South Africa’s agricultural sector still had an impressive GDP in the third quarter of 2020 at 18,5% quarter-on-quarter (q/q), seasonally adjusted and annualised with a 0,6 percentage point contribution, according to Statistics South Africa (Stats SA).

Again, field and horticultural crops, as well as animal products made a strong contribution to agricultural growth. A combination of strong exports, higher commodity prices, and the huge summer crop harvest boosted revenues in the subsector. For example, total maize exports increased by 235% to 963 441 tons in the third quarter of 2020 relative to the same period in 2019. So far, 1,78 million tons have already been shipped for the current marketing season (May 2020 to April 2021), which is 159% higher year-on-year (y/y).

Horticultural crops also saw strong exports with the total agricultural export earnings rising by 5% y/y in the third quarter to US$3,2 billion. After bucking the trend of seasonal declines during the winter period as well as the height of lockdown, livestock commodity prices remained resilient during the quarter. Moreover, it helped lift subsector performance, thereby contributing positively to overall agricultural GDP in the third quarter of 2020.

With the new summer crop planting season and the harvest of winter crops beginning in the fourth quarter, we expect 2020’s agricultural performance to finish on a high note. The recent harvest estimates of winter crops indicate a total record crop of 2,9 million tons, which is 46% up on 2019 levels. Wheat, the biggest winter crop, is estimated to be 40% higher y/y at 2,15 million tons. This will help reduce the country’s import bill as it is net importer.

Preliminary intentions to plant

On the back of a bullish weather outlook with the La Niña pattern having taken hold (more than 90% chance for Southern Africa), the agricultural outlook for the year ahead is even more positive. The preliminary intentions to plant report for summer crops indicates a 5% increase in planted area for the 2020/21 season to 4,15 million hectares. This is likely to increase further in subsequent reports given the high commodity prices and better production conditions. Good production conditions will boost all agricultural subsectors, which means another good year ahead. – Paul Makube, senior agricultural economist, FNB Agri-Business