Net investments in the fishing sector decliningPHILLEPUS UUSIKU
The decline in net investments in the fishing sector could be explained by how quotas are allocated, according to Simonis Storm.
To support their argument, for example, Simonis said some industry players have three boats but receive quota from government which only needs one boat. This follows after quotas have been allocated amongst an increasing number of right holders without an increase in the Total Allowable Catch (TAC).
“As a result, we could continue to see net investment in new vessels decrease in the fishing sector and drag overall industry net investment lower if policy does not reallocate resources in a better way,” Simonis pointed out.
Quotas in the open market have become very expensive due to delayed quota allocation in prior years and the industry is sceptical of securing sufficient quota for their processing facilities. This has shifted investment away from new vessels into land-based operations for additional value adding activities to be pursued, SS added.
On a positive note, during May 2022, cattle, sheep, goats and pig slaughtering increased by 3.4%, 12%,90% and 12.8% year-on-year, respectively.
In addition, exports of live cattle, sheep and goats increased by 35.9%, 47.5% and 9.8% year-on-year, respectively.
South Africa was the only export destination for live cattle during May 2022, whereas 99% of both live sheep and live goat exports going to South Africa, Simonis pointed out.
With regards to processed products, beef meat product exports increased by 76.9% year-on-year in May and were mainly sold to Europe (61.1%), China and the US (23.9%) and Africa (15.1%). Sheep meat product exports increased by 96.3% year-on-year in May 2022 and were sold only to South Africa, whereas pork meat product exports were recorded at eight tonnes in May 2022, compared to zero tonne in May 2021.
Regarding horticulture products, Simonis observed a trend of farmgate prices are declining, while retail prices are increasing.
“This could be indicative of market power – or the abuse thereof – resting with retailers in forcing stock prices down whilst increasing profit margins. We expect profit margins for local crop farmers to remain under pressure owing to rising input costs such as higher diesel and fertiliser prices amongst other,” SS said.
The outlook for horticulture products looks bright given the improved rainfall during the first few months of 2022.
“A surplus in local harvests of most horticulture products is expected between May and September 2022, only two products – potatoes and gem squash – harvests are forecasted to fall short of local demand,” SS said.