BUSINESS MAVERICK: Agriculture’s negative contribution to the disastrous GDP figure driven mainly by drought

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BUSINESS MAVERICK: Agriculture’s negative contribution to the disastrous GDP figure driven mainly by drought By Wandile Sihlobo

Drought has been a major factor in agricultural production in recent years, and 2019 was no different. The central and western parts of the country were fairly dry and that negatively affected summer crops, which are predominantly produced in these regions. But the eastern parts of the country and to some extent the south-western regions had fairly good weather conditions. Thus, forecasts for agricultural output from these regions have been somewhat positive.

Yet the optimism from the citrus industry will likely be short-lived as agricultural conditions were tough in large parts of the country due to drier weather conditions over the past few months. This was specifically the case in the central and western parts of the country, which predominantly produce summer grain and oilseed, and had plantings reduced by 3% year on year in the 2018/19 production year to 3.7 million hectares.

This is below the neutral 50-point mark, and implied that agribusinesses is downbeat about business conditions in South Africa. This again does not bode well for the agricultural economy’s growth prospects, although its drivers include factors besides the weather, which has been a key factor behind the first quarter contraction in agricultural fortunes.

To be clear, most of this is due to bad weather conditions, not disinvestments in the agricultural sector, which has been. But the most important question is, what measures or technological capabilities can be used to lessen the impact of adverse weather conditions in the sector?

 

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