Agriculture is South Africa’s “quiet giant”, contributing significantly to food security, employment, export earnings, and the broader economy and providing the foundation for rural life.
This is the view of John Hudson, head of agriculture, at Nedbank Commercial Banking. In an article in Bizcommunity, he said the importance of agriculture was often underappreciated, despite it being arguably one of the most crucial sectors for the South African economy.
“While primary agriculture contributes around 2.5% to South Africa’s gross domestic product (GDP), the sector’s overall contribution, including the value chain, is substantially higher, contributing more than 14% in 2023,” he wrote.
“A unique feature of agriculture – and one that many forget – is its role in rural communities where, for most, agriculture and agribusinesses are the primary and sometimes only source of employment, which also makes it a key factor in social stability and local economies.”
Following the food shortages during Covid-19 and the KwaZulu-Natal riots in 2020 and 2021, the image of the agricultural sector changed, Hudson said.
“Food security is no longer a vague concept, as people experienced disruption first-hand.”
Despite its importance, agriculture was still considered risky, he said. This devalued private equity investments in the sector.
“The reality is that agricultural GDP has outperformed the economy for the past 20 years albeit with a high degree of volatility.
“Yes, the sector is vulnerable to climate and rural risk, but investment in the sector by South Africa’s banking sector has grown by R100bn since 2019, clearly indicating their confidence in agriculture,” Hudson wrote.
To harness agriculture’s full potential, government, organised agriculture, the private sector and investors must work together to foster innovation, streamline regulations, and provide the necessary financial and technical support.
“At the same time, rural development policies must consider the contribution of farming – beyond the farm gate – to ensure sustainable development for rural communities,” he concluded.
