SA’s agriculture output set to be robust in coming quarters

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The central message about South Africa’s agricultural sector since the start of the year has been positive, highlighting possible large harvests after favourable rains.

Because of this, people were surprised when Statistics South Africa released its first quarter GDP data, outlining that agriculture underperformed. Agriculture gross value added sharply contracted by -12.3% quarter-on-quarter (seasonally adjusted).

There are a few elements that explain this sharp contraction. First, the field crops had a tough start to the season because of excessive rains, which disrupted and delayed plantings by more than a month in some areas.

Second, the cattle industry is still feeling the adverse effects of foot-and-mouth disease, leading to a decline in slaughtering activity. We see similar issues of animal disease problems in the pork industry.

Third, the logistics issues at our ports, although having improved notably as Transnet works collaboratively with the private sector, also weighed on the table grapes activity at the start of the year.

Last, one can not underestimate the effect of load-shedding disruptions on poultry production. 

But the government has introduced various measures to ease this burden on farmers, such as load curtailment, expansion of the diesel rebate to the food value chain and, most recently, the launch of the Agro-Energy Fund.

Also worth noting is that South Africa’s agricultural quarterly gross value-added figures tend to be quite volatile, hence our communication always focuses on the annual performance. 

Boost on the way

We expect the coming quarters in the sector to show a robust performance and boost the annual growth figure to about 3% (from a revised 0.9% in 2022).

While the summer crop season started on bad footing, the weather conditions improved in January and allowed for the completion of the planting. Moreover, the load-shedding interventions assisted some farming entities.

But the effectiveness of these energy support measures differs across farming enterprises, and the costs are high mainly for those not fully benefiting from these efforts and who have had to rely on diesel generators to maintain production.

Consequently, South Africa’s 2022-23 summer crops are in good shape. For example, the maize harvest is estimated at 16.1 million tonnes, 5% higher than the 2021-22 season’s harvest and the third-largest harvest on record. The soybean harvest could reach a record 2.8 million tonnes.

Other field and fruit crops also show prospects for decent harvest this season. These good agricultural conditions will support the fortunes of the sector. But the possible slow recovery in the livestock subsector, which accounts for nearly half of agriculture’s gross value added, remains a risk to this year’s performance.

From a policy position, the Agriculture and Agro-processing Master Plan launched in May 2022 remains an essential guiding pillar for the long-term growth of the sector. This plan offers the government and the private sector a framework to grow the sector, build competitiveness, attract more investment, improve inclusion and create jobs. This year should mark the start of the implementation phase.

But progress so far remains limited, because the focus shifted to energy security at the beginning of the year as load-shedding intensified. Still, the sector should now focus on the master plan and explore ways to implement it.

The growth constraints such as biosecurity (animal diseases), infrastructure, widening of export markets, registration of new crop protection chemicals and various commodity-specific and regionalised plans are some of the aspects that the master plan reflected on.

Notably, the broad sector support behind the plan could wane over time if the implementation is slow, and we may again find ourselves with another “good on paper but not implemented plan”.

Getting out of this state of inertia requires the department of agriculture, land reform and rural development to reconvene the social partners with an implementation proposal at hand. 

Wandile Sihlobo is the chief economist at the Agricultural Business Chamber of South Africa and the author of Finding Common Ground: Land, Equity, and Agriculture. 

The views expressed are those of the author and do not necessarily reflect the official policy or position of the Mail & Guardian.