What does the impact of the lower contribution to the GDP mean for agriculture?

Comment by Paul Makube, senior agricultural economist at FNB Agri-Business

11 June 2021 – Although contribution was muted in the 1st quarter, this is a temporary blip, given the generally huge production outlook across most of the agriculture commodities.

This reflects normal seasonal trend as activity is relatively low in the agriculture sector with crops already on the lands and in the growth phase. On the animal products side, slower processing due to limited availability as producers hold on to stock to take advantage of good production conditions reduced the sector’s contribution. Cattle and sheep slaughter fell by almost 10% and 3%, respectively, during the 1st  quarter of 2021 relative to the same period in 2020.

The 4th and 3rd quarters of 2020 saw growth of 5,9% and 20,1%, but the overall 2020 agriculture was an impressive 13,1% rebound after a sluggish 2019.

We expect a rebound in agriculture gross domestic product (GDP) numbers in the subsequent quarters given the huge supply outlook, improved economic activity, and strong exports. Optimism is quite high in the sector as evidenced by the recent update on agriculture machinery sales with the year-to-date tractor and combine harvester sales both 24% ahead of last year.

Even though the livestock diseases in both the poultry and cloven-hoofed animals in terms of avian influenza and foot-and-mouth disease (FMD) are a bit of a challenge, recently, the impact is unlikely to dent the expected overall agriculture GDP output for 2021.