Document: Quarterly Economic Overview of the Agriculture, Forestry and Fisheries Sector

The global economic prospects remain bleak amid weak economic activity, falling consumer and business confidence levels and growing downside risks. The European sovereign debt crisis and fiscal difficulties in the US remain the main drivers behind the slowdown in global economic activity. The global economic growth rate is expected to slowdown to 4% in 2011, after a 5,1% growth rate in 2010.

The global grain production forecast for 2011/2012 has been raised by 13 million tons to a record 1 819 million tons while global grain consumption is expected to rise by only 2,4% to 1 828 million tons. The improvement in global grain production prospects significantly reduces the 2011/2012 deficit to 9 million tons, down from a previously forecasted 16 million tons. Global grain trade is expected to increase by 7 million tons to 250 million tons as compared to the 2010/2011 season. On the domestic side, the SA economy performed below market expectations during the third quarter of 2011, growing by just 1,4% which is a slight improvement from the 1,3% growth rate recorded in the second quarter of 2011. The main drivers behind the slowing economic growth were the manufacturing, mining as well as the agriculture, forestry and fisheries sectors which all contracted during the third quarter of 2011.

The agriculture, forestry and fisheries sector contracted for the third consecutive quarter, recording a quarter-on-quarter negative growth of 4,3% in the third quarter of 2011 from a revised 6,0% contraction in the second quarter of 2011.

Employment figures for the third quarter showed a slight improvement with 193 000 jobs created during the quarter, bringing the unemployment rate to 25% from 25,7% on the second quarter of 2011. The trade and finance sectors were the main drivers of job-creation, creating 68 000 and 40 000 jobs respectively during the third quarter. After recording job losses for four quarters in a row, agriculture employment rose by 4,3% to 624 000 quarter-on-quarter, with 26 000 new jobs created during the third quarter of 2011 compared to the third quarter of 2010.

The Limpopo province accounted for the largest increase in agriculture employment with employment rising by 17,6% quarter-on-quarter. Real gross farm income from all agricultural products increased by 17,4% year-on-year, from R34,5 billion in the third quarter of 2010 to R40,7 billion in the third quarter of 2011. This was Quarterly Economic Overview of the Agriculture, Forestry and Fisheries sector: July 2011 to September 2011 mainly due to a significant improvement in gross income from field crops from R9,1 billion in the third quarter of 2010 to R13,6 billion in the third quarter of 2011; a 50,5% increase. Real gross income from animal products increased marginally by 6,2% from R16,2 billion in the third quarter of 2010 to R17,2 billion in the third quarter of 2011; while gross income from horticultural products increased by 7,0% from R9,3 billion to R9,9 billion during the same period. Following significant declines during the first two quarters of 2011, the net farm income increased sharply by 36,3% from R10,2 billion in the third quarter of 2010 to R13,9 billion in the third quarter of 2011. This was mainly as a result of the 17,4% increase in income from all agricultural products. Private consumption expenditure on agricultural products increased by 7,5% year-on-year during the third quarter of 2011 with oils and fats remaining the main expenditure items recording a 27% increase.

The value of agricultural exports increased by 6% year-on-year, reaching R15,2 billion in the third quarter of 2011. The value of agricultural imports increased by 23% from R9,5 billion in the third quarter of 2010 to R11,6 billion in the third quarter of 2011. The total export value of fish and seafood increased by 5% from R532 million to R556 million while the total import value increased by 4% from R333 million to R347 million during the period under review. Forestry products, on the other hand, recorded an increase of 11% in export value from R2,6 billion to R2,9 billion and a 4% increase in import value from R1,7 billion to R1,8 billion between the third quarters of 2010 and 2011.