Despite a 0.1% fall in South Africa’s GDP data for the first quarter of this year, the agriculture sector grew by 13.5%.
Thabile Nkunjana, a senior economist at the Trade Research Unit of the National Agricultural Marketing Council (Namc) said this was remarkable given the sector’s numerous fundamental constraints, including infrastructure to a greater extent. “However, the efforts of key government that collaborated with companies to address these difficulties have been partially neutralised, and more work is needed in the future,” Nkunjana said.
The sector had experienced consecutive contraction over the previous quarters.
He added that the agricultural sector’s expansion was principally driven by increased economic activity for horticultural items. “In the first quarter, South Africa’s total agricultural exports were R57.8 billion ($3.1 billion). Grapes were the main export product, valued at R12.1 billion in the quarter, followed by apples (R2.1 billion), pears (R1.9 billion), wine (R1.8 billion), and plums and sloes (R1.4 billion). Maize products, such as maize meal, increased by 13% quarter on quarter to R1.2 billion, which is significantly more than R467.3 million for the same time last year.”
Nkunjana added that this could be attributable to the drought that has plagued southern Africa, resulting in several countries importing maize meal to supplement their domestic supplies due to restricted supplies of primarily white maize. He said there were also noteworthy activities in the livestock industry, with sheep exports growing by 84% in quarter 1 over the same period last year. “Fresh beef exports grew also significantly in the quarter, while pork exports increased marginally.”
He added that going forward, the citrus and avocado industry were expected to contribute positively to SA’s GDP in the coming quarter 2 and maybe quarter 3.
“The country’s citrus exports to large and lucrative markets such as the United States are already increasing, and avocados are going to markets like China. But a drought on maize, which is typically a top product exported by South Africa, is also expected to decrease and this will show on the sectors overall exports. Also, the EU market for South Africa’s citrus products remains grey for now.”
Nkhensani Mashimbyi, an agricultural economist at Absa Agribusiness said due to the seasonality of agriculture, it was difficult to compare the performance quarter-on-quarter from a GDP perspective.
“It is better to compare Q1 2024 data with Q1 2023 data. Here, the quarterly year-on-year GDP slowed by 7.7% due to lower commodity prices, subdued consumer spending and infrastructure bottlenecks. There have been great strides made in improving local port inefficiencies through better collaboration between industry stakeholders and Transnet. Prospective rate cuts later in the year will alleviate consumer pressure,” Mashimbyi said.
The agricultural economist said for field crops, the performance of winter grains was impacted by lower production, quality issues and lower year-on-year commodity prices.
“For maize, soybeans, and sunflower seeds, higher year-on-year production as well as slightly higher white maize prices outweighed the decrease in yellow maize, soybeans and sunflower prices compared to the same period in 2023. For the second and third quarters, which is the period when most production is expected, the lower yield of summer grains and oilseeds is expected to weigh on the sector’s performance despite higher maize prices.”
Absa Agribusiness said for livestock, prospects of higher exports of beef and sheep meat bode well for the industry, however, biosecurity issues present a downside price risk.
“Higher citrus volumes, coupled with competitive pricing in the export market will contribute to positive performance during the second quarter.”
BUSINESS REPORT