#BizTrends2025: Adapting agriculture - key trends and strategies for a sustainable future

Brendan Jacob, Head of Agriculture for Business and Commercial Banking, Standard Bank

1. Curating a deep dive into the future

What will we need to take along from the past and the present into the future:

Agricultural practices started with the first revolution, which was the adoption of modern agriculture to the current digital revolution. Presently, domestic agriculture is a sector that continues to face headwinds from the global economy (geopolitical tensions) which affect agricultural trade, and the growing population to climate change which plagues productivity efficiencies.

Climate change has been prominent over the past decade, with agriculture hard hit from a productivity perspective. Climate change poses a significant threat to yields, particularly rain-fed production.

It has been reported by DALRRD that climate change's impact on agriculture could reduce the real GDP by an estimated 3% and crop net revenues decline by about 90% by 2100 with small-scale farmers mostly affected.

In terms of what to factor in and take into the future, the integrated system of agriculture; sustainability, remains crucial for the sustenance and conservation of agriculture for future generations amid climate change and a growing population.

Mitigation strategies such as new cultivars which are resistant to climate variability, adopting innovative technologies that will improve water use efficiency and implementing sustainable practices at farm level that will ensure that productivity is maintained with limited resources to meet the needs of a growing population.

Partnerships are central to Standard Bank’s approach to sustainability, with the bank collaborating with governments, industry bodies, and development finance institutions (DFIs) to drive investment in climate adaptation. These partnerships are key to scaling the financial solutions and resources needed to support sustainable agriculture and build resilience to the effects of climate change.

2. Trends impacting agriculture in 2025 and beyond

Trends in agriculture may have varying time frames. For example, there can be a short-term trend of softening commodity prices or a long-term trend of adapting to climate change. Nevertheless, based on past and present factors, Standard Bank has put together a list of trends that we can expect to take place over the next twelve months.

Softening of agricultural commodity prices coupled with stable economic growth

Based on global supply recoveries due to expectations of La Nina in major producing regions and declined demand from China, grain prices in 2025 are anticipated to ease.

Using the Bloomberg proprietary aggregate commodity price index (an equal-weighted index of annual averages of the main commodities across energy, metals and agriculture) to decline by 1% in 2025, following a 2% year-on-year growth expected in 2024 and 14% year-on-year decline in 2023.

BMI Fitch Solutions predicts global economic growth to remain stable at 2.6% in 2025. The global manufacturing sector may improve as productivity is expected to increase on the back of inventory rebuilds and increased investment into manufacturing activities.

Other factors contributing to stable economic growth include lower interest rates, increased oil production, strengthened consumer confidence and a rise in real wages, among other things.

Elevated global risks

Spilling over from the recent years, global risks to the economy are expected to be elevated in 2025. This is on the back of late cycle risks, geopolitical risks and the potential for a tightening of financial conditions (BMI, 2024).

The American economy is highly influential on developing economies with spillover effects, with, the American economy is projected to reach its late stage of the economic cycle as its labour market weakens. One cannot think of global risks without factoring in geopolitical tension.

Geopolitical and military tension may remain high in 2025 as President Trump, when in office, works to resolve the Russia-Ukraine conflict. Financial conditions in many global economies may face higher inflation and interest rates on the back of increased tariffs on the United States imports.

Domestic prioritisation on export markets both old and new

The robust agricultural trade performance in the third quarter of 2024 further highlights the prioritisation of market access for agricultural export commodities. On a quarter-on-quarter (q/q) basis, agricultural exports rose by 20% in the third quarter of 2024 despite the ongoing trade restrictions from Namibia and Botswana.

Over the past decade, there has been a growing trend of slowbalisation taking place. The act of slowbalisation is bolstered by countries limiting trade to become self-reliant like the abovementioned neighbouring countries.

Furthermore, the import tariffs to be imposed by the Trump administration may likely result in an increased rate of slowbalisation. According to Oxford Economics, Trump’s import tariffs will reduce global trade values by more than 7% by 2030.

Reinforcing biosecurity measures

The focus on enhancing biosecurity measures is critical for the agricultural sector as the animal sector contributes R199.5bn in real gross income (GI). This component was also a crucial one that was highlighted in the 2024 budget speech, where there was a National Biosecurity Hub Programme aimed at bolstering sanitary and phytosanitary capacities for the domestic agriculture.