Agricultural Exports in SA are Flourishing and Growing The Economy

By Fiona Wakelin & Jessie Taylor 

South Africa’s agricultural sector has proven to be a robust industry, contributing significantly to the country’s economic performance and employment for a large number of South Africans. But the sector’s value is more than just employment and GDP figures, as it supports a number of other sectors, such as manufacturing. This means that the success of the agricultural sector is far-reaching: it can increase productivity and employment in several neighbouring industries.

Supporting Industry Through Agriculture

The agriculture, forestry and fishing industry increased by 4,2% in the second quarter of 2023, contributing 0,1 of a percentage point to GDP growth. This was primarily due to increased economic activities reported for field crops and horticulture products. The growth in this sector has far reaching impact as it relies on a number of complementary industries – purchasing machinery and raw materials and relying on the logistics and freight industry to transport its produce.

In 2022, agriculture had contributed around 2.57 percent to the GDP of South Africa, however if one considers the related sectors (agribusinesses), such as manufacturers, suppliers, processors, distributors, and traders, the contribution could be closer to 7%, according to estimates. As the agricultural sector continues to grow one can expect its impact on related agribusinesses to increase substantially.

According to Agricultural Business Chamber Chief Economist, Wandile Sihlobo, “South Africa could have yet another decent summer grains and oilseeds harvest in the 2023/24 production season. The data released this afternoon by the Crop Estimates Committee puts the preliminary area plantings for summer grains and oilseeds at 4,41 million hectares, up by 0,4% y/y (albeit down mildly from 4,48 million hectares of the intended area when the season started).

This increase is not limited to a few crops but across most summer crops except for soybeans, where plantings possibly fell by 10% y/y to 1,04 million hectares (which is still well above the 5-year average area of 867 240 hectares). The area plantings for other major grains, such as maize and sunflower seed, is also well above the 5-year average. White maize plantings are forecast at 1,56 million hectares, up 2% y/y, with yellow maize planting at 1,08 million hectares, up 2%/y. This places the total commercial maize planting estimate at 2,64 million hectares, 2% more than the 2022/23 production season”.

Investing In Agriculture

The sales figures illustrate that farmers are still investing in their businesses, and show encouraging signs that the prices for agricultural commodities were “holding up”. South Africa’s agricultural sector is considered modern, stable, and productive, making it an ideal market to target the 32 000 commercial farmers with agricultural machinery such as tractors.

According to the US Department of Commerce, the best prospect for importers lie in the sales of tractors, combine harvesters, drone technology, balers, planters, precision agriculture equipment and technologies, sprayers, and irrigation systems. Farmers are increasingly looking for digital solutions to improve their agricultural yield, and there is growing interest in technology such as data management, machine learning, artificial intelligence, automation, and drone-based applications.

South Africa exports almost half of its agricultural produce, but this requires extensive support from processing businesses and transport suppliers. In the last ten years, South Africa’s agriculture and agro-processing exports have averaged more than 10% of all the country’s exports. These goods need to be transported to South Africa’s harbours, and with only around 8% of all transport taking place by rail, the transport sector is a critical partner.

The transport, storage, and communication sector makes up around 10% of the country’s economic activity and is valued at more than R300 billion. Increased agricultural activity is likely to push this value even higher. The agricultural sector is essential for economic growth and recovery, as well as for creating jobs. But it has a far wider impact, helping to grow numerous related industries. Increasing the productivity of the agricultural sector will not only add to food security and reduce employment, but it will also unlock growth in a multitude of related industries.

What Produce Does South Africa Export?

South Africa’s agricultural exports have been estimated at around $3.4 billion. Among the top exported products are citrus, maize, apples, pears, wine, grapes, figs, dates, avocados, nuts, fruit juices, wheat, wool and sugar, among others. Just over a third of all agricultural exports are purchased by African countries, with Asia the second largest agricultural export market at 28%. The European Union was third with 21%. One of South Africa’s key markets is the United Kingdom, which accounts for 7% of South Africa’s agricultural exports.

Source: AgbizTheConversation| Businessforsa |DailyMaverick |Statista | |Grainsa

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