Agricultural sector slowly bouncing back

THE AGRICULTURAL sector in South Africa and the Northern Cape is slowly bouncing back to full strength after an ongoing, crippling drought, according to agricultural economists.

Senior agricultural economist at FNB, Paul Makube, said yesterday that the agricultural sector was slowly recovering from the recent drought, with recent forecasts showing that normal rainfall was expected for the 2017/18 crop season as the El Nino weather pattern had dissipated.

“The strength or weakness of the rand will influence agriculture’s contribution to the economy in terms of import parity prices and export revenues,” Makube said.

South Africa’s agriculture sector is divided into three main commodity sectors. Livestock accounts for 47 percent of the country’s gross producer value (GPV), followed by horticulture and field crops whose share stood at 29 percent and 23 percent respectively in 2016.

Poultry accounts for 16 percent of the agriculture GPV, followed by beef (12 percent), maize (11 percent), deciduous fruits (eight percent) and citrus (six percent).

Together these account for 54 percent of the total agriculture GPV to the tune of R132.80 billion during the 2015/16 season.

Chicken (broiler and layers) distribution in SA is led by the Western Cape at an estimated 21.9 percent share, followed by the North West (21.3 percent), Mpumalanga (15.8 percent), KwaZulu-Natal (13.8 percent), Gauteng (10.3 percent), the Free State (6.8 percent), the Eastern Cape (5.6 percent) and the Northern Cape at 0.2 percent of the total according to industry estimates.

The Eastern Cape accounts for 24 percent of the total beef herd of 13.69 million, with Kwazulu-Natal the second at 20 percent, the Free State (17 percent), the North West (12 percent) and Mpumalanga (10 percent). The shares of other provinces are seven percent for Limpopo, the Western Cape and Northern Cape both with four percent, and Gauteng at two percent.

Mpumalanga leads with maize production at 29.8 percent market share, followed by the Free State (28.5 percent) and the North West (14.7 percent). The Northern Cape produces 9.1 percent of the total and mainly under irrigation, followed by KZN (6.7 percent), Gauteng (5.7 percent), Limpopo (four percent), the Eastern Cape (one percent) and the Western Cape (0.6 percent).

Deciduous fruits are mainly produced in the Western Cape and Eastern Cape provinces, all under warm, dry summers and cold winter conditions. Others such as the Northern Cape have a small market share.

Citrus is mainly produced in Limpopo (42 percent), Eastern Cape (26 percent), Western Cape (16 percent), Mpumalanga (18 percent), KwaZulu-Natal (three percent) and Northern Cape (two percent).

Citrus and deciduous fruit are major export earners and have helped the country to record a positive agriculture trade balance in 2016.

SA’s agricultural labour force stood at about 835 000 heads during the second quarter of 2017.

The Western Cape has the largest share and accounts for 22 percent of the total agricultural labour force, followed closely by Limpopo at 17 percent, KZN (15 percent), MP (11 percent), EC (11 percent), FS (10 percent), the NW (six percent), the NC (four percent) and GP (four percent).

“The expected grain harvest is now expected at a record high of 18.91 million tons according to the latest crop estimates report, which is 10 percent higher relative to last year. The maize harvest is now estimated at 16.41 million tons, up by 111 percent year-on-year.

“Maize accounts for 87 percent of the total grains in SA and is not only used for human consumption but also livestock feeding where it constitutes over 70 percent of feed.

“The horticulture industry was the least affected by the drought due to irrigation as many on-farm dams had sufficient water. The relatively weaker rand exchange rate also helped with export earnings as the industry is largely export driven.

“Agriculture has over the past few years contributed less than 2.5 percent to GDP per year. However, this could even be higher if one considers its forward and backward linkages to other sectors of the economy as in the case of manufacturing where about 70 percent of the agricultural output is utilised as raw material.

“Agriculture GDP reached R65.84 billion at constant 2010 prices in 2016 from R71.42 billion in 2015,” Makube concluded.