South Africa’s agricultural economy started the year on a bad footing, contracting by 13.2% on a quarter-on-quarter seasonally adjusted annualised rate, according to agricultural economist Wandile Sihlobo.
He said this came as a surprise as the industry expected a positive reading on the back of improvement in some horticultural subsectors and the winter crops harvest.
“At the heart of it, though, the contraction is in line with the numbers that are coming out of key horticultural industries that harvested during the first quarter of the year,” he said.
Sihlobo said a case in point was wine grapes, with a harvest down by 2% from 2018, which was already down by 14% from a longterm average harvest.
“The citrus industry, which has been a source of positive news in the horticultural sector, with exports set to reach a record level of 137 million boxes of citrus fruit in 2019 due to large output, only started with its harvest activities in the second quarter, and we expect its fortunes to be reflected when data is available,” he said.
Sihlobo said the optimism from the citrus industry would likely be short-lived as agricultural conditions were tough in large parts of the country due to recent drier weather conditions. He said this was specifically the case in the central and western parts of the country, which predominantly produce summer grains and oilseed.
“We think the expected contraction in the summer crops harvest could overshadow positive news that might emanate from other agricultural subsectors,” he said