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Buoyant agriculture not likely to float SA’s GDP

The agricultural sector’s great performance over the past year would do very little to change the South Africa’s overall gross domestic product (GDP). Photographer Ayanda Ndamane African News Agency(ANA)

The agricultural sector’s great performance over the past year would do very little to change the South Africa’s overall gross domestic product (GDP). Photographer Ayanda Ndamane African News Agency(ANA)

Published Mar 9, 2021

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DURBAN - THE AGRICULTURAL sector’s great performance over the past year would do very little to change the South Africa’s overall gross domestic product (GDP) since primary agriculture accounted for a small share of about 2 percent) of the local economy, the Agricultural Business Chamber (Agbiz) said on Monday.

Wandile Sihlobo, the chamber’s chief economist, said South Africa’s agricultural gross value-added probably grew by roughly 10-13 percent year-on-year in 2020, according to their estimates and those of the Bureau for Food and Agricultural Policy.

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“We believe that Stats SA data this week will most likely confirm this view. Unfortunately, however, the outperformance of the agricultural sector will do very little to change the overall GDP picture of South Africa as primary agriculture is a small share (about 2 percent) of the economy,” said Sihlobo.

Agbiz said Statistics South Africa (Stats SA) would today (TUE) release GDP data for the fourth quarter of 2020 which would give a full-year view of the sector’s economic performance.

At an aggregate level, the first three quarters of 2020 were encouraging, with agriculture gross value-added expanding by double digits on an annualised quarter-on-quarter basis. He attributed the sector’s generally good performance for 2020 in part, to the sector’s classification as an essential service that continued to operate during the strict lockdown period.

He said more importantly, 2020 was a recovery year in agricultural output across all sub-sectors of field crops, horticulture and livestock.

South Africa had its second-largest grains harvest in history in 2020. In horticulture, the country generally had a good fruit harvest with citrus exports reaching a record 146 million cartons. There was also a broad recovery in deciduous fruit production, with apple and pear production up slightly by 5 percent and 1 year-on-year respectively in 2020.

Agbiz said that they had observed a general recovery in the livestock industry, although this particular sub-sector was not as robust as other agriculture sub-sectors.

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The positive performance of the sector was also reflected in the exports data for 2020, which amounted to $10.2 billion (R158bn) in 2020 representing a 3 percent increase from the previous year. This was the second-largest level after the record exports of $10.7bn in 2018, Sihlobo said.

Agbiz said that the favourable weather conditions that underpinned higher agricultural output in 2020 have continued into 2021.

Recently released Crop Estimates Committee data showed that South Africa's 2020/21 summer grain and oilseed production could increase by 5 percent year-on-year to 18.5 million tons. While this was still the first production estimate for this season, with eight more to follow, this would be the largest on record if it materialises.

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Estimates from the South African Wine Industry Information and Systems and Vinpro suggested that South Africa’s wine grape crop could be somewhat larger than in 2020. In the fruit industry, there was also optimism for continued growth in output in 2021.

Agbiz said this essentially provided the basis for another year of substantial growth in South Africa's agriculture.

“We believe that South Africa’s agriculture gross value-added could expand by 4 percent in 2021. The base effects contribute to a slightly muted growth rate this year compared to 2020. We will most likely update this data as more production field crops, and horticulture production data become available,” said Sihlobo.

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