South Africa’s Agriculture Sector Shows Resilience with Q4 GDP Rebound

South Africa’s agriculture GDP rebounded 17.2% in Q4 2024, following prior declines. The annual agriculture sector output fell 8% year-on-year due to severe El Niño impacts, especially in summer crops like maize. Nevertheless, agriculture exports grew by 3%, suggesting resilience. The Agribusiness Confidence Index rose, indicating a positive outlook for the sector’s recovery in 2025, aided by favorable climate conditions and decreasing grain costs.

In the fourth quarter of 2024, South Africa’s agriculture GDP saw a commendable rebound of 17.2% quarter-on-quarter, marking a significant uplift after two consecutive quarters of decline. The previous adjustments noted a stark contraction of -19.7% in Q3 and -3.4% in Q2. Despite this encouraging performance, the 2024 annual agriculture GDP still reflected a downturn of -8% year-on-year, primarily due to the negative impacts of El Niño on production, especially for summer crops.

The severe declines in agricultural output included a notable 9.1% decrease in summer crops production, equating to 15.53 million tonnes. The country’s staple, maize, experienced a sharp decline of 22%, yielding only 12.85 million tonnes. However, the rebound in Q4 demonstrates the sector’s resilience amid challenging conditions, as evidenced by a 3% year-on-year increase in total agriculture exports, reaching $13.7 billion, driven by strong demand and improved pricing.

The Agribusiness Confidence Index (ACI) suggests a turnaround in agricultural fortunes, having risen by 10 points in Q4 to 58, indicating positive momentum beyond the breakeven threshold of 50. Furthermore, the livestock subsector showed modest recovery following previous animal health challenges, while horticulture benefitted from favorable irrigation conditions attributed to better dam levels and consistent electricity supply.

Looking ahead, the return of La Niña weather conditions is expected to enhance the sector’s recovery as projections indicate a potential increase in total summer crops to 17.23 million tonnes in 2025, a rise of 10.9% from 2024. Easing grain prices offer a positive outlook for livestock producers, supporting improved profit margins as feed costs decrease and alleviating pressures on food inflation into the latter half of 2025.

Ultimately, South Africa’s agriculture sector demonstrated resilience with a significant Q4 rebound while still facing annual challenges due to external factors such as climate impacts. The improved conditions signal potential recovery for 2025, supported by positive indicators in both crop and livestock outputs, while addressing food inflation concerns. Continued adaptation to climate variations and market demands will be crucial for sustained growth in the agricultural sector.

Original Source: www.zawya.com