1.5% y/y respectively.
“Crop farming production forecasts look bleak for the first quarter (Q1) of2023 following the latest field verification exercise conducted by the Namibian Agronomic Board (NAB). The NAB forecasts shortages in 62% of the horticulture products it analyses, where more severe shortages are expected for lettuce, cauliflower, broccoli, mushrooms, tomatoes, carrots, onions, potatoes, cabbage and butternuts between January and May 2023.,” Klein said.
He added that only the forecasted tonnage for green peppers and colour peppers production is expected to be sufficient in meeting local demand and their forecasted tonnage is estimated to place them as the top soft commodities for Namibia.
Klein explained that shortages in local harvests imply that Namibia will remain a net importer of food products and so consumers remain vulnerable to global and regional food price developments. “The local food requirement, together with other dynamics we discussed in our Trade Statistics report support the view that Namibia is likely to record trade deficits in 2023,” the analyst said.
In last month’s report Simomis Storm showed that global fertilizer prices have declined by 20.4% in US dollar terms since peaking in April 2022 and remain on a downward trend. When looking at price data from South Africa (a key fertilizer import market for Namibian farmers), Klein explained that they see that fertilizer prices in Rand terms have decreased by 16.0% on average since peaking in April/May 2022.
“Signs of price easing and a strengthening Rand/USD exchange rate could mean that local farmers see a slight ease in production costs, given that fertilizers can account for up to 40% of farming costs (depending on the crop being farmed). However, diesel prices remain elevated and we expect additional price hikes due to global shortages of diesel and this could still weigh on farmers’ margins going forward,” Klein concluded.
Photo: namibianfarming.com
