The South African agricultural sector is also a successful competitor in export markets. In 2013, exports amounted to R72.5 billion, which is R15.2 billion more than agricultural imports. Should favourable production conditions prevail, and considering the weaker rand, the sector can improve on this performance in 2014 and 2015. Current conditions are favourable for field crop production. Irrigation agriculture, which contributes 25% to the value of agricultural production, also has good prospects. Nationwide dams are on average 80% full, and in the larger systems, the situation is even more favourable.
Consumers can look forward to a slowdown or even decline in food price inflation. In November 2014 food price inflation was still 6.5%, but the producer price index for agriculture, forestry and fisheries was 2.3%. The latter should within a few months have a diminishing effect on food price inflation. One of the factors contributing to this trend is the decline in the price of fuel. Expenditure on fuel amounts to 14% of agriculture's expenditure on intermediary goods and services. Indications are that the recent and expected further fuel price cuts will reduce this cost element. The rest of the food value chain should, however, also pass on cost-savings to the benefit of consumers.
Continued investment is probably the best guarantee for continued food security and sustainable competitive production. While there are challenges that the industry must overcome to maintain its competitiveness and at the same time contribute to the industries' transformation and the social upliftment of workers and their families, there is confidence in the future of the industry. The 8.4% increase in the value of investment in agriculture in the past year is indicative of such confidence, backed by a 10.1% increase in the value of land and fixed improvements and 9.9% in that of machinery, implements and vehicles.
