By Sinazo Mkoko
Crucial to fostering economic growth, alleviating poverty and improving food security in South Africa, the agriculture sector is one of the biggest contributors to the country’s GDP growth and has been one of the strongest performers in South Africa in recent years, according to the Bureau for Food and Agricultural Policy (BFAP).
According to Stats SA, the production from the agriculture sector increased by 19.2% in the third quarter of 2022, contributing 0.5 of a percentage point to GDP growth. This, they said, was mainly associated with a rise in the production of field crops and horticulture products.
“After contracting by 0.7% in the second quarter of 2022, the economy rallied in the third quarter, expanding by 1.6%. The agriculture, finance, transport and manufacturing industries were the main drivers of growth on the supply side of the economy. The demand side of the economy was lifted by a rise in exports and government consumption.” – Stats SA.
Stats SA said eight of the ten industries recorded an increase in economic output in the third quarter of 2022 and agriculture, forestry and fishing was the largest positive contributor.
President Ramaphosa commended the growth. He said that given the condition of the country’s economy, there was no room to be complacent, but there was one to acknowledge that the economic recovery is in progress and that the Economic Reconstruction and Recovery Plan, conceived amid the COVID-19 pandemic, was bearing fruit.
“We owe the progress we are making to the high-level partnerships between government and all sectors of our economy, as well as to the hard work of millions of South Africans who report for duty or open their businesses daily to add value to our economy and bring services and products to the nation.
“Through increased economic activity, we will see more and more South Africans in employment and sharing in the prosperity of the nation.” – President Ramaphosa
Chief Economist of the Agricultural Business Chamber of South Africa (Agbiz), Wandile Sihlobo shared that while the sector boosted GDP in the third quarter of 2022, it still faced hurdles:
“The better yields of some field crops (mainly summer grains and oilseeds) and horticulture, combined with relatively higher prices, specifically grains and oilseeds, underpin this improvement. Also worth noting is that the summer grains harvest, typically in the year’s second quarter, was delayed by roughly a month and fell into the third quarter this year. In a slightly more technical sense, the weak growth in the last quarter also created a lower base, setting the ground for a recovery in the third quarter,” he said.
The International Trade Administration (ITA) states that South Africa has by far the most modern, productive, and diverse agricultural economy compared to the rest of the African continent.
“South Africa has a well-developed agricultural sector, which will stand the country in good stead in the face of continuing uncertainty both economically and in terms of the weather. There are many factors impacting on the industry – including credit ratings downgrade, land reform concerns, volatile exchange rate, ongoing weather concerns and the latest COVID-19 pandemic.”
According to Statista, in 2021/2022, the production of maize was approximately 15.3 million metric tons. “This represents a drop of around 10 percent from previous years. In 2015/2016, South Africa experienced a decline reaching about 8.2 million metric tons. A fundamental reason for this was the severe drought that occurred between 2015 and 2017. However, from 2000 to 2022, an increase of roughly 96.3 percent can be recognised,” they said.
When it comes to sugar cane, the country saw a production of around 18 million metric tons of sugar cane in 2021/2022. “The preliminary volume dropped in comparison to the preceding year. Over the last two decades, the quantity of sugar cane produced in South Africa followed a declining tendency, with several fluctuations. The trend is related to farmers substituting their production of sugar cane for other more profitable and less capital-intensive crops. Increases in sugar taxes, decreasing prices, and lower import prices are the main reasons for the substitution.”- Statista.
Sihlobo said the country’s quarterly agricultural gross value-added figures tend to be quite volatile and they still expected a mild contraction in the gross value of the sector in 2022.
“This is mainly because of a decline in some field crop harvests, such as maize, which is down 6% y/y, estimated at 15.4 million tonnes, possible poor performance in sugar cane, and challenges in the livestock industry which struggles with biosecurity weaknesses. Moreover, the base effects after two years of solid growth, where the sector expanded by 14.9% y/y in 2020 and 8.8% y/y in 2021, will also be an additional factor to the potential annual contraction,” he said.
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