Agriculture light in South African economic tunnel

Amid news that the South African economy is officially in a recession, agriculture remains a beacon of hope.

The sector made the biggest contribution to the small growth in the Gross Domestic Product (GDP) for the first quarter of the year and for the first time since 2014 showed positive growth.

In addition, the economic prospects for the second quarter are even more promising, says Wandile Sihlobo, an economist at the South African business chamber Agbiz.

According to Stats SA, the South African agricultural sector grew by 22% compared to last year. Mining grew by 12.8%, while all other sectors of the national economy shrank. At 6%, the trade sector saw the biggest loss.

Sihlobo says the healthy growth in agriculture can be attributed to record harvests for maize and soya, as well as good recovery of the fruit and vegetable industry.

The expected summer grain and oilseed harvest is almost double that of last year’s drought harvests.

Sihlobo believes these improvements will be seen in the GDP of the second quarter, as harvests are coming in until August.

Agbiz also expects growing optimism and accompanied growth in the South African agricultural sector for the rest of the year.

Sihlobo says this optimism is already detectable in the market for tractors and agricultural implements. A total of 493 units were sold in May, a quarter more than the previous month and 17% more than the same time last year.

Jannie de Villiers, CEO of Grain SA, says in developing economies like South Africa, the contribution of primary agriculture to the national GDP is relatively small. But the secondary industry combined with the mining industry can make a huge contribution to job creation for unskilled labour, which has the greatest need for jobs.

share this