While South Africa’s agricultural sector is a major contributor to the gross domestic product (GDP), there are a number of constraints preventing faster and more inclusive growth. These constraints and opportunities were discussed at a recent Nedbank webinar.
A panellist, Dr Tracy Davids, the Bureau for Food and Agriculture Policy’s (BFAP) commodity markets and foresight manager, provided insights on the contribution of agriculture to the South African economy.
According to Davids, primary agriculture made up 2% of the local economy and agri-processing contributed another 5%. Furthermore, from an employment perspective, agriculture was responsible for 7% of the working population and agri-processing 3%.
Agricultural exports generated $10-billion in foreign revenue for South Africa in 2020, while imports totalled to $6.4-billion.
Accelerating growth in agri sector
During her presentation, Davids highlighted growth in Mzansi’s three major sub sectors: field crops, animals and horticulture. However, she also explained the real agricultural GDP had seen volatility in its growth rate from 2000, extending to predictions for 2030.
According to her, the sector has often been impacted by factors outside of the country.
This was both in terms of gains when other major export regions were experiencing droughts or in terms of declines in exports when longer drought periods persist locally, or during livestock disease outbreaks.
The questions that should be asked is not what the business-as-usual scenario looks like going forward, Davids pointed out, but rather what actions can be taken to accelerate growth.
“Once we start thinking about actions that can accelerate growth, we really need to take a holistic view of the value chain.”
She furthermore highlighted market access, new export markets, improved protocols and negotiation of preferential trade agreements as key actions that could fast-track growth.
“All of those will help us to attain a better value for the volumes of fruit products that are coming but also for meat products. along with that goes biosecurity.”
Davids also highlighted infrastructure development and improved efficiency to enhance logistics, and comprehensive farmer support as well as efficient service delivery to improve competitiveness across the value chain.
Addressing inefficiencies that hinder growth
Agbiz chief economist Wandile Sihlobo discussed his suggestions for agricultural transformation and growth.
For growth to be achieved in the sector, the environment needs to be conducive. Sihlobo also pointed out that there were a number of constraints preventing faster and more inclusive growth. Inefficiencies in state administration, infrastructure issues, security and uncertainty needed to be addressed.
“If we could be able to address or have our policies more direct on these four aspects, I think we could see the investments that we need, as well as increased participation and address unemployment and lower economic activity in rural areas.”
Sihlobo said when inefficiencies are addressed, growth and expansions becomes a reality.
Expansion, he believes, should be happen in the eastern parts of South Africa where there are better land capabilities. KwaZulu-Natal, Eastern-Cape, Limpopo and Mpumalanga are some of the prime provinces to receive better rainfall. That is also where there is still underutilised land, Sihlobo noted.
Sihlobo also believes that inclusivity in the sector was curbing growth.
“Black farmers participation in South Africa’s agricultural sector is still very much a bad picture. On average, black farmers in the country are producing somewhere between 5% to 10% of the commercial output.”