South Africa\u2019s agricultural sector is facing significant headwinds and will likely contract in 2023.<\/p>\n\n\n\n
This is the view of Wandile Sihlobo, the chief economist of the Agricultural Business Chamber of South Africa.<\/p>\n\n\n\n
In 2022, the agricultural sector contributed R133.84 billion to the country\u2019s GDP \u2013 constituting just under 3% of the economy.<\/p>\n\n\n\n
Sihlobo said<\/a> he has regularly painted a positive picture of South Africa\u2019s agricultural performance this year following favourable rainfall across the country.<\/p>\n\n\n\n \u201cTherefore, I suspect it shocked some to read that, after an encouraging recovery of 2.8% quarter-on-quarter (seasonally adjusted) in the second quarter of 2023, the country\u2019s agricultural gross value added contracted by 9.6% in the third quarter,\u201d he said.<\/p>\n\n\n\n \u201cI was equally surprised as I thought the ample field crop, the harvest of which was a month behind the typical schedule, would still be reflected in the third-quarter data.\u201d<\/p>\n\n\n\n For example, he said the 2022\/23 maize harvest is at 16.4 million tonnes \u2013 6% higher than the 2021\/22 season\u2019s harvest and the second-largest harvest on record. <\/p>\n\n\n\n Despite this and other record harvests, the sector contracted in the third quarter of 2023.<\/p>\n\n\n\n Sihlobo explained that this is because the base effects and headwinds in the livestock and poultry industry weighed on the sector. <\/p>\n\n\n\n The livestock and poultry industry accounts for nearly half the sector\u2019s value and has been hit by diseases such as foot-and-mouth, avian flu, and African swine fever in 2023.<\/p>\n\n\n\n \u201cThere are weaknesses in the country\u2019s biosecurity system, including the measures in place to reduce the risk of infectious diseases being transmitted to crops, livestock, and poultry,\u201d he said.<\/p>\n\n\n\n \u201cAlso worth noting is that South Africa\u2019s agricultural quarterly gross value-added figures tend to be volatile. Hence, our communication always focuses on the annual performance.\u201d<\/p>\n\n\n\n Considering the downbeat growth figures of the recent quarters, Sihlobo said he now thinks the sector could face a mild contraction in 2023 rather than the solid growth initially expected.<\/p>\n\n\n\n \u201cAside from the quarterly growth figures, the sector also has a deepening downbeat mood, which could undermine investment and long-term growth prospects,\u201d he said.<\/p>\n\n\n\n \u201cThe causes of pessimism in the sector are primary challenges such as rising geopolitical tension, deteriorating infrastructure, poor port performance, weakening municipalities, crime, and energy supply, all of which influence farm profitability and growth prospects.\u201d<\/p>\n\n\n\n Sihlobo urged the government and the private sector to address these issues to support the industry in the long term.<\/p>\n\n\n\n This article was originally published by Daily Investor. To view the original, click here<\/a><\/strong> <\/p>\n\n\n\n
\n\n\n\n
\n\n\n\n