https://www.engineeringnews.co.za
Africa|Packaging|Paper|Packaging|Products
Africa|Packaging|Paper|Packaging|Products
africa|packaging-company|paper|packaging|products

Agriculture was the fastest growing sector of the SA economy in the second quarter

A maize farm in Lichtenburg

Photo by Creamer Media's Marleny Arnoldi

11th September 2023

By: Rebecca Campbell

Creamer Media Senior Deputy Editor

     

Font size: - +

The Bureau for Food and Agricultural Policy (BFAP) has, in its brief report 'Perspectives on Agriculture’s Performance in Q2 of 2023', highlighted the contribution of the agricultural sector to South Africa’s gross domestic product (GDP) during the second quarter of this year (2Q23). While total GDP grew by 0.6%, quarter-on-quarter, agricultural GDP grew by 4.2% over the same period, making it the fastest-growing sector of the South African economy. However, during 1Q23, agricultural GDP had contracted by nearly 12%, quarter-on-quarter.

“Within the agricultural space, where the contribution from different subsector[s] varies by quarter, it is perhaps more relevant to consider year-on-year growth,” stressed the BFAP in its report.

Year-on-year, agriculture in 2Q23 grew by 17.9%. But 1Q23 had seen a year-on-year decrease of nearly 5%, while 2Q22 had experienced a year-on-year fall of nearly 20%, as a consequence of a later-than-usual delivery of some summer crops. (This late delivery boosted agriculture’s GDP growth rate during 3Q22.) The BFAP suggested that 2Q23’s performance showed “some normalisation” in the dynamics of the agricultural sector.

Statistics South Africa does not release value-added data for the different agricultural sub-sectors. Instead, the BFAP makes use of disaggregated Gross Value of Production (GVP) data compiled by the Department of Agriculture, Land Reform and Rural Development. (GVP equals price multiplied by the quantity produced.) The three primary subsectors of agriculture are animal products, field crops and horticulture.

It was the field crops subsector that was the main driver of agricultural GDP growth in 2Q23. Revenues in this subsector grew by 16%, followed by animal products, with growth of just 1.2%, while horticulture saw almost no growth. In terms of total agricultural GVP during 2Q23, field crops contributed 47%, animal products 31% and horticulture 22%.

The field crop contribution was so significant because summer crops were harvested during the second quarter. The biggest component of this summer crop was maize, and the 2022/23 maize crop was expected to be about 6% up on that of the previous year. Although maize prices fell by 17% in 2Q23, GVP jumped by 42%, owing to a 54% surge in deliveries by producers, itself the result, in part, of an earlier harvest.

Soybean production rose 24% in 2Q23, resulting in a third year in a row with a record crop; deliveries during 2Q23 rose by 28%, leading to a 9% increase in soybean GVP despite a fall in prices. Sunflower GVP dropped 27%, because of a 20% fall in prices and a 12% reduction in output.

Sugarcane accounted for 15% of the GVP growth in the field crops subsector, because of weather-delayed Brazilian harvests and weaker Indian output.

Overall, field crop output prices in 2Q23 declined by 12%, on average, but major input prices also declined in this period – fertiliser prices dropped by 36%, for example, while the fuel price reduced by 9%. “While the decline is positive, the weaker exchange rate to date in quarter [three], combined with the stronger Brent Crude Oil price globally, raises concerns about cost dynamics for the rest of the year,” cautioned the BFAP.

Growth in the animal products subsector was “minimal”. Beef production GVP fell 13% year-on-year in 2Q23, mainly because of declining prices, with the beef price falling from R60.35/kg in 2Q22 to R53.80/kg in 2Q23, or almost 11%, which was one of the biggest falls in beef prices during the past decade. This reflected the country’s weak economic growth rate and the squeeze on consumer’s disposable incomes. Pork GVP fell by 10%, year-on-year, despite prices rising by 11%, because of fewer pig slaughters (as a result of consistent pressures on producer margins over the past few years). On the other hand, poultry GVP increased by 7%, consequent to a 2% rise in chicken prices and increased production.

Horticulture (fruit and vegetable) exports were boosted by the 20% year-on-year decline in the rand exchange rate, from R15.58/$1.00 in 2Q22 to R18.68/$1.00 in 2Q23. Fruit exports in 2Q23 were worth R19.8-billion and vegetable exports totalled R1-billion, year-on-year increases of 12% and 18% respectively. Citrus was the biggest contributor to these exports, being responsible for R10.2-billion in 2Q23. In the domestic market, all the main fruit and vegetables benefitted from higher prices, year-on-year. For cabbage, onions, potatoes and tomatoes this increase was 51% in 2Q23. In the case of onions, this price rise came despite a 37% increase in production volumes. However, despite an average output price rise for horticultural products of 27% since 2Q18, the subsector’s input prices have increased far more – fertiliser by 132%, electricity by 82%, labour by 55%, fuel by 50%, chemicals by 49% and packaging paper by 44%.

“The agricultural sector’s growth of 4.2% in [2Q23] was enabled by the field crop sector – mainly the summer crop, where volumes are expected to be higher in 2023 compared to 2022, offsetting the decline in prices,” concluded the BFAP. “In the case of animal products and horticulture, revenue gains were limited and input costs remain high, suggesting that GDP in these sectors contracted. … In BFAP’s latest baseline, a modest contraction is still expected for full year agricultural GDP.”

Edited by Creamer Media Reporter

Comments

Showroom

Hanna Instruments Image
Hanna Instruments (Pty) Ltd

We supply customers with practical affordable solutions for their testing needs. Our products include benchtop, portable, in-line process control...

VISIT SHOWROOM 
SBS Tanks
SBS Tanks

SBS® Tanks is a leading provider of innovative water security solutions with offices in Southern Africa, East and West Africa, the USA and an...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Photo of Martin Creamer
On-The-Air (07/06/2024)
7th June 2024 By: Martin Creamer

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.33 0.383s - 162pq - 2rq
Subscribe Now