Estimated reading time: 5 minutes
There is a lot of talk and little action when it comes to investment by the private sector and this is one of the biggest reasons why Shannon Bold, senior economist at the Bureau for Economic Research (BER), believes the country is currently a 1% economy.
“The local and global political environment is not conducive to higher growth,” Bold said, stating that it seemed unrealistic to expect a year-on-year growth rate close to 3%.
Bold was the guest speaker at this year’s launch of the Bureau for Food and Agricultural Policy (BFAP)’s baseline report.
Investments and inflation
“Private sector investment remains 15% below where we were in 2020,” Bold said, referring to the onset of the COVID 19 pandemic. “A lot of this investment was made in Eskom alternatives. One could therefore argue if it wasn’t for loadshedding the investment would probably have been even lower.”
To add insult to injury, Bold commented that inflation probably would not decrease due to high levels of food inflation, housing, and utilities as well as transport.
Agriculture has not been spared. Bold said while some sectors, such as horticulture, recently saw some improvement, the reality is that the sector’s input costs has outpaced inflation. However, she believes that world prices have started to settle at a new equilibrium which should bring about a bit more certainty.
The international outlook
Regarding the international situation, Bold said the global growth outlook was more uncertain than usual due to issues such as US president Donald Trump’s unpredictable policies. These policies have led to reciprocal tariffs and narrow tariff deals, rather than broad trade agreements. “The deals are temporary, fragile, and unlikely to be ratified or enforced by real rules. The situation facilitates flexible, unpredictable US trade actions.”
This has led to volatile geopolitics that have become the norm, adding ongoing uncertainty to the outlook.
“South Africa has historically depended on an export kick to accelerate economic growth, but is this realistic in today’s world?” Bold said rhetorically, referring specifically to president Trump. “Yes, structural reforms over the long term can help bolster South Africa’s economy, but the ‘cheapest’ way to stimulate economic growth would be to improve the private sector’s confidence in the country.”
Agriculture remains resilient
Dr Tracy Davis, BFAP director, said despite inherent volatility agriculture has still outperformed the rest of the economy. However, the sector has come under increasing pressure in recent years.
The BFAP team is expecting revenue growth to slow down between 2025 and 2035. “Field crops are the primary driver, but animal products will also become stagnant in the short term,” she said.
Consumers under pressure
Dr Davis highlighted the fact that consumers are still financially strained. “It is concerning that the higher income group is shrinking, while the lower income group is growing. This is not at all what one would like to see if for the aim is economic growth.”
With this in mind, it is no surprise that affordability is king when it comes to consumer’s protein spend. More affordable proteins such as poultry, pork, and eggs remain firm favourites among South African consumers.
Livestock outlook
As South Africa’s largest agricultural subsector, the livestock segment offers considerable potential for accelerated and inclusive growth. Over the past decade, strong progress has been driven by substantial investments in intensive operations producing chicken meat, eggs, and pork. The beef industry has transformed from being a net importer to a net exporter, while the wool sector has been widely celebrated for its success – particularly due to targeted support that boosted output from smallholder communal farmers supplying export markets.
However, growth prospects for the next decade remain precarious. With exports expected to be the main driver of expansion, a well-functioning national animal health system is essential. At present, the system is struggling to manage disease outbreaks effectively, which erodes productivity and restricts access to international markets. Strengthening animal health systems and enhancing overall biosecurity will be critical to unlocking future growth in South Africa’s agriculture and agro-processing industries.
Field crop outlook
Field crop margins are expected to tighten, with production stabilising unless new demand emerges from feed or export markets. Narrow margins will especially constrain emerging farmers, many of whom lack effective support, access to credit, and insurance. Large areas with potential for commercial production remain underutilised due to weak or non-existent extension services.
Sustained competitiveness will require innovation in pest control, seed technology, and precision farming practices, as well as improved processing efficiency and investment in logistics.
Horticulture outlook
In the horticulture sector, the area under high-value export fruits and nuts has grown by almost 120 000 hectares over the past decade, with export volumes projected to increase with around 25% by 2034. This success will increase price pressures, underscoring the need for government to secure competitive access to new export markets, and invest in port and transport infrastructure.
Rising costs, logistical inefficiencies, and compliance requirements make trade diversification essential. In addition, the non-maintenance of irrigation schemes is cause for concern with water losses amounting to almost 30%, making infrastructure upgrades critical for new entrants and continued sector growth. – Susan Marais, Plaas Media
For more information, send an email to Dr Dalene Flynn at dalene@bfap.co.za
