SA’s agriculture was the only shining light in the second quarter of this year. The sector’s gross value-added expanded by 15.1% quarter on quarter on a seasonally adjusted and annualised basis, following an expansion of 27.8% quarter on quarter in the first quarter. This is, in part, because the sector was classified as essential and didn’t close down during the strict lockdown period, the effect of which extended to the second quarter.
Most importantly, it is due to this being a recovery year in agricultural output across all subsectors (field crops, horticulture and livestock) following prolonged periods of drought, and a surge in exports (supported by the weak exchange rate). These were also the key drivers of the expansion in the first quarter of the year.
In terms of field crops output, SA harvested its second-largest grains harvest on record. In this category, maize, sunflower seed, and soybeans produced in the current season (2019/2020 production year) are up 38%, 16% and 8% year on year, respectively, estimated at 15.5-million tonnes, 785,910 tonnes and 1.3-million tonnes, respectively. Moreover, SA’s sugar cane production is set to increase by 1% year on year to 19.4-million tonnes.
Good fruit
In the case of horticulture, SA has generally had a good fruit harvest this year, with the citrus industry recently noting a 13% year-on-year increase in available supplies for export markets in 2020. There is also a broad recovery in the production of deciduous fruit, with apple and pear production up by 5% and 1% year on year, respectively, in 2020. There is also a general recovery in the livestock industry, though this particular subsector was not as robust as others.
This is also evident in slaughtering activity softening when the country went into a strict lockdown at the end of March. With that said, the livestock sector activity will probably recover in the third quarter, depending on the widespread opening of restaurants and the ability of consumers to afford animal products.
This data reaffirms the view previously made that SA’s agricultural gross value-added could expand by, at least, an average of 10% year on year in 2020 (compared to a contraction of 6.9% year on year in 2019). The Bureau for Food and Agricultural Policy is even more optimistic, placing its agricultural growth forecast for the year at 13% year on year.
These optimistic growth numbers, however, might not translate into a similar picture of agricultural employment, and this is a point made previously. We generally remain downbeat on the second-quarter agricultural jobs data, which is yet to be released by Stats SA, primarily due to the regulations introduced to curb the spread of the coronavirus.
We think that probably limited the amount of seasonal labour that would have been employed during a year with a bumper harvest such as this one. There will probably also be a huge knock in the Western Cape agricultural employment, a province that typically accounts for about 24% of agricultural jobs as the further lockdown regulations on the wine industry and general decline in agri-tourism probably had a more negative impact in the province.
This will be felt at a national level because of the province’s large share in national agricultural employment.
Unfortunately, however, this did very little to change the overall GDP picture of SA as primary agriculture is a small share of the economy. The overall economy contracted by 51% quarter on quarter on a seasonally adjusted and annualised basis, largely reflecting the effects of lockdown restrictions put in place to slow the spread of the pandemic.
• Wandile Sihlobo and Louw Pienaar are agricultural economists working for the Agricultural Business Chamber of SA (Agbiz) and the Western Cape department of agriculture, respectively.
PODCAST | Tourism Business Council of SA rallies to open borders for international tourists
Subscribe: iono.fm, Spotify, Apple Podcast, Pocket Casts, Player.fm
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.