After registering a 38.7% quarter over quarter (q/q) (revised) growth rate in the second quarter of 2017, the agricultural GDP grew by 44.2% q/q in the third quarter. According to Agbiz, it is against their expectations of a moderate growth of around the mid 20% q/q, as they think the sector should start tracking its long-term growth levels. Nevertheless, this continued strong growth could be explained by good agricultural output during the 2016/2017 summer production season, which in turn boosted trade.
These growth figures mirror an increase in the overall agricultural activity, particularly the 2016/2017 production season of summer grains, oilseeds and fruits, as well as a recovery in the livestock industry. These have manifested into solid exports, thus sustaining the agricultural economy in the positive growth path.
In the past few years, the Agbiz/IDC Agribusiness Confidence Index has proved to be a good leading indicator of agricultural GDP performance. However, the recent notable deterioration in confidence might not be followed by a similar magnitude of a decline in agricultural GDP. This can be attributed to the recently improved weather outlook in the summer crop producing areas which might not have been fully captured in the Confidence Index. The drought in the Western Cape was largely the key driver of the weakening confidence, amongst other factors.
Overall, the sector could remain on a positive growth path for some time, as South African farmers intend to increase the area planted in the 2017/2018 production season by 43 400 hectares year-on-year to 4.03 million hectares. This is driven by a favourable weather outlook and price competitiveness of some commodities. – Press release
See Wandile Sihlobo speak on the agri sector’s performance below.