Positive outlook on agriculture good news for GDP
Official figures show the farmgate contribution to GDP has ranged from 2.8% in 1994 to 2.1% in 2016
As with everything else, the state of agribusiness in SA depends on whom you ask, which in this instance must begin with Statistics SA’s numbers for the contribution agriculture makes to GDP.
The agency reported in March that in 2017 SA’s economy as measured in GDP grew 1.3%, which was better than the 1% forecast by the government. This is largely attributed to the aggregate increase in agriculture‚ forestry and fisheries of 17.7%, culminating in the export of farm goods worth more than R130bn for the year. In the last quarter of 2017, the growth was 37.5%.
These numbers should give substance to the confident mood at the 2018 Nampo agriculture and agribusiness exhibition, which is held in mid-May each year near Bothaville in the Free State.
The show, the biggest in the southern hemisphere, represents national agricultural production worth more than R275bn and a contribution to GDP of about R80bn, according to the Department of Agriculture’s statistics for 2016.
Afgri Agri Services CEO Tinus Prinsloo shares the upbeat sentiment. "The outlook for farmers is excellent," he says, referring specifically to prospects in the Western Cape’s Overberg district where a post-drought recovery is expected to yield good results. Afgri expects similar outcomes in Limpopo and elsewhere in SA, says Prinsloo, with the confidence of a representative of a firm that has just sold five cotton-picking machines worth a total of R50m in response to a revival of cotton growing in the province.
At Nampo’s event last week, an estimated 740 exhibitors exhibited products, up from 712 in 2017 and 516 in 2000.
Visitor numbers rose to 82,817 from 2017’s 78,648. A Nampo survey shows about 88% of visitors to the show are there to view new products, 61% to buy products and 32% to trade in one form or the other.
"Nampo does well every year," says Fanie Brink, who is an independent agricultural economist and a former Nampo insider. "But don’t be misled. You must bear in mind that SA had a bumper maize crop of nearly 17-million tonnes that came straight after a disastrously low yield of about 7-million tonnes the year before. The apparent recovery is off a very low base."
Grain (maize, soya beans, oilseed, wheat) production is an important indicator of the general health of the sector, because almost every other subsector of agriculture is either linked to it or dependent on it, as illustrated by its importance in stock and poultry farming.
It is critical to consider the maize price farmers get against their input costs, fuel in particular, says Brink.
At a yield of 7-million tonnes, the price hit R5,000 a tonne, but with a 17-million tonne crop on the market, the bottom fell out of the price to less than R2,000 a tonne.
It would be misleading, too, to assess the state of SA’s farm sector on primary production alone. Official figures show that the farmgate contribution to GDP has ranged from 2.8% in 1994 to 2.1% in 2016. However, when the indirect role of farming in the economy is reckoned as a function of backward and forward linkages to other sectors (about 70% of farm output goes to manufacturing), the contribution to GDP is closer to 15%.
But Prinsloo and Brink, and speaker after speaker across the political and racial spectrum at Nampo’s Nation in Conversation debates, agree on one thing: the politics of land reform is a threat to agriculture and the economy.
Brink says the expropriation of land without compensation "cannot be done, not in SA or anywhere else in the world".
Prinsloo says: "Don’t make any decisions based on emotions."