Paul Makube

As widely expected, the South African Reserve Bank (SARB) kept the repo rate steady at a record low of 3.5% in its first meeting of 2021, says Paul Makube, Senior Agricultural Economist at FNB Agri-Business. Although the inflation outlook remains subdued below the mid-point of the 3% to 6% range, the SARB’s forecast model points to a potential 50 basis hike for 2021 (2nd and 3rd quarters). The lower rates were positive for the agriculture sector especially at the height of … [Read more...] about Steady interest rates outcome still positive for agriculture in tough times

The South African Reserve Bank (SARB) again left the repo rate unchanged at a record low of 3.5% in its November 2020 meeting. The SARB’s inflation forecast indicates that it will be below the mid-point of the 3% to 6% range due to the slow economic recovery. This implies limited upside for rates but also no further cuts in the medium term. Lower rates for longer especially as we head into the new crop season with increased demand for credit bode well for the agriculture sector. This … [Read more...] about Record Low Positive for Agriculture

In the midst of an unprecedented economic and health crisis one sector in our economy has outshone the rest. The agricultural sector expanded by almost 28% in the first quarter compared to the same period in 2019 and 15.1% in the second quarter. Agriculture was the only one of nine sectors in the economy to show GDP growth in the second quarter. Manufacturing and trade contracted by more than 10% followed by transport and communication and mining with a contraction of around 6% during the … [Read more...] about Buoyant performance from the agriculture sector despite SA’s economic crisis

07 October 2020 – Paul Makube, Senior Agricultural Economist at FNB, says that in just over a week’s time, the planting of summer crops particularly maize begins in the eastern producing areas of the country. The weather outlook is quite positive with a La Nina in the offing, a pattern characterised by above-normal rainfall for the Southern Africa region. Moreover, commodity prices are currently strong with maize above R3200/ ton and almost 34% higher year-on-year (y/y) and interest rates are at … [Read more...] about Fuel price drop is a boost in time for planting

01 October 2020 – Against the backdrop of a contracting overall economy with South Africa’s gross domestic product (GDP) for 2020 forecast to decline by over 8% year-on-year (y/y), there is a silver lining in the agricultural sector outcomes for the next season. Following two consecutive quarters of stellar performance by the agriculture sector with 28.6% and 15% quarter-on-quarter (q/q) seasonally adjusted annualised growth, we expect a similar feat in the remaining quarters of 2020 due to a … [Read more...] about Outlook for the agricultural sector into 2021

Paul Makube, Senior Agricultural Economist at FNB Agri-Business says: 08 September 2020– Following a good start to 2020 with first quarter agriculture GDP rebounding strongly by 28.6% quarter-on-quarter (q/q) seasonally adjusted annualised, the sector posted another impressive growth of 15% in the second quarter of 2020 which made it the only positive contributor with a 0.3 of a percentage point. Statistics South Africa (StatsSA) further revised the 1st quarter agriculture GDP reported … [Read more...] about Another stellar contribution by agriculture to SA’s GDP outcomes in the 2nd quarter of 2020

Paul Makube, Senior Agricultural economist at FNB Agri-Business says: Although the National Crop Estimates Committee (CEC) made a marginal upward adjustment to its earlier estimate of the country’s 2020/21 total grain and oilseed output, the 17.85 million tons is still one of the largest on record crop and is 34% higher relative to the 2019 levels. Despite earlier reduction in output in the Mpumalanga areas and reports that some of the maize in western areas has been downgraded to WM2, the total … [Read more...] about Big harvests for 2020, from the summer to winter crops

Paul Makube, Senior Agricultural Economist at FNB Agri-business, writes about the State of the agricultural sector in South Africa’s economy: The South African economy has faced challenges in the recent times with Gross Domestic Product (GDP) declining by 2% quarter on quarter (q/q) in 1Q20. This comes after South Africa recorded contractions of 1.4% and 0.8% in the two preceding quarters respectively. However, the one sector that has outperformed other sectors is Agriculture. The sector … [Read more...] about State of the agricultural sector in South Africa’s economy

The latest GDP update from Statistics South Africa (StatsSA) shows an impressive rebound in agriculture forestry and fishing industry sector fortunes for the first quarter of 2020, coming in up 27.8% with a 0.5 percentage point positive contribution to the country’s GDP. While the higher contribution of field crops and horticultural products was expected, the performance of animal products came in as a surprise given the Foot-and-Mouth Disease (FMD) outbreak in November 2019 and earlier in … [Read more...] about Positive weather conditions help lift agriculture GDP output

A combination of favourable crude oil price outlook, lower local inflation with risks to the downside, and economic contraction afforded the South African Reserve Bank (SARB) room to cut the repurchase rate by another 50 basis points. This brought the repo rate to a historical low of 3.75% and the prime lending rate to 7.25% effective from 22 May 2020. The interest rate outlook is even lower with the SARB’s projections pencilling another cut of two repo rate of 25 basis points in the next two … [Read more...] about Relief for the agriculture sector

Rate cut to boost agriculture 19 March 2020: In the midst of a recessionary domestic economy, favourable inflation outlook and lower oil prices, the South African Reserve Bank (SARB) got room to cut interest rates by 100 basis points to 5.25%. Paul Makube, Senior Agricultural economist at FNB Agri-Business says that this will go a long way in alleviating pressure on the agricultural sector especially in drought ravaged areas, by improving cashflow and lowering debt repayments. The recovery … [Read more...] about A rate cut, downside inflation outlook and supportive rand boost agriculture rebound

https://youtu.be/4VB1XRf69GE Comments in Afrikaans by Dawie Maree. Paul Makube, Senior Agricultural economist at FNB Agri-Business says: The latest forecast released by South Africa’s Crop Estimates Committee (CEC) points to a somewhat optimistic outlook for the agricultural sector as seasonal conditions turned positive. The current estimates point to a sharp recovery in output of summer crops with the total maize planted area coming in up 10% year-on-year (y/y) at 2.54 million hectares … [Read more...] about Optimistic outlook for SA’s agriculture sector

Recent rains in some parts of the country have renewed hope of a normal season after weeks of heat, dryness and decreasing dam levels. While the overall dam levels for the country remain above 60% at 62% full during the week ended 21 October 2019, some provinces such as Gauteng are facing water restrictions due to higher temperatures and the decline in water levels in critical dams. Water levels in the Vaal dam, a major supplier to Gauteng, dropped to 49.6% full, relative to … [Read more...] about Rain renews hope of normal agriculture season

The recent cut in interest rates, coupled with a reduction in petrol prices and a stronger Rand, while marginal, will go a long way to provide relief to farmers who are currently struggling considering the tough economic environment. Paul Makube, Senior Agricultural Economist at FNB Business says, the current reduction in interest rates coupled with the possibility of further cuts later in 2020 if GDP growth rebounds and inflation remains contained, will have a positive impact on profit … [Read more...] about Interest rate cut positive for Agriculture