This is an important day in South Africa’s economics calendar. At 11h30 this morning, Statistics South Africa will release the Quarterly Labour Force Survey data for the second quarter of 2020.
There is a broad consensus that we will see a notable increase in unemployment, which is unsurprising as the impact of the pandemic was reflected in the sharp contraction of the second-quarter GDP numbers.
In agriculture, however, the numbers could look slightly better than other sectors of the economy, for similar reasons the gross value-added numbers of the sector showed a notable increase in the first half of 2020.
Context
All major subsectors of agriculture — animal products, field crops, and horticulture — showed an increase in output this year, which underpinned the positive economic performance of the sector in the first two quarters of the year.
From a field crops output perspective, South Africa harvested its second-largest grains on record. Within this category, maize, sunflower seed, and soybeans produced in the current season (2019/20 production year) are up 38% y/y, 16% y/y and 8% y/y, estimated at 15.5 million tonnes, 785 910 tonnes and 1.3 million tonnes respectively. Moreover, South Africa’s sugar cane production is set to increase by 1% y/y to 19.4 million tonnes.
In the case of horticulture, South Africa has generally had a good fruit harvest this year, with the citrus industry recently recording a 13% y/y increase in available supplies for export markets in 2020. There is also a broad recovery in the production of deciduous fruit, mainly apple and pear production up by 5% y/y and 1% y/y respectively in 2020. This was generally underpinned by favourable weather conditions.
Moreover, there is a general recovery in the livestock industry although this particular subsector was not as robust as other subsectors. This is evident as slaughtering activity softened when the country went into strict lockdown at the end of March. With that said, the livestock sector activity will probably recover in the third quarter, depending on the widespread opening of restaurants and the ability of consumers to afford animal products.
Implications for jobs
Ordinarily, the good performance in the agricultural sector would have translated into increased activity and employment in the farming sector compared to the previous years. But, the social distancing regulations introduced at the end of March 2020 to prevent the spread of the coronavirus could mean that farmers and agribusiness might not have increased employment, especially of seasonal labour in the same way they would have in the absence of the pandemic. The impact of these dynamics might be reflected in the second quarter labour data which will be out this morning, as well as the following quarters of the year.
This will mean a notable change from the positive start of the year when the first quarter agricultural jobs numbers showed that South Africa’s primary agricultural employment increased by 3% (or 27 000 jobs) from the corresponding period last year to 865 000. This time around, we could see a mild decline in employment in this sector.
