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Mild expansion for agriculture, but outlook for year not so good: Agbiz

Agbiz says while figures released by Statistics SA indicated agriculture showed a mild quarterly expansion it expects a mild contraction this year. Stock photo.
GREAT STUFF: Agbiz says while figures released by Statistics SA indicated agriculture showed a mild quarterly expansion it expects a mild contraction this year. Stock photo.
Image: 123RF/KOSTIC DUSAN

The Agricultural Business Chamber of SA (Agbiz) says the 0.8% contribution by agriculture to SA's first-quarter GDP was due to improved activity in the horticulture industry and some field crops such as soybeans and sunflower seeds.

Stats SA said on Tuesday real GDP increased by 1.9% in the first quarter of 2022, following an rise of 1.4% in the fourth quarter of 2021.

“While the 2021/22 agricultural production season started on a downbeat footing, with excessive rains damaging some crop and vegetable fields, a breather from mid-January allowed for replanting and recovery in some fields.

“In addition to these improvements, we have had a decent deciduous fruit harvest. Moreover, there are expectations of a large citrus harvest,” said Agbiz chief economist Wandile Sihlobo.

Sihlobo said SA’s agriculture quarterly gross value-added figures tended to be quite volatile so Agbiz’s recent communication focused on the annual performance.

“We expect a mild contraction of between 3% to 5% year-on-year in 2022. This will mainly be on the back of a decline in some field crop harvests, combined with the base effects after two years of solid growth where the sector expanded by 14.9% y/y in 2020 and 8,8% y/y in 2021 (revised figures).”

Sihlobo said by field crops, Agbiz was not only referring to summer grains but also sugar cane, which experienced sizeable damage from the recent floods in KwaZulu-Natal.

“This impact will likely show in the second-quarter data. Moreover, the livestock subsector, which accounts for a substantial share of the agricultural value-added, also faces numerous challenges this year, such as rising feed costs and outbreaks of foot-and-mouth which have led to an export ban to some markets.”

Sihlobo said while Agbiz was downbeat about SA’s agriculture growth prospects this year, the sector l has potential for growth in the coming years.

“Notably this year’s possible underperformance does not mean the sector is in bad shape per se. The output in a range of commodities is well above the long-term levels, which speaks to the exceptional performance of the past two years rather than the current production conditions.”

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