JABULANI SIKHAKHANE: Stats SA’s agricultural data in question
The Bureau for Food and Agricultural Policy has issues with GDP and employment numbers
27 March 2024 - 05:00
byJabulani Sikhakhane
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The Bureau for Food and Agricultural Policy (BFAP) has twice in 2024 raised questions about the accuracy of Stats SA data on the agricultural sector. In both cases (agricultural sector GDP and employment numbers), the BFAP has warned that problems with the Stats SA numbers have huge implications for public policy, specifically at it relates to this sector.
In its recent analysis of the agricultural sector’s economic output for 2023, the BFAP disagrees with Stats SA’s calculation of the sector’s contraction. Stats SA reported recently that the sector had contracted by 12.2% in 2023, a finding the bureau described as “a big surprise”. The think-tank, which had long predicted the sector’s contraction in 2023, says its own estimates are that agriculture contacted by 3%-5%.
This follows BFAP’s questioning of data on agricultural jobs as set out in the quarterly labour force survey (QLFS) for the third quarter of 2023, which BFAP says was “not supported by evidence on the ground but rather points to challenges with the QLFS”.
The think-tank argues that it is useful to place the latest Stats SA data in context. In the 77-year history of the data — agricultural GDP numbers have been kept since 1946 — there have been only eight occasions when output shrank by more than 10%. The biggest decline — 19.9% — was in 1995 when the sector was hit by a severe drought caused by El Niño. This came after another drought in 1992.
Four of these contractions in agricultural production happened after the previous year’s strong growth. This, the bureau argues, is a useful explanatory factor because it suggests that the strong growth the previous year would have created a high base that could explain a large decline the following year.
“This context is essential in trying to assess the 12.2% decline in 2023, which is excessively large given the agricultural economy grew by only 0.9% in 2022.”
The think-tank adds that it may be natural to infer that factors such as animal disease (avian flu in particular), the drop in prices of field crops or inefficient logistics and electricity power cuts would have affected farmers’ incomes. However, the GDP calculation involves the income and expenditure side. “Thus, a decline in the real agricultural GDP encompasses a combination of declining and/or increased expenditure.”
Based on data from the department of agriculture, land reform & rural development as well as agriculture’s producer inflation, the BFAP concludes that farm incomes, adjusted for inflation, fell by more than 3% in 2023. This conclusion would then point to a sharp increase in expenditure as the factor that explains the 12.2% contraction in GDP. But the bureau discounts this too, because agricultural input prices only increased by 3.6%.
This then leaves a big jump in the volume of agricultural inputs — in the order of 17%. It is another factor the BFAP discounts. It says the two biggest factors on intermediate expenditures are animal feed and fertiliser, which account for a combined 49% of the basket of cost items used in calculating agriculture GDP.
Animal feed usage isn’t likely to be an explanatory factor because of the decline in poultry production. Poultry accounts for half of the animal feed used in SA. On fertiliser expenditure, the BFAP says the 22% increase in the Stats SA data is an oddity as it suggests that fertiliser volumes increased by 42%. This conclusion is based on a 14.4% decline in fertiliser prices in 2023.
“Given the current economic setting, producers have been looking at possible ways to cut expenditure and so the sharp reported rise in intermediate expenditure does not seem plausible.”
On employment, the BFAP said in a January brief that Stats SA data suggested large job creation, which was at odds with “reports on the ground”. This oddity had serious implications for policy as the vibrancy of the agricultural labour market was a consideration in the adjustments to the sector’s national minimum wage.
The BFAP concluded that the creation of 83,000 agricultural jobs in the year to end-September 2023, which is what Stats SA data showed, “would mean the equivalent of having additional blueberry production seven times the country’s current capacity or the doubling of the country’s now mature citrus industry.
“The main point is that to create such a large number of agricultural jobs would normally require excessive investment and planning [that is] almost impossible to do in a year and impossible to hide.”
• Sikhakhane, a former spokesperson for the finance minister, National Treasury and SA Reserve Bank, is editor of The Conversation Africa. He writes in his personal capacity.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
JABULANI SIKHAKHANE: Stats SA’s agricultural data in question
The Bureau for Food and Agricultural Policy has issues with GDP and employment numbers
The Bureau for Food and Agricultural Policy (BFAP) has twice in 2024 raised questions about the accuracy of Stats SA data on the agricultural sector. In both cases (agricultural sector GDP and employment numbers), the BFAP has warned that problems with the Stats SA numbers have huge implications for public policy, specifically at it relates to this sector.
In its recent analysis of the agricultural sector’s economic output for 2023, the BFAP disagrees with Stats SA’s calculation of the sector’s contraction. Stats SA reported recently that the sector had contracted by 12.2% in 2023, a finding the bureau described as “a big surprise”. The think-tank, which had long predicted the sector’s contraction in 2023, says its own estimates are that agriculture contacted by 3%-5%.
This follows BFAP’s questioning of data on agricultural jobs as set out in the quarterly labour force survey (QLFS) for the third quarter of 2023, which BFAP says was “not supported by evidence on the ground but rather points to challenges with the QLFS”.
The think-tank argues that it is useful to place the latest Stats SA data in context. In the 77-year history of the data — agricultural GDP numbers have been kept since 1946 — there have been only eight occasions when output shrank by more than 10%. The biggest decline — 19.9% — was in 1995 when the sector was hit by a severe drought caused by El Niño. This came after another drought in 1992.
Four of these contractions in agricultural production happened after the previous year’s strong growth. This, the bureau argues, is a useful explanatory factor because it suggests that the strong growth the previous year would have created a high base that could explain a large decline the following year.
“This context is essential in trying to assess the 12.2% decline in 2023, which is excessively large given the agricultural economy grew by only 0.9% in 2022.”
The think-tank adds that it may be natural to infer that factors such as animal disease (avian flu in particular), the drop in prices of field crops or inefficient logistics and electricity power cuts would have affected farmers’ incomes. However, the GDP calculation involves the income and expenditure side. “Thus, a decline in the real agricultural GDP encompasses a combination of declining and/or increased expenditure.”
Based on data from the department of agriculture, land reform & rural development as well as agriculture’s producer inflation, the BFAP concludes that farm incomes, adjusted for inflation, fell by more than 3% in 2023. This conclusion would then point to a sharp increase in expenditure as the factor that explains the 12.2% contraction in GDP. But the bureau discounts this too, because agricultural input prices only increased by 3.6%.
This then leaves a big jump in the volume of agricultural inputs — in the order of 17%. It is another factor the BFAP discounts. It says the two biggest factors on intermediate expenditures are animal feed and fertiliser, which account for a combined 49% of the basket of cost items used in calculating agriculture GDP.
Animal feed usage isn’t likely to be an explanatory factor because of the decline in poultry production. Poultry accounts for half of the animal feed used in SA. On fertiliser expenditure, the BFAP says the 22% increase in the Stats SA data is an oddity as it suggests that fertiliser volumes increased by 42%. This conclusion is based on a 14.4% decline in fertiliser prices in 2023.
“Given the current economic setting, producers have been looking at possible ways to cut expenditure and so the sharp reported rise in intermediate expenditure does not seem plausible.”
On employment, the BFAP said in a January brief that Stats SA data suggested large job creation, which was at odds with “reports on the ground”. This oddity had serious implications for policy as the vibrancy of the agricultural labour market was a consideration in the adjustments to the sector’s national minimum wage.
The BFAP concluded that the creation of 83,000 agricultural jobs in the year to end-September 2023, which is what Stats SA data showed, “would mean the equivalent of having additional blueberry production seven times the country’s current capacity or the doubling of the country’s now mature citrus industry.
“The main point is that to create such a large number of agricultural jobs would normally require excessive investment and planning [that is] almost impossible to do in a year and impossible to hide.”
• Sikhakhane, a former spokesperson for the finance minister, National Treasury and SA Reserve Bank, is editor of The Conversation Africa. He writes in his personal capacity.
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