Going on the agricultural GDP data released by Statistics South Africa, it becomes clear that the nation’s farming economy was not in good shape in 2019. The data show a 6.9% year-on-year contraction, which is a second consecutive year of contraction in South Africa’s farm economy.
While worse than the initial expectations of a 4.0% y-o-y contraction, this is unsurprising. The output of various crops and horticulture produce declined notably in 2019 because of the drought, while the livestock was negatively affected by the foot-and-mouth disease outbreak.
However, 2020 could be different. The improved weather conditions have led to an increase in summer crops area plantings and prospects of higher yields. The data recently released by the Crop Estimates Committee showed that South Africa’s 2019/20 summer crops production could increase by 26% y-o-y to 16.8 million tonnes, which could be the second-largest summer crops harvest on record after the 2016/17 crop. What’s more, the South African wine grapes production is also set to increase in 2020. There is also general optimism about 2020 harvest in the fruit industry.
Against this backdrop, some experts are convinced that South Africa’s farm economy could recover by at least 5% y-o-y in 2020. The two factors that we are concern about and monitoring are the spreading coronavirus and the foot and mouth disease in the domestic market. The coronavirus could negatively impact the global demand for agriculture products, and subsequently prices. Whereas, the foot-and-mouth disease has led to a ban on South Africa’s livestock products exports since the end of 2019.