Agriculture rebounds after four quarters contraction
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DURBAN – South Africa’s agriculture economy rebounded in the first quarter of 2020 by 27.8 percent quarter on quarter on a seasonally adjusted and annualised basis after experiencing four consecutive quarters of contraction due to droughts, foot-and-mouth diseases among other factors.
Agricultural Business Chamber (Agbiz) chief economist Wandile Sihlobo said that they expected the following quarters of the year to show solid growth for the sector.
"We also expect the year to average at about 10 percent year on year (compared to -6.9 percent year on year in 2019).This will be underpinned by a recovery in all major subsectors of agriculture, namely livestock, field crops and horticulture production. This is all on the back of favourable weather conditions during the 2019/20 production season,” said Sihlobo.
Agbiz said that with field crops, South Africa expected its second-largest grains harvest on record. In this category, maize, sunflower seed, and soybeans produced in the current season (2019/20 production year) were up 38 percent, 13 percent and 8 percent and estimated at 15.5 million tonnes, 765 960 tonnes and 1.3 million tonnes respectively.
Moreover, the country’s sugar cane production was also set to increase by 1 percent to 19.4 million tonnes. With horticulture, South Africa had generally had a good fruit harvest this year, with the citrus industry recently noting a 13 percent increase in available supplies for export markets in 2020.
Sihlobo said that there was also a broad recovery in the production of deciduous fruit, with apple and pear production up by 5 percent and 1 percent respectively in 2020.
Sihlobo said the Agbiz/IDC Agribusiness Confidence Index (ACI), which in the past proved to be a good indicator of the growth path of the agricultural economy, had been rather wobbly in the most recent quarters.
“This will continue to be the case in 2020 because of the negative sentiment caused by Covid-19. In the second quarter of the year, the ACI deteriorated to its lowest levels since the financial crisis, which implied that agribusinesses are downbeat about business conditions. Meanwhile, agricultural output and trading conditions were in relatively better shape despite the lockdown regulations to curb the spread of the coronavirus,” he said.
Sihlobo said that there could be a disjoint this year between the agribusiness confidence levels and the actual economic performance of the sector. The sentiment could be downbeat because of the pandemic, whereas the agricultural economy could perform well on the back of an expected large output in all major subsectors of agriculture,” Sihlobo concluded.
National Agricultural Marketing Council chief economist Dr Sifiso Ntombela while the sector looked relatively good, the sector might not see similar growth in the next quarters due to the Covid-19 crisis affecting the demand side of the sector due to the closure of restaurants.