We are nearing the end of a challenging year for SA agriculture.
The sector’s gross value added is likely to show a mild contraction when the data for the entire year is published by March. This would be a notable shift from two consecutive years of solid growth, with the sector having expanded almost 15% year on year in 2020 and 8.8% in 2021.
Mild declines in critical crop harvests such as maize, production challenges in the sugar industry, trade friction in fruits, vegetables, beef and wool, as well as widespread foot-and-mouth disease, weighed on the sector’s performance this year.
In a slightly more technical sense, the strong growth in the last two years has created an exceptionally high base, setting the scene for a pullback. Therefore, despite the expected moderate decline in 2022, it is important to note that overall activity has remained strong and the sector maintained its core contribution of improving national food security and job creation.
On the food security front, SA’s ranking in The Economist’s Global Food Security index has improved. The index puts SA at 59 out of 113 countries, up from 70th last year. It rates SA as the most food-secure country in Africa, followed by Tunisia at 62nd. This improvement is commendable and it is not merely because other countries have regressed since the start of the Russia-Ukraine war, which has inflated global food prices.
SA’s index score came in at 61.4 for 2022, a notable rise from 57.8 in 2021. In the four sub-indices that comprise the Global Food Security index — food affordability, food availability, quality and safety, and sustainability and adaption — there was a deterioration only in the food affordability subindex.
Regarding jobs, SA’s primary agriculture had 873,000 people employed by the third quarter of 2022, up 5% year on year. Notably, this is well above the long-term agricultural employment level of 780,000. As with the previous quarter, the increased farm activity in some vegetable, fruits and field crops sustained robust employment. This speaks to the sector’s resilience amid the many domestic and global economic and geopolitical challenges in 2022.
The export revenue from agriculture also remains encouraging, despite the trade frictions SA experienced with its citrus in the EU, wool in China and vegetables in Botswana and Namibia. In the data we have for the first eight months of this year SA’s agricultural exports amounted to $8.9bn, up 6% from the first eight months of 2021.
Generally, higher commodity prices have also contributed to the increase in export values. Africa and Europe have remained vital markets, accounting for roughly two-thirds of total agricultural export earnings. Citrus, maize, nuts, wine, sugar, apples, pears and grapes were among the key exports, especially in the latter months under consideration.
There have also been important policy developments and programmes that came into effect this year which, if implemented effectively, could boost long-term growth for the sector. For example, in May industry participants and the department of agriculture, land reform & rural development launched the Agriculture & Agro-processing Master Plan. This is a socio-compact programme that requires the collective effort of all agriculture role players to succeed.
Importantly, the programme was co-created by all partners, which means it enjoys a shared vision for the sector’s growth agenda. The master plan reflects on key growth-constraining factors of the sector and further proposes solutions on sectoral cross-cutting issues and is commodity-oriented. Meanwhile, the launch of the blended finance instrument by the department and the Land Bank was an important step that will support the implementation of the master plan.
In sum, 2022 presented various challenges to the sector. Still, its resilience ensured that core objectives, including food security and job creation, have been met amid intensified geopolitical issues and rising input costs that are largely outside SA’s control.
• Sihlobo is chief economist at the Agricultural Business Chamber of SA.
