Agriculture GDP bad, but not that bad – expert analysis

Economists and the agriculture sector were shocked when the GDP data for the third quarter of 2024 showed that the agriculture, forestry and fishing industry decreased by 28.8%, primarily due to decreased economic activities reported for field crops.

However, Agri SA says although agriculture performed badly in the third quarter, its performance was not as bad as Statistics SA indicated in its report on the gross domestic product (GDP) for the third quarter.

Agri SA says in a statement that Agri SA and the Agricultural Business Chamber of South Africa (Agbiz) have noted the sharp decline in South Africa’s agricultural performance in the third quarter of 2024, with a seasonally adjusted quarter-on-quarter decrease of 28.8%.

“While a decline was anticipated due to a challenging mid-summer drought, the extent of the decrease was surprising,” Agri SA says in a statement.

In response, Agri SA and Agbiz requested the Bureau for Food and Agricultural Policy (BFAP) to conduct a detailed analysis of the data. BFAP, a renowned research organization with extensive knowledge of South African and African agriculture, has been publishing the BFAP Baseline for over twenty years and has recently issued quarterly research briefs on agricultural performance.

After the recent publication of South Africa’s agricultural performance, BFAP conducted a rapid assessment of the available data from Statistics SA and the more detailed accounts from the Department of Agriculture, Land Reform and Rural Development.

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Several areas of concern in agricultural GDP statistics

According to Agri SA, BFAP’s technical report provides an assessment of the agricultural GDP statistics and highlights several areas of concern.

“While acknowledging the complexity and difficulty in sourcing real-time statistics to calculate the sector’s economic performance in aggregate, the report suggests that reforms are necessary to ensure more robust indicators for the agricultural economy.”

The analysis indicates that the year-to-date (first three quarters of 2024) decline in real agricultural GDP should be between 5-6%, as opposed to the current official decline of 15.5%.

In addition, the BFAP annual models project that the agricultural sector will contract by 4.8% in real terms in 2024, implying that agriculture is expected to grow in the last quarter of 2024. This figure is also much closer to the initial BFAP Baseline real AgGDP forecast for 2024 of -2.2%, published in August 2024.

Agri SA says these results were shared with the agriculture department, which will engage officially with Statistics South Africa. To ensure better data quality going forward, the agriculture department, Agri SA, Agbiz and BFAP will form the “SA’s Agricultural Conditions Assessment Committee” starting January 2025.

The Committee will meet regularly to assess the state of agriculture in South Africa and release brief insights following their discussions. Detailed communication about the Committee will be provided in January 2025.