The regular readers of this blog may know that I have consistently painted a positive picture of South Africa’s agricultural performance this year, following favourable rainfall across the country.

Therefore, I suspect it shocked some to read that after an encouraging recovery of 2,8% quarter-on-quarter (seasonally adjusted) in the second quarter of 2023, South Africa’s agricultural gross value added contracted by 9,6% in the third quarter.

I was equally surprised as I thought the ample field crop, whose harvest was a month behind the typical schedule, would still be reflected in the third-quarter data.

For example, the 2022/23 maize harvest is at 16,4 million, which is 6% higher than the 2021/22 season’s harvest and the second-largest harvest on record. Soybean harvest is at a record 2,8 million tonnes. South Africa’s sugar cane crop is forecasted to be 18,5 million tonnes in 2023/24, up 3% y/y. Other field crops and fruit harvests were also decent this year.

Ultimately, the base effects and headwinds in the livestock and poultry industry weighed on the sector. The livestock and poultry industry, which accounts for nearly half the sector’s value, has been hit by animal diseases such as foot-and-mouth, avian influenza and African swine fever. There are weaknesses in the country’s biosecurity system, including the measures in place to reduce the risk of infectious diseases being transmitted to crops, livestock, and poultry.

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, with the downbeat growth figures of the recent quarters, I now think the sector could show mild contraction this year instead of the solid growth we initially anticipated.

Aside from the quarterly growth figures, the sector also has a growing downbeat mood, which could undermine investment and long-term growth prospects. The causes of pessimism in the sector are primary challenges such as rising geopolitical tensions, deteriorating infrastructure, poor port performance, weakening municipalities, crime, and energy supply, which all influence farm profitability and growth prospects.

The South African government, collectively with the private sector, should address these issues to support the sector in the long term.

Also crucial for the outlook of the agricultural sector, at least in the medium term, is highlighting that El Nino’s impact on the 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, support growth.

As stated elsewhere, the weather forecasters, including the South African Weather Service, have consistently painted a promising picture that rain may continue until early March 2024, when the El-Nino-induced dryness may begin. These promising production conditions favour broader field crops, horticulture, and livestock and poultry subsectors.

The one aspect worth monitoring is heat levels or temperatures. The South African Weather Service has recently signalled that “Minimum and maximum temperatures are expected to be mostly above-normal countrywide.”

Given the challenging conditions and excessive heat presented to farmers in the northern hemisphere, this will be something livestock and poultry farmers will have to watch and try to find ways to minimize animal heat stress.

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