Drought ham­pers eco­nomic growth

LUYOLO MKENTANE asks Dr John Pur­chase, CEO of Ag­biz, how to kick-start the agri­cul­tural economy

Weekend Argus (Saturday Edition) - - BUSINESS -

LAST YEAR the agri­cul­tural sec­tor pro­vided a sig­nif­i­cant boost to the na­tional economy and as­sisted it from fall­ing into a pro­tracted tech­ni­cal re­ces­sion.

This was on the back of ex­cep­tion­ally good rain­fall early in 2017 that re­sulted in record maize (17.4 mil­lion tons) and soya bean ( 1.3 mil­lion tons) crops, among oth­ers, and de­spite se­vere drought con­di­tions in the Western Cape.

Agri­cul­ture gross do­mes­tic prod­uct is, how­ever, highly volatile over sea­sons, as can be seen from the chart, and largely de­pen­dent on favourable agri­cul­tural con­di­tions.

For 2018 the con­tin­u­ing and now dis­as­trous drought con­di­tions in the Western Cape will im­pact neg­a­tively on the sec­tor’s growth rate as the prov­ince con­trib­utes ap­prox­i­mately 20% to the coun­try’s agri­cul­tural economy.

Se­vere drought con­di­tions have re­turned over large ar­eas of the sum­mer rain­fall re­gion, and es­pe­cially over the im­por­tant crop­ping ar­eas of the Free State and North West prov­inces.

This does not au­gur well for the growth of the sec­tor and could put pres­sure on the coun­try’s growth rate as a whole this year.

The sec­ond ma­jor fac­tor that will de­ter­mine in­vest­ment and growth in the sec­tor is the lack of pol­icy cer­tainty.

Late last year the HighLevel Panel, un­der the chair­man­ship of for­mer pres­i­dent Kgalema Mot­lanthe, re­leased their Re­port on the As­sess­ment of Key Leg­is­la­tion and the Ac­cel­er­a­tion of Fun­da­men­tal Change.

This re­port clearly out­lines many of the pol­icy prob­lem ar­eas in the agri­cul­tural sec­tor and pro­vides rec­om­men­da­tions as to how these should be ad­dressed.

These rec­om­men­da­tions should be im­ple­mented as a mat­ter of ur­gency.

This would dras­ti­cally im­prove con­fi­dence in the sec­tor and stim­u­late in­vest­ment, growth and devel­op­ment.

Un­for­tu­nately, land re­form re­mains an is­sue of great dis­con­tent and un­cer­tainty, and this needs to be ad­dressed.


Graph shows year-on-year quar­ter change and agri­cul­ture, gross value added.

John Pur­chase, ex­ec­u­tive of Ag­biz.


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