Farming is ‘ marginally optimistic’

The agricultural sector, one of SA’s key industries, has been buoyed by a wave of renewed optimism as the economy gradually reopens.

The SA government sees agriculture as a key sector for pushing growth and tackling unemployment, while increased agricultural exports are a potential boost for local industry. The sector contributes about 3% to GDP and is responsible for close to 900,000 jobs.

The sector was largely operational even during the strict level 5 lockdown, except for a few subsectors, such as the wine and tobacco industries.

According to the latest survey of the Agricultural Business Chamber of SA (Agbiz), a key industry body, and national development finance institution the Industrial Development Corporation (IDC), agribusinesses are marginally optimistic about business conditions in SA.

After deteriorating from the 50-point mark to 39 in the second quarter, a period during which there was heightened uncertainty whether the agriculture and agribusiness sectors would operate efficiently when most sectors of the economy were closed under the lockdown regulations, the Agbiz/ IDC Agribusiness Confidence index rebounded to 51 in the third quarter of 2020. A reading above 50 indicates expansion in domestic agribusiness activity.

Wandile Sihlobo, the chief economist at Agbiz, said the latest survey results corroborate various data that show most of SA’s agriculture and agribusiness sectors have not been severely affected by the Covid19 crisis, as the sector was classified as essential and throughout the lockdown period largely was not closed down.

“Mostly, this is a recovery year in agricultural output across all subsectors [field crops, horticulture and livestock] after prolonged periods of drought. The weaker exchange rate and minimal disruptions in logistics have also allowed the sector to register robust export activity in the first three-quarters of this year, particularly as port activity normalised.

“With that said, not all is rosy in agriculture. The wine and tobacco industries are amongst those that are still feeling the negative effects of the prohibition of sales for several weeks during the strict lockdown,” Sihlobo said.