• The attempt last year to amend Section 25 of the Constitution represented a grave threat to whatever chances for future prosperity South Africa had.

    In targeting for the first time a provision in the Bill of Rights, it set a terrible precedent by threatening constitutional protection. Some of its proponents even claimed that the Constitution in its current form would not prevent the ultimate policy goal, Expropriation without Compensation.

    That the measure failed to pass deserves to be viewed with relief. But as we at the Institute of Race Relations have warned in the intervening period, this was at best a respite.

    A Land Court Bill, currently before Parliament, seeks to place land (and land expropriation) matters into a specially created court. The Bill itself is intended to ‘promote land reform as a means of redressing the results of past discrimination and facilitate land justice.’  Its proposed design raises a very real danger of proceedings being loaded in favour of particular outcomes. For example, two lay assessors may be appointed to sit alongside a judge, and may overrule the latter on matters of fact. The Bill is silent on how the assessors will be appointed, and it is far from impossible that  activists hostile to land ownership would be in a position to preside over cases. On certain issues, such as whether ‘nil’ compensation should be awarded, or whether a given property has been abandoned, it is likely that the views of these assessors could be decisive.

       How to counter the Expropriation and Land Court Bills

    In addition, there is the Expropriation Bill. President Ramaphosa has declared the government’s intention to pass the Bill into law this year. Dating back in its current iteration to 2019 (but with a policy lineage that extends back over more than a decade), it would establish a new regime for expropriation of property. Among other things, it defines expropriation – and so too, any entitlement to compensation – so as to require the state to take ownership of expropriated property.

    This suggests that merely depriving an owner of something – without the state’s acquiring ownership in turn, as was the case with South Africa’s mineral resources under the custodianship provision of the Mineral and Petroleum Resources Development Act of 2002 – would not qualify as expropriation. This in turn would make a mass ‘custodial’ taking of a particular asset achievable without any requirement for compensation.

    Move on property rights

    Simply put, despite the Constitution holding for the moment, the mechanisms for proceeding with a move on property rights are being put in place.

    At the same time, there has been a chorus of voices expressing harsh criticisms of the constitutional order, in part or as a whole. These voices include tourism minister Lindiwe Sisulu, KwaZulu-Natal premier Sihle Zikalala, former cabinet minister Ngoako Ramatlhodi as well as academics Professors Sipho Seepe and Eddy Maloka.

    The basic assertion is that the malaise confronting South Africa arises from a lack of radicalism, this having been constrained by a timid compromise in the 1990s and the Constitution that embodied it.

    Thus, Prof Maloka says that: ‘Our approach should not be piecemeal – about land, the judiciary, or this and that. Instead, we should be bold and decisive and overhaul the entire dispensation to align it with our times.’

    Prof Seepe was more direct, attacking both the ANC and the state, claiming that ‘the post-1994 dispensation legitimised ill-gotten economic gains under apartheid.’ The ANC had been infiltrated, he went on to write, to the extent that it is ‘now embraced by even the most racist among our citizens’ (does this mean that the ANC is attracting large numbers of bigoted white voters..?), and ‘a state without any revolutionary content is a threat to our hard earned democratic dispensation.’

    Sisulu denounced the judiciary as ‘mentally colonised’, while Zikalala proposed replacing the supremacy of the Constitution (and the law) with Parliamentary democracy. ‘We want to issue the call for us to debate whether it is not time to move away from absolute rule by the Constitutional Court to a situation where we have a parliamentary democracy in which the voice of the people who elected is supreme to all other voices,’ Zikalala declared.

    Counterproductive

    In a very real sense, this is an extension of the attempt to alter Section 25. It sees the constitutional order as the problem, not the counterproductive nature or impracticability of policy or its inept implementation. This is part populism, but arguably more fundamentally ideological.

    Unsurprisingly, in all of this, land is a central motif. Thus, Minister Sisulu opines: ‘The land is where it all begins. And the law of the land makes or breaks.’ Prof Seepe asserts that land is fundamental to the true revolutionary posture whose absence he bemoans: ‘Land is at the core of any anticolonial struggle. Reclaiming the land would have been the first order of business. With the loss of the ideological narrative, Africans have no control of the future.’

    In a similar vein, for Mr Ramathlodi, the Constitution is the culprit: ‘The essence of the 1913 Land Act retained under the New Constitution in section 25 must be reconsidered.’ 

    Contained within all of this is the notion that with a more aggressive and assertive form of political mobilisation, with the removal on the limits on the state’s powers, veritable economic miracles are possible. (In 2018, President Ramaphosa claimed that EWC would turn the country into a Garden of Eden – an attempt at allegory that fell flat.) To quote Mr Ramathlodi: ‘In this regard, the developmental state must be activist and take out scissors to perform the necessary caesarean birth.’

    Lyrical though that last comment is, it is also delusional. A good part of the reason for the disappointing outcomes of land reform – and support of small business, policing, education and so on – is precisely that the state is not up to the task. South Africa’s state is not developmental, although it certainly tries to be activist. The result, in practical terms, is a mixture of some dire laissez-faire neglect in some areas, and the constraints of an intrusive and often extortionate government apparatus in others.

    Actually, in this respect Prof Seepe is partially correct when he says of the ANC that ‘instead of using the state as an instrument at the service of the poor, it does the opposite.’ But he fails to note that much of the blame for this can be placed squarely at the door of the ANC’s conscious decision to politicise the state administration in the 1990s, thereby preventing a meritocratic, professionalised civil service from emerging. In so doing, it destroyed the prospect of a developmental state.

    Broad ideological thrust

    Such actions were, however, in keeping with the broad ideological thrust of the ANC and with its National Democratic Revolution. One might describe them as the natural outgrowth of the revolutionary impulse.

    South Africa’s future needs a good deal less ideology, and a good deal more pragmatism. This is readily apparent to anyone who cares to look, but is unfortunately not entirely clear to our political and intellectual elites.

    The disparaging of the constitutional order is intrinsically a threat to property rights, and to land ownership, both on the part of those who own and those who aspire to do so. Indeed, a successful land reform programme holds value for all of us – but it will not be delivered by the ideologues and venal individuals who are using it to frame their arguments.  

    The EWC agenda, and all that surrounds it, remains very much in place, and the present is no time for complacency.

  • Nitrogen and phosphates drift downwards as Rand strength helps push local prices down.

     

     

     

    26 May price (ex-WH)

    19 May price (ex-WH)

    Week-on-week change

    Urea gran

    R12,602

    R12,912

    -2.4%

    MAP

    R18,429

    R18,735

    -1.6%

    KCl gran

    R18,626

    R18,770

    -0.8%

     

    Cost per kilogram of nutrient (R/kg):

     

    26 May

    19 May

    Week-on-week change

    Nitrogen (N)

    R27.40

    R28.07

    -2.4%

    Phosphate (P)

    R67.91

    R68.93

    -1.5%

    Potash (K)

    R37.25

    R37.54

    -0.8%

      

    Nitrogen

    Urea from Iran and Russia is putting downward pressure on prices, as buying interest remains quiet. The ammonia price took a big step down this week as the US Tampa contract price dropped almost 40%.


    Markets that are happy to trade with Russia and Iran are enjoying competitive offers for urea, as Brazil and US urea prices continue to drift downwards. The Middle Eastern urea producers are busy fulfilling their tender commitments to India but are facing much lower netback values for any new business as most major price benchmarks are well below the $690/t fob value that the Indian tender price represents. US nitrogen demand continues to be hampered by wet weather conditions for planting and some of the northern states are starting to switch from maize to soya, which will further hurt nitrogen demand.

    It looks like the usual Q2 seasonal lull for urea demand is set to continue for at least another month, unless some unexpected demand emerges.

    The ammonium nitrate and ammonium sulphate markets were also quiet this week, with prices broadly going sideways and the market sentiment pointing towards prices continuing to trend downwards. The main annual industry conference, IFA, is taking place next week, so there is hope that some signs of market direction will emerge from discussions taking place there.

    Ammonia saw some large downward price corrections this week as the US Tampa contract price dropped $425/t to $1,000/t CFR and the Middle East ammonia price benchmark dropped around $100/t too. This will be welcome relief for the local South African fertilizer producers that consume ammonia to produce MAP, CAN and NPKs. An ammonia import cargo was booked from Algeria sailing to South Africa, which may be a first from this origin.

     

    Phosphates

    The market sentiment for phosphates prices continues to be quite negative/downward but players are waiting to see whether India’s attempt to force prices down towards the $900/t mark is successful. Demand destruction remains a common theme as buyers reduce their purchasing volumes.


    Most MAP/DAP prices around the world continue to float in the $1000-1100/t range. There is a lot of noise around prices in various regional markets – with the Chinese domestic price a good $300/t or more below international prices but the Chinese government is maintaining strict restrictions on any export sales. Brazil is being offered discounted Russian phosphates, while the Moroccans continue to demand a big premium for their phosphates.

    The phosphoric acid quarterly contract price remains unresolved and it looks unlikely that a price consensus for this quarter will be reached, considering there is only one month left. The Moroccans are standing by their position of $2000/t while Indian officials are announcing that they will not pay anything above the Q1 price of $1530/t. Interestingly, some of the smaller phos acid exporters to India like Jordan have rolled over the Q1 price and have been selling to India at that level.

    It appears that Foskor has agreed to another large phos acid export to Bangladesh during the past week or so, which has angered a number of the local liquid fertilizer producers who are concerned about getting adequate phos acid supplies ahead of the liquid season. Foskor is reported to be running fairly well otherwise, although MAP availability remains incredibly limited in the South African market.

     

    Potash

    A very quiet week for potash as prices rolled over and no price changes are expected any time soon. 


    Potash market players are apparently waiting for next week’s IFA conference to thrash out potash prices. Emerging trade data from Brazil points to over 500,000t of Russian product destined for that market, which represents almost half of Brazil’s May requirement. This is a larger volume than most market analysts anticipated being possible out of Russia. Russia historically has supplied 10-15% of Brazil’s potash imports at this time of year.

    This may all point to downwards price pressure, until more potash supply emerges, prices are not likely to change.

    Asian markets have been struggling to source their full needs and trade data for the year to date is indicating that Asian buying is 15-20% lower than the same period in 2021. Not only is this a sizable reduction to potash consumption but is a major concern for crop yields and thus food security.

     

    General Market Outlook 

    Brent crude oil price remains very strong this week, as some recovery in the Rand gives relief on local commodity prices.

    Crude oil had a very bullish week with the price rising steadily from $111/bbl to touch above $117/bbl by Thursday. In early trading this morning prices appeared to drop a little but oil prices remain very elevated. On the natural gas front, the US Henry Hub price leapt from $8/MMBtu to go above $9.5/MMBtu as June options expired on Thursday and some players had to scramble to get cover. European gas prices dropped to $26/MMBtu earlier in the week before moving up to $28/MMBtu currently.  

    Maize prices declined on the international front over the past week, and the stronger rand exacerbated the drop in Safex prices for both white and yellow maize of over 4%. Local soya and sunflower prices bucked the maize trend, overcoming weaker CME prices and the stronger rand to gain around 2% over the week.

    The rand strengthened against the dollar for the second week running, gaining just under 1%.

    Latest Direct Hedge quotes for urea and MAP swaps in USD:

     

     

    Arab Gulf
    27 May 2022

    Arab Gulf
    20 May 2022

    Week-on-week change

     

    Bid

    Ask

    Bid

    Ask

    Bid

    Ask

     

     

     

     

     

     

     

    Jun-22

    680

    720

    700

    720

    -20

    -

     

    Q3-22

    680

    720

    700

    750

    -20

    -30

     

     

    Jul-22

    680

    720

    700

    720

    -20

    -

     

     

    MAP Brazil CFR
    27 May 2022

    MAP Brazil CFR
    20 May 2022

    Week-on-week change

     

    Bid

    Ask

    Bid

    Ask

    Bid

    Ask

     

     

     

     

     

     

     

    Jun-22

    1,050

    1,100

    1,050

    1,100

    -

    -

     

    Jul-22

    1,100

    1,200

    1,100

    1,200

    -

    -

     

     

     

    As we speculated might be possible last week, the urea Swaps price softened slightly to align with the physical urea market. A question that could be asked is why the forward urea price did not decline more considering the negative sentiment in the market around urea prices. We probably need to see increased trading volumes to make any predictions around the urea price direction – currently, trading volumes are so limited that it’s difficult to draw robust conclusions about where urea prices will be in the next month or two.

    There was no change on the Brazil MAP forward prices this week, as the MAP market remains subdued and most market participants are waiting for the IFA conference next week to get some pricing signals.

    If you would like to discuss these fertilizer price trends in more detail, or discuss other fertilizer products not addressed in this report, we would love to hear from you. We would also be happy to discuss your fertilizer procurement needs with you.

    Andrew Prince 


    This email address is being protected from spambots. You need JavaScript enabled to view it.


  • South Africa has a globally competitive agribusiness sector and a highly developed value chain with well-established economic institutions and techniques. 

  • A large share of the 2017/18 maize crop has already been delivered to commercial silos, hence the weekly producer deliveries have slowed in the recent weeks. In the week of 05 October 2018, maize producer deliveries amounted to 31 986 tonnes, down by 62 percent from the previous week. About 55 percent of this was white maize, with 45 percent being yellow maize. 

  • South Africa is divided into a number of farming regions according to climate, natural vegetation, soil type and farming practices.

  • Prof. Ashok Chapagain has recently been appointed as senior professor in the department of agricultural economics in the faculty of natural and agricultural sciences at the University of the Free State (UFS).

  • Many people are worried about the uncertainty surrounding the discussion about land reform policy in SA. However, some allow the fear to get ahead of themselves. I have heard folks saying “farmers stopped planting” in SA, possibly due to uncertainty caused by land reform.

  • South African new-truck market has increased overall sales by 2.3% year-on-year for the first nine months of the year, defying a slew of negative economic indicators.

  • Yes, land reform in South Africa is an urgent issue; the landless will almost certainly not be put off much longer for at least some movement in their direction.

  • Nearly a week has passed since South Africa’s 2018 jobs summit. The two-day gathering produced some useful agreements between the social partners: government, organised labour and business (essentially, big business).

  • It seems like the global agricultural observers have not fully factored in the possible effect of a weak El Niño in their grain production forecasts, specifically on South Africa.

  • Successful farmers run their operations like a business.

  • Further substantial fuel price hikes are lined up for the end of October, based on the unaudited mid-month fuel price data released by the Central Energy Fund.  

  • October 16th is World Food Day and maybe the most fitting thing to do would be to boast about South Africa’s progress in terms of food security, having been ranked by the Economist Intelligence Unit’s 2017 Global Food Security Index the top in Africa.

  • South African farmers believe Russia has great potential in the field of agriculture and are interested in sharing experience with the country, Omri van Zyl, the executive director of federation of South African agricultural organisations AgriSa, told Sputnik. 

  • In South Africa 7.4 million people are reported to be suffering from hunger. One wonders how this is possible, as South Africa is among the top 10 most food-secure countries in Africa. 

  • The growing need to boost rural economic activity through agricultural development has re-introduced the discussion on the subdivision of land to create as many small farms as possible that will benefit communities. 

  • The debate about the expropriation of white-owned land without compensation is about much more than the method of land reform.

  • October 16 is World Food Day and perhaps the most fitting thing to do would be to boast about South Africa’s progress in terms of food security, having been ranked by the Economist Intelligence Unit’s 2017 Global Food Security Index the top in Africa. 

  • This April the dam levels in the Western Cape slumped to a low of just 18% and South Africans were bracing themselves for Day Zero.