Words Farm

Agriculture in the South African Economy

As South Africa struggles through an economic downturn, it’s worth having a look at the role that agriculture has to play in the country’s economy. Particularly, we’re interested in the role the sector has in alleviating poverty.

Agriculture’s contribution to the economy is pegged at less than 2.5%. Given this, it’s tempting to write the sector off as largely irrelevant – but to do so would undoubtedly be a mistake.

The reason we say this? It’s because the impact of agriculture goes beyond the borders of common economic contributions. For this reason, a more complete weighing of its effect on the economy is often undertaken by referring to several specific roles the industry plays.

We’re not going to examine all of these roles in this article, but rather focus on agricultures role as food provider and employment source, with an aside to market linkages – the term used to refer to buying goods and providing inputs to the manufacturing sector.

Food provider

Given the general poverty level of the average South African, the role of agriculture as a provider of food is of huge consequence.

Current trends show that our country is not self-sufficient in terms of food production, importing greater amounts of food than we export – although the value of our exports outstrips imports, largely thanks to higher value products like wine.

Nevertheless, South Africa currently imports more than half of all the wheat consumed in our borders. Again, while this detracts from our ability to be self-sufficient, the move from grain to more lucrative crops has improved the country’s balance sheet, representing an important economic contribution.

Employment

So, who grows all these crops? Turns out, it’s quite a lot of people.

In fact, the agriculture industry is one of the largest employers in the country by sector. By its nature, this is slice of the working economy is labour intensive, accounting for a significant proportion of the labour force – rivalled only by the mining and manufacturing sectors.

This makes agriculture an outsized contributor to the labour economy.

Linkages

The percentage contribution that’s attributed to the agricultural sector is flawed in many ways –most notably, it ignores the inputs it purchases, as well as those it sells to manufacturers.

For instance, no farm can survive without a significant input in equipment. Whether it’s feeders, tillage machines, or spreaders, the purchasing of equipment represents a material effect on the economy.

When including these closely related factors, the economic share for the agricultural sector jumps to almost 3 times its generally quoted number.

But even this number can be misleading, as it ignores a host of other factors. The truth of the matter is simply this: agriculture is a vital part of the South African economy, and we downplay its role only to our own detriment.