The agricultural sector could return to a positive growth path if livestock disease was controlled and South Africa has a favourable rainy season in the 2022/23 summer, according to the Agricultural Business Chamber (Agbiz).
Wandile Sihlobo, the chief economist at Agbiz, said yesterday this meant that to get this sector back to a growth path, the Department of Agriculture, Land Reform and Rural Development (Dalrrd), together with organised agriculture, should accelerate the collaborative efforts of resolving the animal disease challenge.
“We are already in the camp of those that forecast a mild contraction in South Africa’s agricultural sector this year. There are a number of things that concern us. For example, the livestock industry, which accounts for roughly half of South African agriculture's gross value added, continues to suffer from foot-and-mouth disease outbreaks and rising feed costs,” Sihlobo said.
Meanwhile, some field crops' harvests were not as robust as the 2020/21 season due to heavy rains at the start of the season.
However, he said while some of these harvests would be lower than in the previous season, they were well above the long-term harvest levels.
“That said, these reduced harvests and the challenging in livestock farming will likely overshadow the robust activity we have seen in field crops such as soybeans, sunflower seeds, and various fruits.”
While Agbiz anticipated some moderation in South Africa's overall agriculture growth prospects this year, they were not suggesting that the sector was in tatters.
“The output in a range of commodities is well above the long-term levels, and the contraction that we project is largely a reflection of the exceptional performance of the past two years rather than the depressed production conditions in the current year,” Sihlobo said.
Futhermore, Agbiz added the issue of trade as various agribusinesses and farmers continued to highlight the need for expansion of export markets to markets such as China, South Korea, India, Saudi Arabia, Bangladesh and Japan.
These were countries with strong economies that could be key buyers of local high-value products such as beef, wine and fruits.
“Simultaneously, we need to maintain the existing export markets such as the EU, the African continent and some Asian markets, which are instrumental for our growth path. This is a long-term endeavour that requires active engagement by the South African authorities in consultation with other role-players in the sector.”
Regarding the upcoming 2022/23 agricultural season, Sihlobo said the prospects of a weak La Niña provide a good foundation for an excellent rainy season.
“This is notwithstanding the lingering challenges of higher prices of critical farm inputs such as fertiliser, agrochemicals, and fuel, which will put pressure on farmers’ and agribusinesses’ finances when the summer crop season starts in October,” Sihlobo said.
Meanwhile, the National Agricultural Marketing Council (Namc) report for this month said that comparing the second quarter (April to June) of 2022 to the second quarter of 2021 (y-o-y), the real net farm income real and real gross income had decreased by 14.4% and 5.8%, respectively, while the real expenditure on intermediate goods and services increased by 3.7% y-o-y.
When comparing the second quarter (April to June) of 2022 to the first quarter of 2022, the real net farm income, real gross income and the real expenditure on intermediate goods and services increased by 316.9%, 61.7% and 3.4%, respectively
The organisation said that one other aspect worth monitoring was the sector job opportunities, as agriculture was viewed as a key employer.
Sihlobo said they were not as concerned as they were about the broad growth numbers. “For example, in the second quarter of this year, there were 874 000 people in primary agriculture, up by 1 percent year-on-year (and up 3% quarter-on-quarter). Notably, this is well above the long-term agricultural employment of 780 000.”
BUSINESS REPORT