SA’s agriculture performance down 12.2% in 2023

South Africa's agriculture sector is facing challenges as it recorded its first annual contraction since 2019, shrinking by 12.2% in 2023. This marks the biggest annual fall in agriculture production since 1995, according to Statistics SA Agriculture. CNBC Africa's Godfrey Mutizwa recently discussed the situation with John Hudson, Head of Agriculture at Nedbank Commercial Banking. Hudson expressed concerns about the disappointing performance of the sector but highlighted the volatile nature of agricultural performance over the years. While there were two consecutive quarters of contraction, the steepness of the drop caught many by surprise. Hudson remains optimistic about the sector's ability to bounce back despite the challenges it faces. One of the factors contributing to the downturn in agriculture was the outbreak of avian influenza in the poultry sector towards the end of the year. However, there were positive developments in export earnings, with the sector recording a record US$13.2 billion in exports, driven by products like citrus, nuts, avocados, and palm fruit. Hudson emphasized that some sectors continue to expand, offering a glimmer of hope amid the challenges. Looking ahead to 2024, Hudson expressed concerns about the impact of below-average rainfall and the onset of El Nino on crop production. While some areas initially received good rainfall, recent weeks have been hot and dry, posing challenges for crops like maize, soy, and sunflower. Despite the expected decline in maize production, Hudson noted that the projected 14.5 million tonnes still surpasses local requirements. The sector's volatility was underscored by contrasting performance in recent years, with 2020 and 2021 being strong years, followed by a flat 2022 and the disappointing 2023. Hudson stressed the importance of the agricultural sector's contribution to the economy, citing its role as a significant employer and a key driver of export earnings. Despite anticipating a tough 2024, Hudson believes the sector will remain a crucial player in economic growth and trade balance. While challenges lie ahead, South Africa's agriculture sector is poised to weather the storm and continue its vital role in the economy.