Farmers give GDP big boost

Record maize harvest leads agriculture sector’s contribution to growth

THE agriculture sector was yesterday hailed as a shining light in South Africa’s declining economy following a positive contribution to the gross domestic product [GDP].

After showing negative growth in the two previous quarters – plunging South Africa into a recession for the first time since the 2008-09 global financial crisis – the country’s GDP grew by 2.5% in the second quarter of this year, from the first.

However, economists believe this growth will not be sustainable and forecasts for the third quarter are not as positive.

The agriculture, forestry and fishing sector, which grew by 33.6%, contributed 0.7 of a percentage point to the GDP growth.

A large portion of that growth was attributed to the largest maize harvest the country has ever seen.

The finance‚ real estate and business services sector also performed well, increasing by 2.5% after contracting in the first quarter‚ and contributed 0.5 of a percentage point.

Mining and quarrying increased by 3.9%‚ contributing 0.3 of a percentage point.

The trade‚ catering and accommodation industry increased by 0.6% on the back of increased activity in the wholesale and retail trade sectors.

Grain SA economist Luan van der Walt said the figures showed the difference a good or bad agricultural year could make.

“This year’s maize harvest of 16.4 million tons is the biggest in South Africa’s history, with the highest average production of 6.24 tons a hectare. The previous record was in 1981.”

Van der Walt said while the Eastern Cape’s contribution was not as significant as provinces like the Free State, Mpumalanga and North West, it showed the most potential for development.

Besides the province’s contribution to maize production, Agri EC president Doug Stern said citrus, dairy and meat production were also major contributing factors to the agriculture industry as a whole.

“Our main grain-producing regions, namely Elliot and Cradock and their surrounds, have made a significant contribution to the country’s harvest, despite grain not being our province’s main commodity,” Stern said.

Citrus, from the Gamtoos area, and especially lemons from the Sundays River Valley region, had been major contributors due to demand from Europe and Asia, he said.

The Eastern Cape, particularly the Tsitsikamma coastal region, is one of the country’s largest milk producers, and about a third of the country’s livestock is also farmed in the province.

“Agriculture is our province’s main economic sector and we will continue to contribute not only to the national economy but to food security,” Stern said.

Efficient Group chief economist Dawie Roodt said the unpredictable nature of agriculture played a large role in the sudden economic growth, and would also come into play when growth could not be sustained in the third and fourth quarters.

“Agriculture has had an unbelievably good year. But it is a precarious sector,” he said.

Port Elizabeth economist Dr Neal Bruton said growth seen in the second quarter was more than likely to be a “one-off” occurrence as the third and fourth quarters were expected to show much less improvement.