South Africa’s agriculture sector has experienced two consecutive years of recession due, in large part, to the widespread drought on the production of field and certain horticulture crops.
According to the GDP figures for the fourth quarter of 2019, recently released by Statistics South Africa (Stats SA), agriculture, forestry and fisheries contracted 7,6% quarter-on-quarter.
In addition, annual real GDP for agriculture, forestry and fisheries decreased 6,9% in 2019, the second year of overall decline for the sector, which also contracted 4,8% in 2018.
The sector’s lacklustre performance added to South Africa’s overall economic woes by contributing -0,2 of a percentage point to GDP growth of -1,4% in the fourth quarter.
This followed a contraction of 0,8% in the third quarter of 2019, thus plunging the economy into a technical recession.
In a statement, Stats SA said that following an increase of 0,8% in 2018, annual real GDP for South Africa increased only 0,2% in 2019, the lowest yearly growth since 2009.
Wandile Sihlobo, chief economist at Agbiz, said that double digit production declines in the grain and horticulture industries was the main cause of decline in output by the farming sector.
“We expected a contraction of about 4% for 2019, but the impact of drought on the grain and horticulture industries, as well as biosecurity threats, such as the foot-and-mouth disease outbreak and the impact this has had on trade in the livestock industry, cut deeper than what we thought.”
The agriculture sector may, however, escape this two-year slump in 2020, said Sihlobo. Production estimates for summer grains and wine grapes, for example, already suggested that the sector was recovering.
“I think we will see growth of 5% [for agriculture] this year, especially given that recovery will be of a low base.”
But, according to Sihlobo, while the short-term expectation might represent an improvement, whether or not the farming sector would be able to achieve long-term, sustained growth depended on the outcomes of various policy discussions currently underway.
In this regard, the amendment of Section 25 of the Constitution to provide for the expropriation of land without compensation would have a significant impact on future investment in the farming sector, he said.