SOUTH Africa’s agricultural industry is projected to continue outperforming other sectors and aid the recovery of an economy battling the effects of the coronavirus scourge.
The defiant mood of the sector in the face of the economic challenges conceded in the first quarter of 2020 (1Q 20) buoys the projections.
South Africa recorded contractions of 1,4 percent and 0,8 percent in the two preceding quarters respectively.
“However, the one sector that has outperformed other sectors is agriculture,” said Paul Makube, Senior Agricultural Economist at FNB Agri-business.
The sector increased by 27,8 percent quarter on quarter (q/q) due to higher production of animal products, horticulture and field crops amid favourable weather conditions.
He projected the agriculture sector to continue its upward trend.
This, according to the economist is underpinned by the enormous contribution from field crops, horticultural products and animal products.
First-quarter gross domestic product (GDP) for agriculture forestry and fishing industry sector increased by 27,8 percent q/q with a 0,5 percentage-point positive contribution to the country’s GDP.
Makube noted good weather conditions boosted crop prospects, allowing farmers to plant 7 percent more hectares (ha) under commercial grain and oilseed crops.
Planted area for maize, SA’s largest staple, was alone 13 percent higher year-on-year (y/y) at 2,61 million ha. The expected total maize harvest now hovers around 15,51 million tons which is 37,6 percent higher relative to the 2019 levels according to the Crop Estimates Committee (CEC) June 2020 estimates.
Strong export demand boosted maize revenues with 1Q20 total of 512 800 tonnes which is 86 percent higher y/y.
Makube added that a combination of relatively good production conditions, a sharply weaker rand and the rebound in exports boosted performance in the fruit sector despite port challenges also spelt good prospects for the sector.
“Given the bullish harvest outlook for both the summer and winter grain and oilseed crops, as well as citrus, it is expected the current stellar performance from the sector will spill over into the subsequent quarters of 2020 despite the COVID-19 disruptions,” Makube said.
He added weather conditions had since turned positive for the winter rainfall areas with good snow coverage and heavy rains in the Western Cape province.
This has aided moisture replenishment and flows through the rivers to the region’s dams.
Makube said although it was about two months before the onset of the new crop season, forecasts for Southern Africa indicated positive developments for the agriculture sector.
Explaining the impact of COVID-19 on agriculture, Makube noted the sector was overall minimally impacted as the most could operate and export due to being declared an essential service.
“The biggest potential for the sector is in post-COVID-19 upliftment of critical infrastructure such as rail, ports, water and related services to support the high-value export commodities such as citrus, avocados, macadamias,” he said.
Agriculture’s contribution historically is about 2,5 percent to GDP.
Meanwhile, the Economic Transformation Committee of the ruling African National Congress (ANC)and Business for South Africa (B4SA)released their respective strategy documents for the post-COVID-19 inclusive economic recovery for South Africa.
Wandile Sihlobo, chief economist at the Agricultural Business Chamber (Agbiz) noted ANC and B4SA prioritised the agriculture sector, for its transformative potential and aligned their strategies with the National Development Plan.
“This reflects the commitment of both the government and private sector to the larger development agenda of South Africa,” Sihlobo said.