News in South Africa 28th February:

1. Great news for braai lovers:

The Bureau for Food and Agricultural Policy (BFAP) latest food inflation brief points to an easing of meat prices in South Africa across the board – even for chicken pieces, following a heavy-hitting avian flu crisis at the end of 2023.

Great news for braai lovers
Photo by Marek Mucha

The group noted that international meat prices declined for the seventh consecutive month in January, reflecting lower prices for poultry (-4.4%), pork (-0.9%) and beef (-0.2%).

“The poultry market was under pressure, given weak demand and ample export supply in the global market. For pork, prices were pressured by low import demand from China, given sufficient domestic production in tandem with abundant supply from other producers in the world market.”

Beef prices decreased due to increased exports from Oceania and South America. Beef exports are projected to move up by 1% to 12.1 million tons in 2024, driven by increased shipments by leading exporters Brazil and Australia due to ample production and strong global demand.

The main factor supporting this surge is robust US import demand, fuelled by declining domestic beef production.

In the sheep meat market, a decrease in the number of sheep available for slaughter (because farmers kept animals for longer due to recent rains) and high demand for imports globally caused sheep meat prices to rise (2.0%) internationally.

Good news for South Africa

The good news for South African braai lovers is that local meat prices were in line with global prices across all meat types, the BFAP said.

“The prices for poultry, using Individual Quick Frozen (IQF) as benchmark, were down by 1.3%, beef down by 1.5% and pork down by 10.3%.”

The group noted that the prices were lower in January 2024 compared to December 2023 as demand weakened following the festive season, warning that there may be a rebound in local demand and prices as Easter approaches.

“Poultry prices reflect sufficient domestic supply of meat despite the impact of Avian Influenza through the latter half of 2023, with weekly slaughters now back to normal and additional supply through imports.

“Ample imports of fertile eggs to keep day-old chick supply consistent aided in achieving sufficient supply.”

The group noted that retail egg prices were slightly cheaper (-1.6%) for a tray of 6 eggs and 0.4% for a tray of 18 in January 2024 from December 2023 levels.

“However, prices were still above those recorded for January 2023 given that supply is still constrained following widespread culling of layer hens in the latter half of 2023 due to Avian Influenza,” it said.

Sourced from BusinessTech

The BFAP said that estimates suggest that up to 22% of the commercial layer flock was culled, “but the retraction in prices suggests that supply is starting to recover, albeit slowly”.

Looking ahead, the group said that the conclusion of the bilateral trade agreement with Saudi Arabia for exports of high-value cuts of meat, as well as the resumption of exports to China signals that the meat industry could experience growth in the demand over the coming months.

Representatives in the local meat industry said that shipments as part of the deal with Saudi Arabia are due to start “in a matter of weeks”. They should drive significant confidence in the local market as well as further investment into South Africa, they said.

2. SA fast-tracks foreign work permits:

South Africa will slash the time taken to issue work permits to foreign executives and technicians employed by the biggest companies in the country in a bid to lure overseas investors. 

Under the so-called Trusted Employer Scheme, a pilot of which was introduced in October, work permit processing times will be cut to 20 days from 22 weeks, the Department of Home Affairs said in a statement on Tuesday.

The Southern African-German Chamber of Commerce and Industry, which represents companies operating in South Africa, including Volkswagen AG and Bayer AG, has previously said that the difficulty in securing work permits limited investment and threatens 100,000 jobs in the country. 

“This is one scheme that will allow South Africa to more easily attract skills and manage immigration, particularly in the processing of applications for senior executives, technical personnel, corporate employees and investors,” Aaron Motsoaledi, South Africa’s Home Affairs minister, said in the statement. 

Companies under the program will have their applications given a higher priority and will be subject to fewer requirements and demands for supporting documentation. 

South Africa’s Presidency, which recommended the creation of of the program among other steps in a report last year, has said a skills crisis is the second-biggest threat to economic growth after recurrent power outages. 

3. Load shedding improving:

Breakdowns at Eskom’s ageing power stations are declining, and proof of that is the fact that South Africans experienced 600 hours less load shedding over the past three months than in the corresponding period a year before, according to Electricity Minister Kgosientsho Ramokgopa.

The average generation capacity unavailable due to breakdowns has decreased from about 18,000MW to less than 15,000MW, meaning that at least 3,000MW, equal to about three stages of load shedding, remains available to feed electrons into the grid. 

This improvement is partly due to less partial load losses, which is when units are in service but don’t perform as they should and deliver less electricity than expected. 

The load shedding that did take place was also less intensive than before, Ramokgopa said.

Increased planned maintenance, aimed at improving plant performance in the future, is why the availability of Eskom’s generation fleet is still low, he said.

Eskom was able to increase its planned maintenance, which at its peak this summer saw 18% of generation capacity taken offline, thanks to the fiscal support from government, Ramokgopa said. 

The maintenance programme is specifically focused on Eskom’s priority power stations, namely Kusile, Kendal, Majuba, Matla, Tutuka and Duvha – and even the problem child Tutuka now has three of its six units generating electricity “at any given time”. 

Maintenance increases intense power cut risk

This “deliberate strategy” of increased planned maintenance does increase the risk of more intense load shedding but will pay off in the long run.

Ramokgopa said failures of units after they return to service following routine maintenance, which has been a long-standing problem at Eskom’s coal-fired power stations, have also decreased. 

This comes as Eskom’s average energy availability factor (EAF) for the first seven weeks of 2024 dropped to 51.57%, compared to 54.71% for the whole of 2023 and a government-imposed target of 65% by the end of March.

4. Free State ideal for renewable energy:

The Free State’s geographic location is ideal for renewable energy projects in South Africa. This is as the country battles to end load shedding.

These sentiments were shared by the Minister of Electricity, Kgosientsho Ramokgopa, at the Free State Investment Conference in Bloemfontein.

Ramokgopa believes that if all avenues are explored the province could be a game changer.

He says the Free State has the advantage of optimal radiation levels, vast land and grid capacity.

According to the minister, Letsatsi Solar Power plant just outside Bloemfontein is an example of what the country should invest in.

The plant produces 64 megawatts and has an excess of 16 megawatts that is immediately available to relieve the pressure of load shedding.

Five municipalities have been identified to replicate this project in the province.

“Because the province has got three major advantages; first, the quality of the sun, the radiation level and the number of days that we have the sun and the number of hours that we have in a day where there’s good quality sun. (The) second one has the ample land in addition to the land that they use for agricultural activities; there’s land that remains unused. And the third one is that they got great capacities. So, if you look at the Cape provinces, Northern Cape, Eastern Cape and Western Cape they have limited or they have exhausted their grid capacity. So, they have got three key ingredients to enable projects of this magnitude to happen,” says Ramokgopa

The Broll Property Group, one of the role players in the Free State Investment Conference, says it hopes to help in aligning some aspects of the strategic initiatives.

Broll Property Group Director Bathobile Chime says they would like to collaborate with other small businesses to attract local and international investors.

“We sit on the advisory side to help businesses decide where they should be and how they should be operating. So, our intention about being here today is to facilitate some of those interactions between the investors, as well as the attendees and local businesses here. So, we operate here from the Free State as well, so we are working for alignment and partners,” says Chime.

Trade and investment:

The Free State government says the Investment Conference aims to explore trade and investment as a pillar of the province.

MEC for Small Economic Development, Thabo Meeko, says this arises from the province’s strategic location at the heart of the country connecting six provinces including Lesotho.

Meeko says the discovery of gas as a natural resource in the province is another milestone in the improvement of the economy of the province.

“We are now going into the second phase of the investment of the gas exploration. Out of it we can derive benefits, one of them is gas to energy. Second of which is very key to building capacity in the downstream, is the processing of that gas. We are told that companies who are operating in tiles, doing glass benefit a lot.”

Local small business owners say the investment conference will help to open markets for them.

5. New cannabis laws:

The National Council of Provinces (NCOP) has passed the Cannabis for Private Purpose Bill, meaning that the legislation is now waiting on the President’s desk to be signed into law.

On 27 February 2024, the NCOP passed the amended piece of legislation, which establishes a new legal framework for adult private use of cannabis while tightening and clarifying the restrictions related to children and the use and possession of the plant.

In 2018, the Constitutional Court upheld a ruling finding that sections of the Drugs and Drug Trafficking Act were unconstitutional, leading the way to the decriminalisation of private cannabis use in South Africa.

Introduced in 2020, the legislation broadly seeks to allow for the cultivation and possession of a stipulated quantity of cannabis and the use of it in private settings.

It also looks to expunge the criminal records of those convicted of possessing cannabis.

Responding to various concerns, parliament released a statement saying that the bill “does not propose protection and neither suggesting any provision to use cannabis for traditional purposes and it is not at all aimed to condone the use of cannabis for commercial intensions.”

The Bill also “extremely prohibits children to possess, deal and smoke or consume cannabis,” it added.

What are the prescribed amounts?

According to the Bill, there is a prescribed quantity of cannabis that an adult can cultivate and possess for personal use:

  • Unlimited seeds and seedlings for private cultivation;
  • Allowed four flowering cannabis plants or cannabis plant equivalent per adult person in a private place;
  • Privately possess one flowering cannabis plant or cannabis plant equivalent in a public space;
  • Privately possess 100 grams of dried cannabis or cannabis equivalent in a public space;
  • Privately possess 600 grams of dried cannabis or cannabis equivalent per adult in a private place.

A an adult person may provide to, or obtain from, any adult person without payment:

  • 30 seeds or seedlings or any combination thereof;
  • One flowering cannabis plant or cannabis plant equivalent;
  • 100 grams of dried cannabis or cannabis equivalent.

Some important examples of contraventions of the Bill

The bill does have penalties for contraventions of the provisions, in terms of possession, cultivation, smoking and consumption (specifically in public spaces), as well as the involvement of a child.

  • Smoking and consumption of cannabis in public is prohibited;
  • Exceeding the prescribed amounts previously stipulated;
  • It is a criminal offence to smoke cannabis in a public place, in a vehicle on a public road, or in the immediate presence of any non-consenting adult person/child;
  • Cannabis is considered an intoxicating substance, therefor a person may not operate a vehicle after having used it;
  • It cannot be sold.

These contraventions are punishable by a fine or imprisonment.

All information sourced from articles posted by: BusinessTech, DailyInvestor, Moneyweb, and SABC News.

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