South Africa’s agriculture GDP rebounded by 17.2% in Q4 2024, recovering from earlier declines, though it fell by 8% year-on-year due to El Nino effects. Despite a significant drop in summer crop production, particularly maize, the agribusiness sector shows resilience with a positive export increase and higher confidence levels. Looking ahead, expectations for summer crop yields in 2025 are optimistic, potentially improving economic conditions
In a recent update, South Africa’s agricultural GDP exhibited a significant recovery, rebounding by 17.2% quarter-on-quarter (seasonally adjusted) in the fourth quarter of 2024. This recovery followed two successive quarters of decline, which were revised to -19.7% in Q3 and -3.4% in Q2. However, the overall agricultural sector GDP for 2024 has decreased for the second consecutive year, showing a year-on-year decline of 8%, largely attributed to the adverse impacts of the El Nino phenomenon on production.
The substantial decline in the agricultural output was highlighted by a 9.1% year-on-year contraction in total summer crops, resulting in a production of 15.53 million tonnes. Specifically, maize, the country’s primary staple, reported a sharp decrease of 22% year-on-year, amounting to 12.85 million tonnes. Despite these challenges, the impressive rebound in Q4 reflects the agricultural sector’s resilience and capacity for recovery under difficult circumstances.
Furthermore, total agricultural exports experienced an increase of 3% year-on-year, reaching $13.7 billion in 2024 driven by robust demand and improved prices. The Agribusiness Confidence Index (ACI), a significant predictor of agricultural GDP, indicated a positive trend with a rise of 10 points in Q4, exceeding the breakeven level at 58 points in December’s update.
The livestock and horticulture subsectors showed marked recovery; the livestock sector rebounded modestly following previous diseases, while horticulture benefited from higher dam levels and stable electricity supply for irrigation. With the return of La Nina conditions, expectations for 2025 appear promising, forecasting total summer crops to achieve an output of 17.23 million tonnes, reflecting a 10.9% increase from 2024.
Additionally, grain prices have begun to decline from their 2024 peaks, which may lead to improved profit margins for intensive livestock production systems as feed costs decrease, positively influencing food inflation rates into the latter half of 2025.
In summary, South Africa’s agricultural sector has demonstrated notable resilience, indicated by a 17.2% GDP rebound in Q4 2024, despite an annual decline of 8%. The recovery is attributed to improved export performance, the influence of favorable weather conditions, and increasing confidence within the agribusiness sector. Looking forward to 2025, projections for summer crop yields are optimistic, potentially aiding in better financial margins and alleviating food inflation pressures. Therefore, the agricultural sector’s adaptive capacity coupled with favorable conditions bodes well for future recovery.
Original Source: www.zawya.com
