The agricultural sector’s GDP recorded a sizeable decline of 28.8% during the period under review. Photo: File
South Africa's agricultural sector is diverse and export oriented, shaped by market policy reforms enacted in the mid-1990s. Over the past three decades, South Africa has maintained its position as a net exporter of primary agricultural products, gaining market access in over 181 countries. It remains the largest food producer and exporter in Africa.
Despite the sector’s resilience and growth over the years, it continues to be plagued by several issues, namely adverse climatic conditions; biosecurity challenges; low gross capital formation; and infrastructure constraints.
According to Statistics South Africa (Stats SA), South Africa’s real gross domestic product (GDP) contracted by 0.3% in the third quarter (Q3) of 2024. The agricultural sector was among the main contributors to this decline along with transport, trade and government services sectors.
The agricultural sector’s GDP recorded a sizeable decline of 28.8% during the period under review. This is a second successive decline following the 2.1% drop experienced in Q2. This is largely attributed to the mid-summer drought that reduced the production of grains and oilseeds such as maize, soya beans and sunflower. Moreover, unfavourable weather conditions also negatively affected the production of key subtropical and deciduous fruits. Similarly, vegetables were adversely affected in some parts of the country.
The country’s exports showed continued resilience despite the negative performance of the overall agricultural economy during the period. Data from the International Trade Centre Trade Map shows that, in Q3, South Africa’s agricultural exports were valued at about $4.1 billion (R73bn) showing an impressive growth rate of 22% from a value of $3.4bn in Q2. Moreover, this shows a 5% year-on-year (y/y) increase compared to the same period in 2023. The leading exported commodities were oranges, soft citrus, maize, lemons, nuts, wine and avocados.
Netherlands was the leading export markets for South Africa’s agricultural products during this quarter with a share in value of about 12%, followed by Zimbabwe (8%), China (8%), United Kingdom (8%), Botswana (6%), Namibia (6%), Mozambique (5%), United Arab Emirates (4%) and the US (4%).
Although South Africa’s agricultural sector is export oriented, the country imports some agricultural commodities due to self-insufficiency and comparative disadvantage. This is underscored by notable growth in imports over the years. In Q3, South Africa imported about $1.95bn worth of agricultural products, showing an increase of 5% compared to the previous quarter; also reflecting an 11% y/y increase. Wheat and meslin was the leading imported commodity accounting for a share of 10% in value, followed by milled rice (8%), palm oil (6%), food preparations (3%), raw sugarcane (3%), and frozen poultry meat (2%).
The commodities driving this observed growth in imports were mainly crude sunflower oil, sugarcane, coffee extracts, and poultry meat. The main supplying markets for products imported by South Africa were Thailand, China, Brazil, Eswatini, Indonesia and India.
Although the South African agricultural sector faces significant challenges, such as the El Niño adverse effects and infrastructure constraints, it remains resilient and continues to play a crucial role in the country’s economy. The sector does not only generate vital export earnings. It also supports job creation, and food security. The agricultural sector employed about 935 000 people during Q3, increasing by 4.4% compared to Q2.
It is essential to upscale efforts towards investment in agricultural research and innovation to enhance resilience and productivity. Moreover, mitigate biosecurity and climate change challenges. Innovative and technology solutions include adoption of climate-smart agricultural practices and early warning systems to ensure better preparedness and cope with droughts and other unpredictable weather events. Moreover, continued maintenance of existing markets, expansion and diversification of export markets leveraging on bilateral and multilateral agreements is essential.
Therefore, consistent with the aspirations articulated in the Agriculture and Agro-processing Master Plan (AAMP), the State and social partners such as the industries, civil society, agribusiness organisations, and organised agriculture should continue to strive towards opening up new markets, ensure compliance with export requirements and significant investment in infrastructure.
Bhekani Zondo is an economist: Trade Research Unit & AAMP: Research Coordinator
BUSINESS REPORT