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The Role of Agriculture in the South African Economy

Commercial agriculture revolutionised human society: rendering the hunter-gatherer lifestyle obsolete and allowing humans to specialise in various fields. Without the Neolithic Revolution, many of the jobs we know today might not have emerged. In many ways, the agricultural sector forms the basis of modern life, and in South Africa, it plays a crucial role in the economy.

South Africa’s Agricultural Landscape

South Africa encompasses the largest area of agricultural land per country in Africa, with about 80% of the total land area being classified as agricultural land.(1) 12.5% of that share is land where crops can be grown; the rest is used for animal production. Given these statistics, one might expect agriculture to constitute a significant portion of South Africa’s GDP, but it only contributes to 2.8% of the total GDP. Despite this, the sector’s contribution to GDP is among the lowest in Africa.(1)

Even though this meagre 2.8% seems small, agriculture has far-reaching impacts that cannot be adequately embodied by a percentage of GDP. South Africa has many informal farmers, whose contributions are largely excluded from GDP calculations. In Wandile Sihlobo’s book A Country of Two Agricultures (2023), he explains that South Africa is a unique case where there are two distinct farming systems: subsistence farmers and the commercial farming sector. GDP does not capture informal economies such as most subsistence farmers, who farm to feed their own families and to trade. Another important effect South African agriculture has on the overall economy is that this sector is an important earner of foreign exchange.(2) Agriculture has an important indirect role in the economy through its forward and backward linkages with other sectors in the supply chain.(2) Farmers purchasing inputs such as fertilisers create backward linkages with the manufacturing sector, while agricultural production provides raw materials for further manufacturing, establishing forward linkages. Thus, agriculture is an engine of growth for the South African economy.

Key Crops, Livestock and Trade

Overall, South Africa boasts a wide variety of crops in production. In 2023 the leading crops in the country were sugarcane and maize.(3) In terms of livestock, poultry and cattle dominate livestock production.(1) South Africa produces a greater volume of chicken eggs than chicken meat.(3)

In addition, the total gross value of agricultural production for 2022/23 increased by 5.5% compared to the previous year.(2) Animal products contributed 42.8%, field crops 29.3% and horticultural products 27.9%.(2) Figure 1, shows South Africa’s top exported agricultural products in 2023. Maize is by far the largest chunk of agricultural exports by volume followed by oranges.

Figure 1: South Africa’s 10 most exported agricultural products in 2023.(3)

South Africa’s agricultural trade surplus not only earns us foreign income but also strengthens ties with trade partners. The Southern African Customs Union (SACU) is a prime example of a successful free trade agreement established by South Africa and its neighbours, Botswana, Eswatini, Lesotho and Namibia.(4) SACU imports a large quantity of South Africa’s maize and soy.(3) In addition to SACU, other trade agreements offer significant potential benefits for South Africa.

BRICS has been gaining media coverage as of late, with new members joining, but BRICS is a promising trade area to be further explored. A continuous challenge for South Africa is expanding export markets and the competition to export to the EU is ever increasing. South Africa’s exports to BRICS members have steadily increased over the past 10 years.(5) The goal is not to replace export markets with BRICS nations but to diversify our shares of agriculture exports. Lingering trade agreement talks (such as lowering import tariffs) could give South Africa’s export market the boost it needs to secure continuous growth in the agricultural industry.

Challenges the Industry is Facing

One of the primary challenges facing South Africa’s agricultural industry is rising costs. South Africa, as is the rest of the world, is facing consumer food price inflation.(6) In October, the South African consumer food price inflation slowed down to 2.8%.(6) Fertiliser prices skyrocketed with the start of the Ukraine-Russia war and have yet to return to pre-COVID levels.(7) These elevated costs increase cost pressures on farmers to produce higher yields to cover input costs. Food prices are largely inelastic, meaning they remain relatively stable despite external pressures. The burden falls largely on farmers, who must strive for increasingly higher yields to offset rising input costs.

Future Trends and Sustainability

As sustainability becomes a key focus, the Climate Change Act of 2024 mandates that all sectors, including agriculture, reduce carbon emissions and report on Environmental, Social, and Governance (ESG) indicators. This shift will require farmers and agribusinesses to adopt carbon accounting practices and implement sustainability-driven strategies.

To support this transition, Blue North, a specialist consulting practice and technology provider, assists businesses in the agricultural and food sectors with sustainability strategy development, carbon emissions management, and applied research. Their online solutions, including Confronting Climate Change (CCC) for carbon footprinting, SHERPA for integrated sustainability management, and FruitLook for satellite-based remote sensing, enable data-driven decision-making to enhance long-term resilience. Through these tools and advisory services, Blue North helps businesses navigate the complexities of sustainability while ensuring economic viability.

At the same time, external factors such as international trade policies continue to shape South Africa’s agricultural landscape. President Trump’s policies, including the U.S. withdrawal from the Paris Agreement and potential import tariffs on key trade partners like Canada, Mexico, and China, could have ripple effects on South African exports. Similar shifts occurred in 2018 when tariffs on China altered global trade dynamics. Monitoring these developments will be crucial for maintaining stability in agricultural exports.

Despite these challenges, South Africa’s agricultural sector remains a crucial and resilient part of the country’s economy. By proactively addressing risks and fostering innovation, policymakers and farmers can strengthen the sector’s long-term sustainability and economic contributions.

 

Written by Tania Coetsee

 

References

  1. Cowling N. Agriculture in South Africa – statistics & facts. Statista [Internet]. 2024 Jun 21 [cited 2025 Jan 30]; Available from: https://www.statista.com/topics/9876/agriculture-in-south-africa/#topicOverview
  2. Economic Review of the South African Agriculture 2022/23. Pretoria; 2023 Sep.
  3. FAOSTAT [Internet]. [cited 2025 Jan 30]. FAOSTAT Database. Available from: https://www.fao.org/faostat/en/#data/TCL
  4. Department Trade I and C. South Africa’s Trade Agreements [Internet]. [cited 2025 Jan 29]. Available from: https://www.thedtic.gov.za/sectors-and-services-2/1-4-2-trade-and-export/market-access/trade-agreements/
  5. Sihlobo W. Do South African farmers benefit from BRICS? Agricultural Economics Today [Internet]. 2025 Jan 7 [cited 2025 Jan 29]; Available from: https://wandilesihlobo.com/2025/01/07/do-south-african-farmers-benefit-from-brics/
  6. Sihlobo W. South Africa’s consumer food price inflation is at its lowest level since May 2019. Agricultural Economics Today [Internet]. 2024 Dec 3 [cited 2025 Jan 29]; Available from: https://wandilesihlobo.com/2024/12/03/south-africas-consumer-food-price-inflation-is-at-its-lowest-level-since-may-2019/
  7. Sihlobo W. Fertilizer prices remain higher than pre-covid levels. Agricultural Economics Today [Internet]. 2025 Jan 11 [cited 2025 Jan 29]; Available from: https://wandilesihlobo.com/2025/01/11/fertilizer-prices-remain-higher-than-pre-covid-levels/
  8. Climate Change Act. 2024 Jul.
  9. Sihlobo W. Thinking about President Trump’s trade policy and possible implications for agriculture. Agricultural Economics Today [Internet]. 2025 Jan 21 [cited 2025 Jan 29]; Available from: https://wandilesihlobo.com/2025/01/21/thinking-about-president-trumps-trade-policy-and-possible-implications-for-agriculture/