With the recent fuel price hike, the country falling into the junk status category and many other negative news stories in the media there is finally some good news.
Paul Makube, Senior Agricultural Economist at FNB provided a snapshot view of the agricultural sector which is said to be slowly bouncing back to full strength and recovering from the drought.
South Africa’s major agricultural commodities:
South Africa’s (SA) agriculture is divided into three main commodity sectors.
Livestock accounts for 47 per cent of the country’s gross producer value (GPV), followed by horticulture and field crops whose shares stood at 29 per cent and 23 per cent respectively in 2016.
SA’s top five agricultural commodities:
Poultry accounts for 16 per cent of the agriculture GPV, followed by beef (12 per cent), maize (11 per cent), deciduous fruits (8 per cent) and citrus (6 per cent). Together these accounted for 54 per cent of the total agricultural GPV to the value of R132,8 billion during the 2015/ 16 season.
The distribution of the production regions in SA:
• Poultry – Chicken (broiler and layers) distribution in SA is led by the Western Cape at an estimated 21,9 per cent share, followed by the North West (21,3 per cent), Mpumalanga (15,8 per cent), KwaZulu-Natal (13,8 per cent), Gauteng (10,3 per cent), the Free State (6,8 per cent), the Eastern Cape (5,6 per cent), and the Northern Cape at 0,2 per cent of the total according to industry estimates.
• Beef – The Eastern Cape accounts for 24 per cent of the total beef herd of 13,69 million, with Kwazulu-Natal the second at 20 per cent, followed by the Free State (17 per cent), the North West (12 per cent) and Mpumalanga (10 per cent). The shares of other provinces are 7 per cent for Limpopo, the Western Cape and Northern Cape both with 4 per cent and Gauteng at 2 per cent.
• Field crops – Mpumalanga leads with maize production at 29,8 per cent of the market share, followed by the Free State (28,5 per cent) and the North West (14,7 per cent). The Northern Cape produces 9,1 per cent of the total (mainly under irrigation), followed by KZN (6,7 per cent), Gauteng (5,7 per cent), Limpopo (4 per cent), the Eastern Cape (1 per cent) and the Western Cape (0,6 per cent).
• Deciduous fruits – These are mainly produced in the Western Cape and Eastern Cape Provinces, all under warm, dry summer and cold winter conditions. Others provinces, such as the Northern Cape, have a small market share.
• Citrus – Citrus is mainly produced in Limpopo (42 percent), Eastern Cape (26 percent), Western Cape (16 percent), Mpumalanga (18 percent), KwaZulu-Natal (3 percent) and Northern Cape (2 percent).
Citrus and deciduous fruit are major export earners and have helped the country to record a positive agriculture trade balance in 2016.
Agriculture’s contribution to employment numbers:
SA’s agricultural labour force stood at about 835 000 heads during the second quarter of 2017.
The Western Cape has the largest share and accounts for 22 percent of the total agriculture labour force followed closely by Limpopo at 17 percent, KZN (15 percent), MP (11 percent), EC (11 percent), FS (10 percent), the NW (6 percent), the NC (4 percent) and GP (4 percent).
State of recovery from the drought
The expected grain harvest is now expected at a record high of 18,91 million tons according to the latest crop estimates report, which is 101 percent higher relative to last year.
The maize harvest is now estimated at 16,41 million tons, up by 111 percent year-on-year (yoy). Maize accounts for 87 percent of the total grains in SA and is not only used for human consumption but also livestock feeding where it constitutes over 70 percent of feed.
The horticulture industry was the least affected by the drought due to irrigation as many on-farm dams did have sufficient water. The relatively weaker rand exchange rate also helped with export earnings as the industry is largely export driven.
The total contribution to SA’s GDP
Agriculture has over the past few years contributed less than 2,5 percent to GDP per year. However, this could even be higher if one considers its forward and backward linkages to other sectors of the economy as in the case of manufacturing where about 70% of the agricultural output is utilised as raw material.
Agriculture GDP reached R65,84 billion at constant 2010 prices in 2016 from R71,42 billion in 2015.
Paul added, “Recent forecasts showed that normal rainfall is expected for the 2017/18 crop season as the El Niño weather pattern has dissipated. The strength or weakness of the rand will influence agriculture’s contribution to the economy in terms of import parity prices and export revenues.”
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