South Africa Agribusiness optimism grows by all measures: a 2021 second quarter observation
In the second quarter of 2021 production year, South Africa has already recorded one of the highest outputs in years. This is accompanied by high commodity prices recorded around the globe. Agri representative bodies such as the Agricultural Business Chamber of South Africa (Agbiz) have called the duo occurrence of high output/high commodity prices, an unusual double win in the country’s agricultural history.
High commodity prices are largely influenced by the growing demand in China and the dryness in some parts of South America. China and other East Asia countries have recently become South Africa’s preferred export market for commodities such as citrus and other fruits. Almost 60% of citrus grown in the country is exported to this region.
As a result the country is also experiencing one of its highest agribusiness confidence period. By all measures and sub indices the sector displays high optimism. For example according to Agbiz, “employment sub index increased by 23 points to 66 in the second quarter of 2021. Export sub index increased by 22 points to 78 in the second quarter of the 2021”. This happens soon after the South African government’s policy to lift minimum wages of farm workers has been enacted in March 2021.
It confirms that despite the reluctance of agribusiness to support this policy the growth of the sector remains reliant on intensive labour. It also confirms that the country’s agribusiness sector has not yet started reacting to this policy by introducing automated technologies into their businesses as some analysts had predicted.
Above all, this development signifies that the country’s economy is in the recovery path after it had been negatively hit by COVID-19 in 2020. It is also a show of the country’s agricultural sector resilience against far-reaching shocks such as COVID-19.