South Africa’s Agricultural GDP Demonstrates Resilience with 17.2% Q4 Rebound

South Africa’s agricultural GDP rebounded by 17.2% in Q4 2024 following two quarters of decline. Despite an overall year-on-year decline of 8% attributed to adverse weather impacting summer crops, the sector displayed resilience with a 3% increase in exports and positive signals from the Agribusiness Confidence Index. Livestock and horticulture sectors showed improvement, and forecasts suggest a potential recovery in crop yields for 2025.

In the fourth quarter of 2024, South Africa’s agricultural GDP demonstrated significant growth, rebounding by 17.2% on a seasonally adjusted basis, contrary to the earlier declines in previous quarters. This upturn is noteworthy considering the agriculture sector had contracted 19.7% and 3.4% in Q3 and Q2, respectively, due to adverse weather conditions, particularly El Niño.

However, the overall agriculture sector experienced a year-on-year decline of 8% in 2024, primarily attributed to an unprecedented drop of 9.1% in summer crop output, with maize production plummeting by 22%. Such decreases were largely anticipated given the climatic challenges faced.

Despite the substantial yearly downturn, the Q4 performance underscores the sector’s resilience. Agricultural exports increased by 3% year-on-year, totaling $13.7 billion, bolstered by strong global demand and favorable pricing.

The Agribusiness Confidence Index (ACI), a pivotal indicator for the agricultural sector, indicated a positive shift by rising 10 points in Q4, surpassing the breakeven mark with a reading of 58 points. This could signal a reversal in fortunes for the agriculture sector.

Both the livestock and horticulture sub-sectors showed noteworthy improvements in Q4. Following previous challenges posed by diseases, the livestock sector exhibited modest recovery, while horticulture benefitted from favorable irrigation conditions due to high dam levels and consistent electricity supply.

Predictions for 2025 are optimistic, as the return of La Niña conditions suggests that total summer crop outputs could reach 17.23 million tonnes, reflecting a 10.9% increase. Additionally, grain prices have recently experienced a decline, benefiting livestock producers by improving profit margins as feed costs decrease.

In summary, the agricultural sector in South Africa is showing signs of recovery following a challenging period marked by significant production declines. The rebound in Q4 2024 highlights resilience amidst adversity, with positive indicators for future growth in 2025. Favorable climatic adjustments and improved agricultural exports further bolster confidence in the sector’s prospects going forward.

Original Source: www.zawya.com