South Africa’s agricultural sector was a star performer in 2020 and 2021, but what lies ahead for 2022? Expert opinions seem to disagree.
The cautiously optimistic view is given by the Bureau for Agricultural Policy (BFAP), an independent research group.
The BFAP’s latest quarterly survey acknowledges that the Ukraine war could have a potentially significant impact on input costs and thus food prices, and the outcome is uncertain.
“If international prices remain at current levels for most of 2022, and inputs remain readily available, albeit at a higher cost, South Africa’s real agricultural GDP could expand for a third consecutive year,” it says.
While there is a risk or further price increases, “if a peaceful resolution can be reached in the Black Sea region and other Northern Hemisphere producers have favourable conditions, prices could ease later in the year.”
Agricultural economist Wandile Sihlobo believes the downside is likely, both this year and possibly also in 2023. Not only is the Ukraine war raising agricultural input costs, sanctions on Russia will affect South Africa’s exports of citrus, apples and pears.
“From a growth perspective, 2022 will probably be a break from the solid two years of expansion in South Africa’s gross value added for agriculture,” he said.
Sihlobo predicts a “mild contraction” in 2022 and says the Ukraine war has “negative implications for the 2022-23 agricultural season and, after that, the general performance of the sector in 2023”.