Despite pandemic-induced economic uncertainty, SA’s agricultural sector is flourishing, with the country shipping $10.2bn (about R150bn) worth of produce in 2020 or 3% more than in the previous year.
This is the second-highest level after the record export value of $10.7bn in 2018, according to data issued on Monday by the Agricultural Business Chamber of SA (Agbiz).
The agricultural sector contributes about 3% to GDP and nearly 900,000 jobs.
The near-record high exports were driven primarily by large domestic agricultural output, supported by good weather. The relatively weaker domestic currency also made SA’s agricultural products more competitive in the global market. The top 10 exportable products by value were citrus, grapes, wine, apples and pears, maize, nuts, sugar, wool and fruit juices, Agbiz said.
At the same time SA’s agricultural imports fell 8% year on year to $5.9bn. The fall in imports of poultry meat, sugar, spirits, sunflower oil, prepared animal feed, malt beer, fish and coffee was one of the main reasons for the overall lower figure for imports. This led to a 26% year-on-year increase in SA’s agricultural trade surplus to $4.3bn.
Agbiz projects that exports will rise further in 2021 thanks to more favourable conditions that have led to an increase in summer crop area plantings and prospects for a larger maize harvest.
The vibrancy and increasing exports suggest that the agricultural sector could create more jobs while other sectors struggle to stay afloat in the health crisis. But the impasse over the new national minimum wage and uncertainty about land reform could dampen the sector’s outlook.
The government announced last week that farm workers’ wages will be increased from R18.68 an hour in line with the national minimum wage of R21.69. Some farmers say they cannot afford the increases and could be forced to close all labour-intensive divisions, leading to huge job losses.
Wandile Sihlobo, head of agribusiness research at Agbiz, told Business Day on Monday that the minimum-wage hike will affect farmers differently. Wine farmers, who are already facing cash flow challenges due to three liquor sales bans, were likely to be hit hardest.
The agricultural sector was largely operational even during the strict level 5 lockdown, except for a few subsectors such as the wine and tobacco industries.
Sihlobo said aside from the favourable weather that enabled a large harvest, the surge in exports was also due to the unhindered food value-chain operations due to the effort of the government, the private sector and various research institutions.
Notably, the government’s decision to leave the agricultural and broader food sector fully operational from the lockdown’s onset provided conducive business conditions. In addition, the continuous interaction between private sector organisations and logistics companies ensured a constant flow of products to export markets, Sihlobo said.
Kulani Siweya, an agricultural economist at Agri SA, a federation of agricultural organisations, said SA should focus on building on the agricultural sector’s successes, and continued partnership between the government and the private sector was pivotal.
“This takes different forms and shapes which includes but is not limited to further investments in infrastructure, resolving the energy crisis, as well as financing in the sector,” Siweya said, adding that the sector is still positioned to become a major catalyst to get the economy moving.
“And with the developments in Brexit and the African Continental Free Trade Area (AfCFTA), an opportunity presents itself for SA to unlock new markets and/or strengthen current trade relations.”
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