Agriculture provided around 2.53% of South Africa’s GDP in 2020, while industry and services contributed 23.42 and 64.57 percent of total value added, respectively.
In 2019, how much does agriculture contribute to South Africa’s GDP?
In South Africa, the value of primary agricultural production climbed by 15,9% to R332 953 million in 2020, while its contribution to GDP was projected at R81 337 million in 2019.
How much does agriculture contribute to South Africa’s economy?
Source of data: The above values are unofficial estimates based on industry sources.
In comparison to the rest of Africa, South Africa’s agricultural industry is by far the most modern, productive, and diverse. South Africa has a well-developed agriculture industry, which will help the country weather continued economic and weather unpredictability. Credit ratings downgrades, land reform concerns, a variable exchange rate, continuous weather issues, and the latest Covid-19 pandemic are all affecting the industry.
In South Africa, there are approximately 32,000 commercial farmers, with between 5,000 and 7,000 producing roughly 80% of agricultural output.
According to forecasts, the country’s economic growth would remain stifled as consumers continue to tighten their belts as a result of the country’s contracting economy and rising inflation over the past year.
Agriculture investment is often regarded as a necessary precondition for attaining goals such as increasing food security, creating jobs, increasing income, and thereby reducing poverty. Moving into 2020, there are still significant headwinds that may influence the agricultural sector. Weak global growth, domestic input costs, the fallout of Covid-19, and policy uncertainty might all have a detrimental influence on the economy and result in unforeseen repercussions.
The agriculture industry is protected from the detrimental effects of a big credit downgrade because it is mostly export driven, but farmers are vulnerable to increasing financing costs, lower local demand, and foreign animal and plant health import permits.
Opportunities
Farmers appear to be optimistic about present agricultural prospects, despite the current economic downturn. Sporadic rainfall and persistently dry weather are a problem, but they also give chances for no-till planting. Soil sampling equipment is quite popular among businesses and farmers.
Digitalization: For Sub-Saharan Africa, integrating digital technology with agriculture represents a significant opportunity. The rise of the mobile phone as a popular mode of communication, along with internet-based solutions, might greatly increase access to agricultural input financing across the value chain. The appropriate use of fertilizer and seeds, as well as digitalization, will become increasingly vital in unlocking Africa’s agricultural prospects. Data management, machine learning, artificial intelligence, automation, and drone-based applications are among the most popular agricultural technology.
Production research and technology, in which South Africa must invest, is an area of opportunity for agricultural expansion and the reduction of crop and livestock vulnerability.
Barriers: Bringing new equipment to the South African market is relatively simple. Planters, sprayers, and tilling equipment, for example, can enter duty-free if the same product is not made in this market. Planters, self-propelled sprayers, and combine harvesters are among the precision agriculture implements imported from South America, Europe, and the United States; lesser implements are purchased locally. In this sector, well-known American companies such as Massey Ferguson, John Deere, New Holland, AGCO, and Case IH are well-established and well-known for their quality.
South Africa serves as a hub for “regional expansion,” with excellent economic potential in neighboring Zambia, Zimbabwe, Angola, Mozambique, and Botswana. In these regional markets, used tractors and equipment are also popular.
NAMPO Harvest Day, the continent’s largest agricultural equipment show, is held in South Africa. This annual outdoor expo takes place in May and gives a great opportunity for American companies to showcase their equipment and technologies.
Trade Barriers
Commodities on custom declarations must be categorised according to an applicable tariff heading in all commercial transactions. The rate of duty due on particular commodity is directly related to the tariff classification code. Under the World Customs Organization’s (WCO) Harmonized System Convention, classification is part of the international Harmonized Commodity and Coding System. All used products must be imported under import control, and an import authorization is necessary.
Overview
South Africa’s economy is one of Africa’s most advanced and diverse. It is an appealing business destination due to its booming market and accommodating business environment, with a population of about 60 million people. South Africa also acts as a gateway to other southern African countries.
All main cereals (excluding rice), oilseeds, deciduous and subtropical fruits, sugar, citrus, wine, and most vegetables are produced in South Africa’s market-oriented agricultural sector, which is highly varied. Cattle, dairy, hogs, sheep, and a well-developed poultry and egg business are all examples of livestock production. Slaughtering, processing, and preserving meat; processing and preserving fruit and vegetables; dairy products; grain mill products; crushing of oilseeds; prepared animal feeds; sugar refining; and cocoa, chocolate, and sugar confectionery, among other food products, are all value-added activities in the sector.
In FY2020, the agriculture industry generated roughly 10% of South Africa’s overall export revenues, totaling $10.2 billion.
Citrus, wine, table grapes, corn, and apples were the most valuable exports. Wool, nuts, sugar, mohair, and pears are just a handful of the products exported by South Africa.
South Africa imported $6.3 billion in agricultural and food items in FY2020, down 7% from FY2019, owing primarily to the COVID-19 pandemic’s impact.
Rice ($497 million), wheat ($449 million), palm oil ($389 million), chicken parts and offal ($205 million), cane sugar ($197 million), sunflower oil ($164 million), soybean meal ($130 million), and whiskies ($114 million) were the most expensive imports.
South Africa received $282 million in agricultural exports from the United States in FY2020, down 17% from the previous fiscal year.
Poultry meat, wheat, planting seeds, distilled beverages, animal feed, and tree nuts were among the major US exports to South Africa.
Dairy products and sorghum were among the other items imported from the United States by South Africa.
The Foreign Agricultural Service (FAS) of the United States Department of Agriculture (USDA) in Pretoria produces more than thirty market intelligence reports for various agricultural commodities in Southern Africa.
FAS also produces papers highlighting the prospects and regulatory processes for agricultural exports from the United States to South Africa.
For agricultural and food enterprises in the United States considering South Africa as a possible market, the Exporter Guide for South Africa is a smart place to start.
For more information, please contact the Foreign Agricultural Service in Pretoria at the following address:
Grains
The grain sector (barley, maize, oats, sorghum, and wheat) is one of South Africa’s most important agricultural industries, accounting for more than 30% of overall agricultural production. Input providers, farmers, silo owners, merchants, millers, bakers, research organizations, and financiers are among the industry’s important stakeholders. In the grain supply chain, the animal feed sector is a significant client and player. The animal feed manufacturing business in South Africa uses about 6.0 million tons of grain and 1.6 million tons of oil cake (from imported and locally produced sunflower and soybeans) each year.
Corn is the most widely grown field crop in the SADC region and the most important source of carbohydrates for animal and human consumption.
South Africa is the primary corn producer in the SADC area, producing roughly 15 million tons per year on average during the last five years.
Corn consumption in the United States is more than 12 million tons per year, with surplus corn often exported.
Wheat is grown mostly in the Western Cape’s winter-rainfall areas and the eastern parts of the Free State, with significant annual production changes.
Over the last five years, average wheat output has been at 1.8 million tons per year, with local demand reaching 3.5 million tons per year.
As a result, to meet local demand, South Africa is reliant on wheat imports.
Wheat
Despite rising local consumption, there has been a decrease in the area planted with wheat over the last 20 years, particularly since agricultural markets were deregulated in 1997. Due to shrinking economic margins, local wheat farmers have switched to other crops such as canola, corn, and soybeans, as well as increasing animal production. Furthermore, due to variable weather conditions, wheat output has been intermittent over the last 20 years. Without technological advancements or governmental adjustments, South Africa’s wheat-planting hectares will continue to decline.
South Africa has the largest wheat consumption in Sub-Saharan Africa, with annual wheat consumption increasing by roughly 1% per year on average over the last ten years.
This trend is expected to continue in the 2021/22 MY, with wheat consumption reaching 3.6 million tons, or around 60 kg per inhabitant, according to FAS/Pretoria.
With annual wheat production of less than 2.0 million tons, South Africa’s wheat imports are likely to reach 1.5 million tons in the 2021/22 MY.
Alcoholic Beverages
South Africa consumes around 4.5 billion liters of alcoholic beverages each year and exports a significant amount of alcoholic beverages, particularly wine. South Africa, on the other hand, imports a substantial amount of alcoholic beverages, particularly whiskies. Consumers are increasingly flocking to new and inventive distilled spirits, including a larger prominence in previously underserved areas, according to recent trends. South Africans’ tastes and preferences are evolving, and the average customer is increasingly expecting a larger selection of alcoholic beverages on store shelves. As a result, the market now has access to a wide selection of new imported products. Openness to new products and a growing middle class have contributed to create a favorable environment for the sale and promotion of distilled spirits in the United States. Consumer purchase behavior is dictated by price sensitivity rather than brand loyalty.
What percentage of GDP does agriculture contribute?
According to the Economic Survey 2020-2021, agriculture’s contribution of GDP has risen to nearly 20% for the first time in 17 years, making it the only bright light in GDP performance in 2020-21.
Agriculture was the only sector to expand at a positive rate of 3.4 percent at constant prices in 2020-21, despite the fact that other industries dropped.
Agriculture’s contribution to GDP climbed to 19.9% in 2020-21, up from 17.8% in 2019-20. The last time the agriculture sector contributed 20% to GDP was in 2003-04.
After the terrible drought of 2002, when the sector’s growth rate was negative, this was the year when it grew at a rate of 9.5 percent.
“Agriculture and allied industry GVA (gross value added) growth has been inconsistent over time. However, although the overall economy’s GVA decreased by 7.2 percent in 2020-21, agriculture’s GVA grew by 3.4 percent, according to the report.
Food security was also aided by the consistent supply of agricultural commodities, particularly staples such as rice, wheat, lentils, and vegetables.
Total food grain output in the country (296.65 million tonnes) was up 11.44 million tonnes in 2019-20 (according to fourth advance estimates).
It was also greater by 26.87 million tonnes above the preceding five years’ average production of 269.78 million tonnes (2014-15 to 2018-19).
The increased production also enhanced food grain allocations under the National Food Security Act (NFSA), which jumped by 56% in 2020-21 compared to 2019-20. Until December 2020, the government has allocated 943.53 lakh tonnes of food grains to states and union territories.
In a message to the farmer community, the survey also referred to the new farm rules as a “remedy” and “not a malady.”
“The three agricultural reform bills are largely designed and intended to aid small and marginal farmers, who account for around 85% of all farmers and are the hardest hit by the regressive Agricultural Produce Market Committee-regulated market regime. The freshly enacted agricultural regulations “signal a new age of market flexibility that can significantly boost farmer welfare in India,” according to the report.
Various consultations and reports on the need for agricultural changes were noted in the study.
“The previous regulations kept the Indian farmer captive to the local Mandi (wholesale market) and their rent-seeking intermediaries,” it claimed, adding that agricultural reforms were more overdue than labor reforms.
It demanded a paradigm shift in the way people thought about agriculture “from a rural source of livelihood to a modern business organization”
What percentage of Africa’s GDP is contributed by agriculture?
Agriculture has a huge social and economic impact in Africa. Smallholder farmers account for more than 60% of the population in Sub-Saharan Africa, and agriculture accounts for roughly 23% of the continent’s GDP.
Who makes the largest contribution to GDP?
In India, the services sector is the most important. The services sector contributes for 53.66 percent of India’s total gross domestic product (GDP), which is Rs. 137.51 lakh crore. The industrial sector is the second largest contributor to Indian GDP, accounting for roughly 31%.
What is the most important contributor to the South African economy?
According to the report, finance (23 percent) is the most important industry in South Africa, followed by personal services (17 percent). Following that are trade (14%), manufacturing (13%), and mining (9%). Government accounts for 8%, transportation for 7%, and power, gas, and water for 3%.
What role does agriculture have in the economy?
Agriculture is critical to economic development and progress. It is a cornerstone of human existence since it provides nourishment. It is a significant contributor to economic activity in other areas of the economy as a supplier of industrial raw materials.
What role does agriculture play in economic development?
Agriculture, through agricultural output and employment creation as a result of its interconnections with the rest of the economy, can play a major role in contributing to economic growth. As a result, it has the potential to make a large contribution to poverty reduction.
What role does agriculture play in economic development?
The Agricultural Gross Domestic Product (AgGDP) is a measure of agricultural output that excludes the agribusiness sector, agricultural forward and backward connections with the rest of the economy, and the sector’s multiplier effect due to income shifts. Traditional agricultural statistics, aside from the so-called input-output linkages, reveal nothing about agriculture’s contribution to rural development, poverty reduction, food security, nutrition, biodiversity, and environmental sustainability. Furthermore, traditional agricultural growth assessment only takes into account changes in physical output volumes, not changes in revenue. These growth statistics (in constant prices) only give a partial picture of agriculture’s performance. Farmers may be dissatisfied because their revenue may actually fall as a result of the lower prices, even if output improves (see for more details Paz, Benavides, & Arias, 2009).
Recognizing and appropriately valuing agriculture’s performance, essential relevance, and growing role in economic development has significant ramifications for public sector budgetary allocations and actual spending in agriculture, which remain low and insufficient.
Agriculture’s contribution to the country’s economic development is grossly undervalued because it is quantified using data on actual output and raw material sales (mostly volumes of fresh produce or crops harvested, livestock killed, and fish produced/landed).
However, as a country progresses from agriculture-based development (more than 50% of workforce in agriculture) to urbanization (10-25% workforce in agriculture) to developed (less than 10% workforce in agriculture), either the percentage share of primary agriculture or the percentage share of expanded agriculture to GDP will decline significantly.
Agriculture can account for as much as 50% of overall GDP in agricultural-based countries, but it drops to around 20% in urbanizing countries and less than 10% in developed ones.
This is because other sectors of the economy, particularly the service sector, become considerably more active, resulting in faster growth, particularly in developing countries.
However, this does not imply that agriculture or agribusiness are becoming less essential.
In fact, in agriculture-based countries, the agribusiness industry generates 56 cents for every dollar earned on the farm (a 1:0.56 ratio). In urbanizing countries, the multiplier rises to 1:1.17, whereas in developed countries, it rises to 1:1.90. (World Bank Group, 2015). In other words, primary agriculture contributes less than 1% of overall GDP in countries like the United States, while one dollar of primary agriculture creates nearly two dollars in agribusiness value added.
Measuring forward linkages with other sectors of the economy is another way to visualize agriculture’s contribution to development. Forward linkages refer to economic activity that occurs outside of the farm as products flow through the supply chain to end users. In the instance of Jamaica, for every dollar created on the farm, 55 cents goes straight to primary consumption, thereby losing opportunities to add value along the supply chain. Only 16 cents per dollar goes to the processed food industry, which sells 62 cents of its output to final consumers, 12 cents to hotels and restaurants, and 9 cents to exporters. Backward connections, or the value added generated in industries that provided agricultural inputs and services, can be used in a similar way (chemicals, transportation, energy and financial sector). Over time, policies and incentives should be implemented to encourage more value-added activities, so increasing the economic effect of each dollar earned on the farm.
Furthermore, as countries grow, the value added per worker in agriculture rises dramatically. This is mostly attributable to gains in agricultural production, knowledge, and capital intensity. Agriculture value added per worker is estimated to be as low as USD 1,410 in agriculture-based countries, rising to USD 14,784 in urbanized countries on average, and reaching USD 31,268 in developed countries on average. As a result, primary agriculture’s percentage of overall GDP and relative employment in agriculture has decreased dramatically over time, but agriculture’s capital stock and value added per worker have increased. This explains why a diminishing agriculture sector (in relative terms) is a major source of rising income and living standards in rural regions, as well as an important supply of inputs for industry, and generates enough food for the world’s rapidly growing urban population.
The issue now is to establish effective policies to boost productivity, promote value-added agriculture, increase income and product diversification in rural areas, and promote market-oriented policies, in light of the facts stated.
More public resources must be allocated to achieve this through recognizing, assessing, and valuing agriculture in all of its dimensions, beyond what traditional statistics indicate.
This is a summary of a presentation given in January 2016 at the Regional Planners Forum on Agriculture Policy Orientation/Training for the Intra-ACP APP Project’s Component 1: Strengthening Regional Agricultural Development Policy and Strategy Implementation, which was funded through the 10th European Development Fund (EDF).
D. Arias, B. Coello, J. Arias, A. Giertz, S. Edmeades, R. Bandura, L. Msellati, A. Giertz, A. Giertz, A. Giertz, A. Giertz, A. Giertz, A. Giertz, A. Giertz, A. Giertz, A. Giertz, A. Giertz, A. Giertz (2014). From Quantity to Quality in Latin America and the Caribbean Agriculture for Nutrition (D. Arias, Ed.). International Bank for Reconstruction and Development, Washington, DC. https://goo.gl/OseFZY was used to get this information.
J. Arias, J. Arias, J. Arias, J (2010). Agriculture’s Contribution to Jamaica’s Long-Term Development IICA, San Jose, Costa Rica. https://goo.gl/yGQJdY was used to get this information.
J. Paz, H. Benavides, and J. Arias (2009). A technical point on measuring agricultural GDP performance. COMUNIICA. http://goo.gl/TrPFmd was used to get this information.
R. Trejos, J. Arias, O. Segura, and E. Vargas (2004). Agriculture’s True Contribution Is More Than Just Food on the Table. IICA, San Jose, Costa Rica. https://goo.gl/0Z9Onc was used to get this information.
What percentage of GDP is contributed by agriculture?
Agriculture is a significant part of the Indian economy, accounting for over 17% of total GDP and employing more than 60% of the population.
