South Africa is the second largest African economy, after Nigeria, with an estimated GDP of US$325 billion for 2016. Likewise, South Africa is one of the largest agricultural producers in the continent and allows other regions of the world, such as Europe, yearlong access to a variety of agricultural products. Mineral commodities, such as gold, diamonds, and platinum, are also major South African exports. This article explores how weather variations and Asia’s economic slowdown have affected the South African economy in recent years.
Agriculture and Mining in the South African Economy
South Africa’s economic growth, though consistently above one percent (1.0%) over the last several years, has witnessed a substantial slowdown during the aftermath of the global financial crisis. This slowdown is mainly due to Asia’s manufacturing slowdown, given that China is South Africa’s most important trade partner, particularly when it comes to the mining sector. This in turn has led to domestic struggles, such as mining strikes and high unemployment. Nevertheless, another important industry with great potential in South Africa is agriculture, where there are 15 million hectares of arable land available for development. In fact, South Africa’s agricultural production accounted for US$14 billion in 2014, US$15 billion during 2015, and is expected to reach US$16 billion by the end of 2016. South Africa is a net exporter of agricultural goods and ranks as Africa’s largest agricultural exporter as well as the world’s 30th producer.
South Africa boasts a much diversified agriculture industry, whose main products are corn, wheat, rice, and poultry. However, its major exports are high-end niche products such as citrus fruits, apples, pears, grapes, and wine. In this regard, the Netherlands and United Kingdom are South Africa’s main agricultural trade partners. South African agricultural exports during 2014 totaled more than US$9 billion. However, this amount decreased to an average of US$8 billion for 2015 and 2016 respectively. Within the domestic market, corn, wheat, and vegetables are the most consumed commodity goods.
Nevertheless, South Africa’s agricultural industry has struggled over the last several years because of unforeseen climate variations. The grain and oilseed sectors have been hit particularly hard by extended droughts and have forced the import of these goods in order to meet domestic demand. For the first time in many years, South Africa imported US$412 million worth of grains during 2014. Likewise, the country is expect to import a total of US$500 million worth of grains as well as US$200 million on oilseeds during 2016. Furthermore, inflation has increased substantially and is currently estimated at about 10%, affecting food consumer goods in particular.
As policy makers and the agriculture industry implement the necessary measures to get through these rough times, South Africa continues to be a world leader in biotechnology research and development. In fact, South Africa is the world’s ninth producer of genetically engineered (GE) commodity goods. It is estimated that ninety percent of South Africa’s corn, cotton, and soybean production comes from GE crops.