The week got off to a fairly slow start with no key data releases in the domestic agricultural calendar. This offered us an opportunity to briefly look back at key developments this year. If there is anything that has shaped agricultural permeance it is the drought in the 2018/19 production season and also the biosecurity matters. I spoke about the impact of these on agricultural economic performance in the third quarter of 2019 (see here).

But it is important that we also zoom into the recent trade figures, which show that South Africa’s agricultural trade surplus narrowed by 9% in the third quarter of this year compared to the corresponding period in 2018, recorded at US$1.2 billion.

Similar to the previous quarter, the narrowing of South Africa’s agricultural trade balance was underpinned by lower export values of wool, edible fruits, wine and grains. This can be explained by two factors, which are animal health and the changing climate. (Although I am not going to dive into details – I should note that imports also increased somewhat in the third quarter of 2019, and thus, also contributed to a narrower trade-balance).

Now, back to the main point, first, the foot-and-mouth disease outbreak that occurred in Limpopo earlier this year resulted in a temporary ban of South Africa’s livestock products exports, which included wool, and thus the lower export values. The wool exports have since resumed, and we could see some normalisation in export values in 2020.

Second, the drought that started in October 2018 and continued into early 2019 in some parts of South Africa led to a poor summer crop and horticulture harvest.  The main challenge throughout the year has been the lower output of major agricultural commodities such as maize, soybeans, sunflower seeds, amongst others, whose harvests declined by double-digit levels in the 2018/19 production year. Moreover, the wine grapes harvest was down by 2% from 2018. All this subsequently led to lower export volumes in the second quarter of this year compared to a corresponding period in 2018.

From a destination point of view, the African continent and Asia were the largest markets for South Africa’s agricultural exports in the third quarter, respectively accounting for 35% and 30% in value terms. Europe was the third-largest market, taking up 25% of South Africa’s agricultural exports in the second quarter of 2019. The balance of 10% value was spread across other regions of the world.

Note: My column which appears on Business Day on Wednesday, 11 December 2019, will present a brief review of South Africa’s broad agriculture performance in 2019.

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