SA’s Agricultural Economy Took a Knock in Q1, 2018

Okay folks, I know this could have easily been summarised in a Twitter thread, but I needed to add a bit of context to the numbers.

The negative effects of the Western Cape drought are evident in the first quarter GDP data, which showed that South Africa’s agricultural economy contracted by 24.2% q/q on a seasonally-adjusted and annualised basis.

South Africa’s agricultural economy underperformed owing to a 19% y/y decline in winter wheat production to 1.54 million tonnes, 14% y/y decline in barley production to 307 000 tonnes, 11% y/y decline in canola production 93 500 tonnes, and a decline in stone fruit and grape production, particularly in the Western Cape province (see chart below for Western Cape production estimates).

WC crops

The aforementioned crops, together with summer fruits (stone fruit and grapes) are typically harvested in the period between November and March, which somewhat coincides with the first quarter GDP data, which ultimately explains the negative agricultural GDP reading.

The current summer crop had minimal bearing on this data, it will largely be factored in within the succeeding quarters.

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Author: Wandile Sihlobo

Wandile Sihlobo is an agricultural economist and head of agribusiness research at the Agricultural Business Chamber (Agbiz) in South Africa. He is a columnist for Business Day and Farmers Weekly magazine. Sihlobo is a member of the South African Agricultural Economics Association. He has previously served as an economist at Grain South Africa. He holds a Master of Science degree in Agricultural Economics from Stellenbosch University.

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