The agriculture sector contributes about 1.6% to South Africa’s gross domestic product (GDP), below the 2.2% contribution that is needed for the sector to remain sustainable, Agricultural Business Chamber (Agbiz) CEO Dr John Purchase said on Friday 25 November.
Addressing delegates at a conference focused on the state of South Africa’s agriculture industry, he noted that per capita output is declining in the country, “which is concerning.”
Purchase highlighted that 2016 had been a challenging and tumultuous year for the agribusiness environment and farmers alike.
He said deep and fundamental political divisions in government and the governing party, the threat of ratings downgrades to subinvestment grade, as well as an uncertain global political and economic environment were negatively affecting the sector.
He further stated that the country’s food security remained at risk.
“The major challenge the sector is currently facing is the downgrade threat by ratings agencies. It will force [South Africa] to raise interest rates, which will make us less competitive,” Purchase pointed out.
He added that “reckless and dangerous” statements by Economic Freedom Fighters’ leaders on land nationalisation without compensation and the encouragement of illegal land grabbing, were also threats to the industry.
Purchase noted that not only did the ongoing drought of the past years continue its devastation over much of the country, but a declining economy and constrained consumers led to dampened demand and declining output.
However, Purchase did note that in the last quarter of 2016, there was evidence of some recovery in the Agbiz/Industrial Development Corporation Agribusiness Confidence Index, and with good rains falling in key production areas, this indicated a potential turnaround situation.
