The impact of the three-year economic lockdown in China has reverberated around the world, and South Africa’s agriculture sector has not escaped unscathed.
Logistics and supply chain snags at Chinese ports have created massive export backlogs for the domestic macadamia industry, while at the same time, demand for travel and holidays has allegedly taken precedence over superfoods in the international consumer’s budget.
The macadamia industry has harvested a record crop at more than 70 000 tons, well over the predicted 58 000 tons, but demand has dried up on the back of carry-over stocks due to the pandemic. Nut prices are at rock bottom.
In October, South Africa’s port authority Transnet declared force majeure after what it termed an “illegal strike”, leaving agriculture exports – among others – in limbo.
The Macadamia understands that container backlogs at the port of Durban will take at least until early December to clear, putting cashflow pressure on mac farmers and processors, mainly in KwaZulu-Natal.
Fortunately, macadamias have a long shelf life and backlogs will not impact too heavily on quality, however, customers waiting for shipments might look elsewhere in future for more reliable stock rather than wait up to three months to get the South African crop on to their shelves.
The Macadamia also understands that some processors in the country are looking to Mozambican ports for a more reliable service, as that country’s port operator, TLG Corporate Services, has reportedly announced the construction of a dry port at the Lebombo border just a stone’s throw from the town of Komatipoort in Mpumalanga.
The announcement by sugar group Tongaat Hulett that it was opting for voluntary business rescue on October 27 came as a massive shock in KwaZulu-Natal.
The surprise announcement left thousands of small-scale and commercial sugarcane growers scrabbling for cash as payments for their deliveries to the mills were delayed. Many farmers in the province run dual outfits, where cashflow from sugarcane deliveries is used to cross-fund their macadamia production operations. This means suppliers are also feeling the pinch as they join the queue for payment.
Tough times are predicted for both the sugar and macadamia industries in the years ahead.
Experts are advising farmers to manage their costs wisely, to reduce spending on new tractors and machinery, while gearing their operations for ongoing high input costs and shrinking profit margins, at least until 2025.