Looking at the South African agricultural sector’s economy

The agricultural industry in South Africa is among the most diverse in the world, with both corporate and private intensive and large crop farming systems producing vegetables, fruit, nuts, grains, and other crops. The backbone of South Africa’s agricultural economy is its well-developed commercial farming industry, which had the strongest growth rate of any economic sector in 2020, coming in at 13.1%.

South Africa’s climate, which ranges from subtropical to the Mediterranean, offers a wide variety of farming opportunities because of the biodiversity of the nation, goods like wine, fruit, and grains are exported and highly regarded for their superior quality. In South Africa, there is a rising need to advance small-scale, informal subsistence farming.

The agriculture sector’s backward and forward connections with other economic sectors put it in a precarious position. Due to Covid-19, it will be affected by the so-called contagious effect, which means that what happens in other economic sectors will have an impact on the agricultural sector.

How much does agriculture contribute to GDP in South Africa in 2021?

Risenga Maluleke, statistician-general of Statistics South Africa (Stats SA), stated on March 8 that the weak GDP growth was due to the country leaving the Covid-19 pandemic environment in 2021.

He pointed out that the economy was still at a level similar to that of the third quarter of 2017, despite expanding at a rate of 4.9%. The fourth quarter of 2021 saw a rise in real GDP expenditure of 1.3% while GDP climbed by 1.2% quarter over quarter.

Industry growth in agriculture, forestry, and fishing was 12.2%, and it added 0.3 percentage points to GDP growth. The production of animal products grew, which is mostly responsible for the rise. Reza Hendrickse a portfolio manager at PPS Investments, 2021 was a great year overall with a full-year GDP growth rate of 4.9%.

“The SA economy’s size is still below pre-COVID levels and the forecast is subdued with a return to trend growth, which is closer to 2% per year. “Much of this was due to 2020’s low base from which to rebound, while the favorable global growth backdrop was also a tailwind,” she says.

Hendrickse says the economy should continue to recover as the effects of the pandemic recede and the forecast for growth is stable.“Despite the tightening of monetary policy, the environment is still supportive as we move toward more normal policy rates and low local inflation. Aside from increased tax receipts, the fiscus is also in a better position as a result of gradual reform”.

What drives the South African Economy

South Africa places a high priority on its agricultural sector. Despite having relatively limited access to land and water, it contributes significantly to local economic growth and produces a sizeable part of exports. Only slightly more than one-tenth of the country’s land is arable, with the majority of the well-watered, productive soils being found in the KwaZulu-Natal coast and the river valleys of the Western Cape.

Due to significant government support in the form of subsidies and extension services for white farm owners, the Highveld of Mpumalanga and the Free State traditionally provided suitable conditions for large cereal cultivation. Irrigation has helped some dry areas, like the Fish River valley in the province of the Eastern Cape, become fruitful. The continuing Orange River Project, which when finished should provide another three-tenths of the total amount of land in production, has supplied more irrigation.

What does South Africa export in agriculture?

The South African economy has grown significantly as a result of its agricultural exports to African markets. One of the most diverse agricultural industries in the world, South Africa includes vast and intensive crop farming systems, including those for grains, nuts, vegetables, and fruits, as well as integrated and independent intensive crop farming systems.

The country’s developed commercial farming sector, which had a 13.1% growth rate across all economic sectors, proved to be the backbone of the country’s agricultural economy. The varying South African climate benefits the agricultural industry and provides a variety of farming options because it gives plants and animals the climatic conditions they require to contribute to the farming industry’s profitability and increase exports.

South African agricultural exports earnings

The amount of South Africa’s agricultural exports, which totaled $10.2 billion in FY2020 and represented roughly 10% of the country’s overall export revenue, was the second-highest level ever after the record exports of $10.7 billion in 2018. The highest value exports were citrus, wine, table grapes, corn, and apples. In addition, South Africa exports pears, wool, almonds, sugar, and mohair, to name a few. The majority of South Africa’s agricultural exports are coordinated within the SADC Free Trade Area and the Southern Africa Customs Union (SACU) (FTA). Even so, there are a variety of products that can be exported into SACU and SADC, including fruit juice, wine, apples, pears, sugar, prepared food products, and maize.

Which province agricultural export the most goods?

In comparison to the rest of the nation, the Western Cape Province exports more agricultural goods. Tshepo Morokong, an agricultural economist for the Western Department of Agriculture, says in his most recent report on employment and exports in the Western Cape that the region exported R78.68 billion worth of total agricultural and agri-processing goods in 2020.“I want to thank farmers and agri-workers for their commitment to growing our agricultural products in the Western Cape.”

Meyer continues: “The 24% increase (from R63.23 billion in 2019 to R78.68 billion in 2020) demonstrates the importance of agriculture in the Western Cape’s economic recovery. One of my ministerial objectives is agricultural export, and we will take all reasonable steps to increase our exports and generate job possibilities”.

Morokong says that the Western Cape’s agriculture industry is export-focused and accounts for 44% of all agricultural exports nationally. Morokong: “In 2020, the province’s primary agricultural exports accounted for 53% of national exports, beverages 70%, processed meat, fish and fruit products 44%, leather related products 31%, and dairy 22%.”

“In 2020, primary agriculture will employ 10% of the province’s workforce while agri-processing will employ 4% of the workforce. Therefore, increased investment in agri-processing operations has the potential to boost the economy and produce more job opportunities. The Western Cape Department of Agriculture continues to promote agribusinesses in this subsector because of this”. Said Meyer.

 Agricultural land in South Africa

According to StatsSA In 2020, South Africa’s agricultural land area was close to 96.34 million hectares or almost 79 percent of the nation’s total land area. The area used for the production of animals and the cultivation of crops usually decreased over the period under review until 2011, after which it remained steady.

Where to get  help for agricultural purposes

Land Redistribution for Agricultural Development

This initiative offers scholarships to those who were formerly underprivileged so they can purchase land for agriculture. Those who want to start a farm may apply for an LRAD grant, but they must contribute a minimum of R5,000 (more if the grant is larger) in labor or money. Grants can range in amount from R20,000 to R100,000.

People or organizations can apply. Many times, organizations that already use common land owned by local governments might apply to the program to purchase more land. Those who identify as female, young, or disabled are encouraged to apply.

Integrated Food Security and Nutrition Programme (IFSNP)

This intergovernmental initiative offers agricultural assistance, such as seedlings, machinery, fertilizer, etc., to households struggling with food security. Giving recipients the tools they need to grow their own food is the goal. Subsistence farmers in rural or urban regions, as well as organizations or people, are eligible to apply.

Irrigation, Revitalisation, and Development

Since there is a limited amount of water accessible for farming and agriculture, good management techniques are crucial to maximizing the water supply. Small-scale irrigation has a significant impact on reducing poverty and ensuring food security. Enhancing the livelihoods of rural communities can be accomplished through the revitalization of underutilized irrigation systems and the creation of new irrigation systems in locations where sufficient water is available.

Comprehensive Agricultural Support Programme (CASP)

To use their land productively, many people who receive it through land and agrarian reform programs require assistance. This program provides assistance services to formerly underprivileged landowners in order to encourage and facilitate farming. CASP has six areas of focus:

Information and technology management

Technical and advisory assistance

Marketing and business development

Training and capacity-building

On/off farm infrastructure and product inputs

Financial support

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