SA’s agricultural industry leant towards a positive trajectory in the third quarter, with strong crop performance lifting the overall outlook despite lingering challenges in the livestock sector.
This is according to the department of agriculture’s latest agricultural conditions assessment, which “continues to view SA’s agricultural conditions as uneven but leaning more towards the favourable growth path for most industries”.
Agriculture contributes about 3% to GDP. While relatively small in direct economic output, the sector plays a disproportionately significant role in the broader economy through its strong linkages to agri-processing, logistics, exports and employment.
According to the department’s agricultural conditions assessment committee, summer grains and oilseeds recorded a 28% year-on-year production surge to nearly 20-million tonnes.
This was driven by favourable rains and increased planting, with delayed harvests shifting deliveries into the third quarter and boosting short-term gross value added. However, the ample supply placed downward pressure on commodity prices.
Sugar cane benefited from good rains, but global price weakness limited returns. Winter crops, while hampered by pests and late-season dryness, posted a 4% annual increase, with wheat, canola and barley production holding up. Vegetable volumes also rose, though price drops, particularly for potatoes, affected producer margins.
In contrast, the livestock sector continues to suffer. Foot-and-mouth disease has reduced slaughter volumes and carcass weights, particularly in beef and dairy.
While lower feed costs thanks to the bumper maize and soya bean harvest have eased some strain, producers face a “heightened risk environment”, according to the committee.
Pork and poultry producers gained marginally from consumer substitution, driven by higher beef prices, as well as shorter production cycles.
The horticultural sector offered a brighter picture, with higher volumes in citrus, deciduous fruits and wine grapes.
“The primary concern for horticulture and wine producers remains trade policy, particularly the friction in the US market and the slow pace of export diversification. At the production level, the conditions are favourable and should support third-quarter growth,” the committee noted.
Agbiz chief economist Wandile Sihlobo said: “We are likely to see the benefit of the excellent production figures and also through third-quarter agricultural growth figures when the GDP data is out.
“Due to these abundant harvests, exports have also been encouraging since the start of this year, with agricultural exports reaching $3.7bn in the second quarter, a 10% year-on-year increase.”
But he emphasised the recovery is uneven. “The foot-and-mouth disease that many South Africans read about at the start of this year remains a major challenge and constraint for livestock farmers.”
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