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Daily Maverick
25-06-2025
- Business
- Daily Maverick
‘First step to cheaper food' — Steenhuisen axes controversial bread inspection contract
Following President Cyril Ramaphosa's call in the State of the Nation Address to reduce the cost of living, Agriculture Minister John Steenhuisen said on Tuesday that he had revoked a controversial bread inspection contract and that red meat costs were next on the agenda. When President Cyril Ramaphosa asked Minister of Agriculture John Steenhuisen to find ways to bring down the cost of food in South Africa, he and his team looked at where 'friction costs' and 'red tape' drove up prices. 'The contract for inspections by Leaf Services was one of the first things raised with me when I became the minister of agriculture,' Steenhuisen said on Tuesday. 'I spent the first three months of being a minister going out and speaking to stakeholders. I met with organised agriculture and the commodity bodies. I met up and down the value chain with as many people as possible. This was a common theme that came up from … millers, Agbiz [Agricultural Business Chamber], the various commodity organisations and of course the retailers. 'Their whole argument was that they are already required in terms of their product standards to do the testing, and what these assignee services do essentially is to add another layer of bureaucracy. It obviously adds to the cost of food, which ultimately has to be passed on to the consumer.' He said supermarkets, like Shoprite Checkers, that offered R10 meals had bread as one of their staples, but if assignee services had to be added on, it would be impossible for the stores to offer these meals. Unfair 'Their view was that it was unfair towards the lower end of the consumer chain.' Steenhuisen said retailers argued that this was fundamentally unfair as the assignee services (Leaf Services) would just duplicate product testing that the retailers were already doing. 'When they [retailers] get bread in from suppliers, they do their own testing of the quality,' he said. This included weighing the bread. 'They told me that if they sold bread that was below weight, their customers complained.' He said the assignee service contracts did not contain a proper business model of how they would carry out these tests. 'When it came to this particular assignee, Leaf Services, it was almost impossible to determine their value add,' he said. 'On a balance of probabilities and given the fact that the medium-term development plan has spoken about reducing the cost of living, and the President, at the State of the Nation Address, has asked us specifically to look at mechanisms to reduce the cost of food in the country, this was one of the first places to start. 'It is part of a wider process in the Department of Agriculture to look at red tape and friction costs around food costs and the value chain … and to try and remove as many of them as possible,' he said. 'But obviously without compromising consumer safety, which also has to be paramount. 'When Leaf Services originally advertised what they wanted to do, it was met with very strenuous opposition. All raised the same concerns.' He said that based on these objections he had revoked Leaf Services' assignee application. Payment to Leaf Services would have been compulsory, from the grain producers to the millers to the retailers. 'We are looking at other mechanisms as well throughout the regulatory space to cut red tape and reduce friction costs.' Nimble regulatory environment Steenhuisen said creating an agile, nimble regulatory environment that took into account the views of the sector was a key priority he had announced for his ministry, 'a modern, progressive, regulatory agenda that is adaptable to the space'. His decision to revoke Leaf Services' contract was part of delivering on this promise. He said that assignee services were one of the 10 priorities needing the Department of Agriculture's attention as set out by agriculture economists Wandile Sihlobo and Johann Kirsten in their book The Uncomfortable Truth about Agriculture in South Africa. 'Across the chain, it is the right move to make. We will also be looking at other areas where we can reduce the cost of food.' Red meat, he said, was next, and this would be done within eight weeks. He said the contract for Leaf Services had been ongoing for the past three to four years. 'The retailers' big thing was to argue that if you want the price of bread to go up, this was the best way to do it,' he said. Steenhuisen said he had little doubt that Leaf Services would litigate, given the lucrative nature of their contract. 'But I stand ready to defend this decision. The government needs to listen. Where people identify the impediments to growth, you have to listen and take it seriously.' Lack of transparency Dr Tobias Doyer, the CEO of Grain SA, said they and stakeholders from across the grain industry had persistently engaged with the government about the lack of transparency, stakeholder consultation and cost implications associated with Leaf Services' proposed role in grading inspections. 'We commend the minister and the department for the significant progress made towards a regulatory environment that is principled, transparent and accountable,' said Doyer. 'These strides reflect a growing commitment to regulatory stewardship that aligns with global best practices.' He said, 'Formal objections were submitted, legal advice pursued, and a direct appeal was made to the ministry in 2024 to revoke the appointment of Leaf Services.' Experts from Grain SA calculated that if the R4-per-tonne fee proposed by Leaf Services were implemented in 2016 as intended, it would have cost members more than R600-million. 'Seen differently, this revocation represents a R600-million saving for grain producers. Grain SA itself incurred R135,000 in legal costs to appeal the proposed implementation — an investment made in the best interest of our members and the broader industry,' said Doyer. 'The grain industry supports regulation that is coherent, cost-effective, enabling and respectful of the rights and responsibilities of both juristic and private actors across the food value chain. 'We believe that regulations, when properly applied, are not merely a safeguard, but a critical enabler of inclusive economic participation, innovation, and agricultural competitiveness.' Relieved Pick n Pay CEO Sean Summers said that when Leaf Services started their contract it would have raised the price of staples. 'As it is, basic bread is a low- or zero-margin product, given that it is a staple for most South Africans, especially those under considerable financial strain. 'We are obviously relieved that the minister listened to concerns raised by so many and took the right decision. This would have been an unconscionable waste of money to no benefit.' He said that while Pick n Pay and all others involved fully accepted and supported that bread was legally regulated, it was difficult to understand why the department had originally found it necessary to appoint Leaf Services, which in turn would force the industry to pay for a service that used to be free. Summers said that Leaf Services' appointment was successfully challenged in court in 2021 by the Consumer Goods Council of South Africa, and a new 'equally unreasonable business model' was submitted. He said no research 'at all' had been conducted to establish the level of compliance within the baking industry to see if there was a need to conduct inspections in the first place. 'Bread quality is managed by producers, millers and retailers, and the Department [of Agriculture] in the past provided a free service to control quality. The proposed service was not about food safety. It was completely unnecessary,' he said. 'When applying this to Pick n Pay alone, the inspection methodology proposed by Leaf Services, which included three annual inspections at each of our 920 stores across the country, raised significant concerns. 'The sampling process would have required duplicate samples from each batch and size of bread, drawn from the point of sale. Given that our batch codes are determined by the day's production, this methodology would have substantially increased the operational complexity and cost for our business, and that of all other retailers. 'Since foundation, we have baked and sold billions of loaves of bread across our stores, consistently of high quality. We have never encountered issues with compliance, which underscores our commitment to maintaining these standards voluntarily. 'The introduction of this new inspection regime by Leaf Services would have represented an unnecessary cost burden that could be better allocated to further enhancing the value and affordability we provide to our consumers. 'Had the minister not revoked this contract, the cost to Pick n Pay alone would have been in the region of R10-million a year, excluding the additional costs with speciality breads and other types of bread produced in our in-store bakeries. With Boxer, it would have been about R15-million for a service that was free in the past.' Responding to a request for comment from Daily Maverick, Leaf Services said: 'Leaf Services is aware of the notice published by the Department of Agriculture in the Government Gazette on 13 June 2025. 'Considering this development, we are currently evaluating our options. We consider it premature to comment further at this stage, but we will communicate our position in due course.' DM
IOL News
18-06-2025
- Business
- IOL News
Agribusiness Confidence Index shows slight decline amid global uncertainties
Agricultural Business Chamber said that despite the slight decline, the current level of the ACI, implies that South African agribusinesses remain optimistic about business conditions in the country Image: Supplied South Africa's Agricultural Business Confidence Index (ACI) edged down by five points to 65 in the second quarter, reflecting a slight dip in sentiment across the agribusiness sector, the Agricultural Business Chamber (Agbiz) said on Wednesday. The chamber noted that concerns over global trade uncertainty, persistent geopolitical tensions, and ongoing domestic animal disease outbreaks were among the main factors weighing on industry confidence. "Despite the slight decline, the current level of the ACI, implies that South African agribusinesses remain optimistic about business conditions in the country," said Wandile Sihlobo, the chief economist at Agbiz. 'The better summer rains and improvements at the ports which have enabled exports with minimal interruptions, are some of the positives. This survey was conducted in the second week of June, covering various agribusinesses operating in all agricultural subsectors across South Africa." The ACI comprises ten subindices; six of them declined in quarter two, while the rest remained unchanged. The turnover subindex confidence was down by 5 points to 55. There was a deterioration in sentiment among agribusinesses operating in the red meat sector, while others maintained a roughly unchanged view from the previous quarter. Similarly, the net operating income subindex fell by 5 points to 65 points. The drivers were the same as the turnover. The sub-index measuring export sentiment volume fell by 40 points to 60. Sihlobo said, 'This is still a relatively favourable level. For example, in quarter one, South Africa's agricultural exports totalled $3.36 billion (R54 billion), up 10% from the same period a year ago, according to data from Trade Map. Thus, the decline in sentiment in quarter two is a normalisation.' The general economic conditions subindex fell by 15 points to 50 in quarter two. "This indicates concerns about growth prospects this year due to both domestic and global constraints. The market share of the agribusiness subindex fell by 5 to 65 points in quarter two," Sihlobo said. "Most respondents maintained an essentially unchanged view, which enabled the high base to lead to a mild decline in sentiment.' Sihlobo said the second-quarter ACI results for 2025 reflect an overall optimistic sentiment in the agricultural sector, with expectations of a recovery continuing through the year. However, he cautioned that the rebound is likely to be uneven, as certain key subsectors remain under pressure from ongoing animal disease outbreaks. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ "The dominance of geopolitical concerns amongst respondents' views illustrates South Africa's agricultural sector's strong dependence on export markets and the need to work to diversify markets," Sihlobo noted. 'China, India, Saudi Arabia, and Egypt are among the key markets we should expand into.' Francois Rossouw, the CEO of Southern African Agri Initiative (Saai), said the slight decline in the ACI is understandable given the pressures facing the sector. 'While confidence remains in positive territory, ongoing threats like foot-and-mouth disease, amongst others, continue to weigh heavily on the red meat industry. Globally, escalating geopolitical tensions and uncertainty over key trade relationships- especially with major partners like the United States, raise concerns for export-driven agribusinesses," he said. These dynamics, alongside regional conflicts in Ukraine and the Middle East create planning difficulties for producers. 'While confidence remains resilient overall, strengthening biosecurity and maintaining stable, trade-friendly diplomacy will be essential to support continued recovery,' Rossouw said. TLU SA general manager, Bennie van Zyl, is in agreement with most of the findings of ACI by Agbiz. 'It must be noted that the agricultural sector is in a fluctuation of seasonal realities especially with rain. Some years we have better rain , some years we have late rain and some years we have no rain," Van Zyl said, "This is something that has a huge influence on the climatic side of the agricultural sector. There's also the impact of crime on the agriculture sector such as produce theft and theft of cattle which is stock theft.'
Daily Maverick
02-06-2025
- Business
- Daily Maverick
SA farm exports to US rise 19% in Q1, a green sprout amid frosty diplomacy
An important point that emerges from this data is that if the fictional 'white genocide' and land seizures of Trump's imagination were actually unfolding, then South African commercial farmers – who are mostly white – would not be in a position to grow their exports to markets such as the US. South Africa's agricultural exports to the US increased 19% in the first quarter (Q1) of this year compared with the same period in 2024, according to data from Trade Map, which was crunched by the Agricultural Business Chamber (Agbiz) and released on Monday. It is an interesting trend that highlights several important points against the backdrop of a frosty diplomatic landscape amid US President Donald Trump's false claims about a 'white genocide' and the ruthless persecution of white farmers, which was on full display during his recent White House meeting with South African President Cyril Ramaphosa. For starters, as South Africa faces the prospect of exclusion from the Africa Growth and Opportunity Act (Agoa) – which provides preferential treatment to the US market for eligible countries – it is clear that there is American demand for agricultural products grown or made here. Specifically, these products are mainly citrus, grapes, wine, and fruit juices – South African products that could surely grow in the massive US market. Some might see America as a fairly small market in the broader scheme of things, with the 19% year-on-year rise in Q1 only amounting to $202-million – 6% of all South African agricultural exports in that period, which grew 10% to $3.36-billion. But 6% is material: this slow-growth, high-unemployment economy needs to pluck any fruit it can – and this stuff is low-hanging. Americans love citrus and fruit juice, a point underscored by the fact that global prices for these products are heavily influenced by the New York-based OJ futures market. Another important point that emerges from this data is that if the fictional 'white genocide' and land seizures of Trump's imagination were actually unfolding, then South African commercial farmers – who are mostly white – would not be in a position to grow their exports to markets such as the US. What this means: South Africa's commercial agricultural sector is a budding rose among the thorns of this moribund economy. It needs continued access to markets such as the US to grow and create badly needed jobs and investment opportunities while bringing in export revenue to help support the rand. South African farmers can find other markets, but the US, as the world's largest economy, remains the big prize. This does not mean that South Africa's agricultural sector isn't facing a range of serious political, economic and environmental challenges. The Expropriation Act is a red flag for South Africa's commercial farmers and investors more widely. That there are still glaring disparities in ownership – with only about 25% of farmland now in the hands of black South Africans, according to Agbiz estimates – is largely a reflection of state failure and dithering, corruption and incompetence under the ANC. Still, even in the face of other challenges such as climate change, South Africa's agricultural sector is prospering, a narrative at odds with Trump's view that a Zimbabwe-style mass land grab is under way. Americans clearly want to drink South African wine and fruit juice, and farmers here can meet that demand. Instead, Trump's racist resentment threatens to reap a bitter harvest from what should be fields of hope. BM
Russia Today
05-03-2025
- Business
- Russia Today
South Africa sets exports record
South Africa's agricultural exports rose to record highs and reached $13.7 billion (R255.5bn) in 2024, marking an increase of 3% from the previous year. Despite this positive trend, the Agricultural Business Chamber (Agbiz) on Monday cautioned that the nation faces headwinds from escalating trade tensions, particularly between the US and China, a situation that could have ripple effects on South Africa's export market. The findings reveal a trade surplus of $6.2bn, albeit a slight decline of 2% from the prior year. This fluctuation in figures comes as economists warn of continued volatility in the rand, primarily driven by developments in the US and fluctuations in the US dollar. Prospects of relative strength in the rand loom as upcoming US tariff applications may be less severe than initially anticipated. South Africa's agricultural sector is increasingly pressured to diversify its market reliance, particularly with the US, given the tit-for-tat trade war that has erupted with China. In a provocative retaliation, China has responded to a 25% tariff imposed by the US, charged with neglecting the influx of fentanyl into US territory. Such geopolitical manoeuvring underlines the urgent need for South Africa to enhance logistical efficiency and maintain, if not expand, its market presence across the European Union (EU), Africa, Asia, the Middle East, and the Americas. Wandile Sihlobo, Agbiz chief economist, said if South Africa were excluded from the African Growth and Opportunity Act (Agoa), the country would face an average import duty of about 3% at the Most Favored Nations Rate. This underscores the fact that Agoamainly offers price competitiveness to the products South Africa exports to the US. 'The 3% tariff would advantage other competitors that access the US market duty-free as South Africa currently does under the Agoa. South Africa's agricultural exports to the US - mainly citrus, grapes, wine, and fruit juices - account for 6% which also includes exports to the Americas,' Sihlobo said. 'Still, this is not to minimize their value as few specific industries are primarily involved in these agricultural exports to the US. Since the start of Agoa, the percentage share of South Africa's agricultural exports to the US has remained at these levels.' South Africa is on short notice with the US as that country highlights that government has taken aggressive positions towards the US and its allies, including accusing Israel, and not Hamas, of genocide at the International Court of Justice, and reinvigorating its relations with Iran. According to Investec chief economist Annabel Bishop, markets also perceive a deterioration in the political relationship between SA and the US after the former recently removed aid support from South Africa, and concerns are growing over South Africa Agoa's free trade access into the US. According to Agbiz, the EU is South Africa's third-largest agricultural market in 2024, with a share of 19%. Citrus, grapes, wines, dates, avocados, pineapples, fruit juices, apples and pears, berries, apricots and cherries, nuts, and wool were amongst the top agricultural products South Africa exported to the EU in 2024. Sihlobo said the country needed to accelerate initiatives including investments in the port and rail infrastructure and improving roads in farming towns. 'South Africa must work hard to retain the existing markets in the EU, the African continent, Asia, the Middle East, and the Americas. This is even more important in the current climate, where US policymakers are increasingly discussing raising tariffs,' Sihlobo said. He added that the departments of trade, industry and competition, as well as international relations and cooperation, and agriculture, should lead the way for export expansion in the current export markets and the search for new export markets. Sihlobo said South Africa should expand market access to some key BRICS countries, such as China, India, Saudi Arabia, and Egypt. 'The BRICS grouping should emphasize the need for member countries to lower the import tariffs and address artificial phytosanitary barriers hindering deeper trade within this grouping,' he said. He also noted that other strategic export markets for South Africa's agricultural sector included South Korea, Japan, Vietnam, Taiwan, Mexico, the Philippines and Bangladesh. 'The private sector and the South African government share this ambition for export market expansion. In the current fragmented world, more resources and marketing must be used for this work,' he published by IOL
Russia Today
04-03-2025
- Business
- Russia Today
South African agricultural exports hit record high
South Africa's agricultural exports rose to record highs and reached $13.7 billion (R255.5bn) in 2024, marking an increase of 3% from the previous year. Despite this positive trend, the Agricultural Business Chamber (Agbiz) on Monday cautioned that the nation faces headwinds from escalating trade tensions, particularly between the US and China, a situation that could have ripple effects on South Africa's export market. The findings reveal a trade surplus of $6.2bn, albeit a slight decline of 2% from the prior year. This fluctuation in figures comes as economists warn of continued volatility in the rand, primarily driven by developments in the US and fluctuations in the US dollar. Prospects of relative strength in the rand loom as upcoming US tariff applications may be less severe than initially anticipated. South Africa's agricultural sector is increasingly pressured to diversify its market reliance, particularly with the US, given the tit-for-tat trade war that has erupted with China. In a provocative retaliation, China has responded to a 25% tariff imposed by the US, charged with neglecting the influx of fentanyl into US territory. Such geopolitical manoeuvring underlines the urgent need for South Africa to enhance logistical efficiency and maintain, if not expand, its market presence across the European Union (EU), Africa, Asia, the Middle East, and the Americas. Wandile Sihlobo, Agbiz chief economist, said if South Africa were excluded from the African Growth and Opportunity Act (Agoa), the country would face an average import duty of about 3% at the Most Favored Nations Rate. This underscores the fact that Agoamainly offers price competitiveness to the products South Africa exports to the US. 'The 3% tariff would advantage other competitors that access the US market duty-free as South Africa currently does under the Agoa. South Africa's agricultural exports to the US - mainly citrus, grapes, wine, and fruit juices - account for 6% which also includes exports to the Americas,' Sihlobo said. 'Still, this is not to minimize their value as few specific industries are primarily involved in these agricultural exports to the US. Since the start of Agoa, the percentage share of South Africa's agricultural exports to the US has remained at these levels.' South Africa is on short notice with the US as that country highlights that government has taken aggressive positions towards the US and its allies, including accusing Israel, and not Hamas, of genocide at the International Court of Justice, and reinvigorating its relations with Iran. According to Investec chief economist Annabel Bishop, markets also perceive a deterioration in the political relationship between SA and the US after the former recently removed aid support from South Africa, and concerns are growing over South Africa Agoa's free trade access into the US. According to Agbiz, the EU is South Africa's third-largest agricultural market in 2024, with a share of 19%. Citrus, grapes, wines, dates, avocados, pineapples, fruit juices, apples and pears, berries, apricots and cherries, nuts, and wool were amongst the top agricultural products South Africa exported to the EU in 2024. Sihlobo said the country needed to accelerate initiatives including investments in the port and rail infrastructure and improving roads in farming towns. 'South Africa must work hard to retain the existing markets in the EU, the African continent, Asia, the Middle East, and the Americas. This is even more important in the current climate, where US policymakers are increasingly discussing raising tariffs,' Sihlobo said. He added that the departments of trade, industry and competition, as well as international relations and cooperation, and agriculture, should lead the way for export expansion in the current export markets and the search for new export markets. Sihlobo said South Africa should expand market access to some key BRICS countries, such as China, India, Saudi Arabia, and Egypt. 'The BRICS grouping should emphasize the need for member countries to lower the import tariffs and address artificial phytosanitary barriers hindering deeper trade within this grouping,' he said. He also noted that other strategic export markets for South Africa's agricultural sector included South Korea, Japan, Vietnam, Taiwan, Mexico, the Philippines and Bangladesh. 'The private sector and the South African government share this ambition for export market expansion. In the current fragmented world, more resources and marketing must be used for this work,' he published by IOL
