After a sharp contraction of -11,9% quarter-on-quarter  (seasonally adjusted) in the first quarter of 2023, South Africa’s agricultural gross value added grew by 4,2% in the second quarter.

This improvement is based on the robust production conditions of various field crops and horticulture, which weren’t reflected in the first quarter data because of a delayed start to the 2022/23 production season and the base effects.

Also worth noting is that persistent load shedding threatened agricultural production at the start of the season.

Still, the various interventions to ease the load-shedding burden on farmers, such as load curtailment, expansion of the diesel rebate to the food value chain, and most private sector investment in alternative energy sources, all supported the production conditions.

Notably, the rainy summer season also cushioned field crops and horticulture from the adverse effects of load-shedding. Although arguably small, the recently launched Agro-Energy Fund is also valuable in assisting the sector to install alternative energy sources going forward.

Hence, the 2022/23 maize harvest is estimated at 16,4 million, 6% higher than the 2021/22 season’s harvest and the second-largest harvest on record. Soybean harvest could reach a record 2,8 million tonnes. South Africa’s sugar cane crop will likely increase by 3% to 18,5 million tonnes in 2023/24. Other field crops and fruits also show prospects for decent harvest this season.

Also worth noting is that South Africa’s agriculture quarterly gross value-added figures tend to be quite volatile; hence, our communication always focuses on the annual performance.

Importantly, we expect the coming quarters in the sector to show a robust performance and boost the annual growth figure to around 3% (from a revised 0,9% in 2022). There will likely be a solid rebound in the year’s third quarter. The delayed harvest will probably be reflected in the data for the third quarter.

Aside from the quarterly growth figures, the sector’s key challenges are rising geopolitical tensions, deteriorating infrastructure, weakening municipalities, crime, and energy supply, which all influence farm profitability. The South African government, collectively with the private sector, should address these issues to support long-term in the sector.

Also crucial for the outlook of the agricultural sector is highlighting that El Nino’s forecast in the upcoming 2023/24 summer season is another aspect to keep an eye on, although we remain optimistic that it will have a mild impact on the sector and thus keep production at decent levels and, by extension, sustain growth.

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