+27 71 448 3496
leon@whyafrica.co.za

El Niño summer in Southern Africa should not deter agriculture investors

Share Article
Crops in Botswana, Southern Africa. An El Niño summer will affect farming in the region, but it will not necessarily be a calamity. Image credit: Leon Louw for WhyAfrica

El Niño summer in Southern Africa should not deter agriculture investors  

Forecasts of an El Niño occurrence in the 2023/24 summer season do not necessarily equate to a bad agricultural season in parts of Southern and Central Africa.  

By Wandile Sihlobo

The upcoming season of possible below-normal rainfall in the southern and central parts of Africa follows a rare consecutive four years of heavy rains that have improved soil moisture and natural grazing veld.

This means there is a natural cushion for agricultural activity even if the rains are below average (typically about 500mm) this summer. However, it will be necessary for the rain that does fall to occur in critical periods, such as the seed germination and pollination stages of growth, which are essential for crop growing.

The summer of 2018/19 was marked by an El Niño event, but there was rainfall at just the right times and many parts of Southern Africa ended up harvesting decent crops. South Africa, for example, recorded commercial maize at 11.2-million tonnes, soya beans at 1.2-million tonnes and sunflower seed at 678,000 tonnes.

Other field crops and horticulture also achieved good yields that year. Notably, the 2018/19 season was not preceded by a favourable four-year period of good rainfall that improved overall soil moisture. The current position is therefore better than the last El Niño period.

High probability of El Niño (El Niño summer in Southern Africa should not deter agriculture investors)

Various weather forecasters share the view in terms of the likelihood of the occurrence of an El Niño. Forecasts by the South African Weather Service and Columbia University’s International Research Institute for Climate & Society, all point to a higher probability of El Niño occurring towards the end of this year. The latter placed the odds at more than 80% at the start of June.

The Australian Bureau of Meteorology also put out a statement recently that the “outlook has been shifted to El Niño ALERT. This means that while the El Niño-Southern Oscillation (Enso) is now neutral, there is about a 70% chance of El Niño forming in 2023”. It said this is “roughly three times the normal chance of an El Niño”.

Under such conditions the agricultural sector and agribusinesses must plan for a changing operational environment from the conducive four years that supported growth in the sector. Still, this weather outlook should not necessarily imply less investment in agriculture or elevated risk.

Such trepidation is inevitable as farmers in South Africa still remember the harsh drought of the 2015/16 production season, when maize output fell to 7.8-million tonnes and soya beans to 742,000 tonnes, while the sunflower seeds harvest, at 755,000 tonnes, was boosted by farmers switching white maize hectares to sunflower seed and cotton in the western regions of the country.

That season the livestock industry, various field crops and horticulture all suffered major losses. Importantly, the 2015/16 season was preceded by a drier production period in 2014/15, and soil moisture was low in various regions.

The fall in yields was therefore unavoidable. Moreover, the years before were not exceptionally wet, and production conditions were generally challenging.

Too soon to worry (El Niño summer in Southern Africa should not deter agriculture investors)

This means teams in the agricultural credit desks at various organisations that use the recent drought periods as a reference for what could transpire in the coming season would be misguided and could result in a far more risk-averse approach than production conditions on the ground warrant.

The financiers and service providers in the sector could perhaps start to worry if the region’s get another drought in the 2024/25 season.

Such a scenario would then be on the back of a drier season, and soil moisture reserves would have been depleted in 2023/24. But this is not in the forecasts at this point. Communication and messages from all major weather forecasters have focused on the upcoming season.

Also worth noting is that farmers’ production methods have changed over the past few years with the adoption of no-till farming and other climate-friendly practices, which all aim to conserve soil moisture and support production.

Overall, the Southern African agricultural sector faces a slightly drier 2023/24 summer season. But this should not scare investors or financiers away.

Wandile Sihlobo is Chief Economist at the Agricultural Business Chamber and a Senior Fellow at the Department of Agricultural Economics at Stellenbosch University

Follow Wandile on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

El Niño summer in Southern Africa should not deter agriculture investors

ADVERTISEMENT

WhyAfrica provides on the ground information and business intelligence about the sustainable utilisation and extraction of natural resources in Africa, and can assist your company through:  

  1. Membership:
  • WhyAfrica’s membership offers great business insights to you, your company, and clients.
  • Amongst many other benefits, we will publish editorial content about you or your company on the WhyAfrica online platform and on all WhyAfrica’s social media pages – the annual fee is R5,500 and you can find out more or subscribe here: https://www.whyafrica.co.za/product/membership/ 
  1. Sponsorship:
  • WhyAfrica’s annual 45-day African Road Trip takes place in July and August. We will visit more than 30 project sites and this year we plan to visit Angola, Zambia and Malawi. Sponsoring the Road Trip, or to be a WhyAfrica member, gives you unparalleled insight into the business environment of the countries that we travel to and the project sites we visit.
  • To be a member or sponsor allows you access to invaluable, on the ground, business intelligence and a great marketing opportunity for all companies doing business in Africa.
  • The main aim of our Road Trips is to promote Africa as an investment destination and to showcase Africa’s greatest companies, and projects to our large global audience, which includes a list of potential investors, venture capitalists and serial entrepreneurs.
  • To view the photos of last year’s Southern Africa Road Trip click on the gallery link or follow our Instagram account at why.africa https://www.whyafrica.co.za/road-trips/whyafrica-road-trips/. 
  1. Advertising:
  • We publish daily online articles on our WhyAfrica platform and post them on social media every day. Our combined online reach is more than 45,000. In-article banner ads are highly successful advertising tools as is advertising space on our website.
  • In addition to our bi-weekly newsletters, we publish two printed- and two interactive digital magazines per year. The printed magazines are distributed at major events and conferences throughout the year, and also on our WhyAfrica Road trips.
  • Digital magazines are e-mailed to all our subscribers and shared on our social media platforms. A copy of the latest edition is automatically attached to all our outgoing e-mails.
  • WhyAfrica magazines provide great marketing opportunities. There are also in-article and on-line advertising opportunities at exceptional rates. Contact me for more information on leon@whyafrica.co.za or give me a call.
  • To subscribe to WhyAfrica’s free newsletters and magazines click on the link and register: https://www.whyafrica.co.za/subscribe/  
  1. 4. Partnerships
  • Maximise your African exposure and link with our large business network through becoming one of only 10 WhyAfrica partners. We have only five prime partnership positions left for 2023, so contact me at leon@whyafrica.co.za before the end of March to get the best deal.

El Niño summer in Southern Africa should not deter agriculture investors  

Share Article

Sectors

AgricultureEnvironmental Management & Climate ChangeEnergyESGInfrastructureMiningPolitical EconomyTourism and ConservationWater Management