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Analysis of agriculture’s contribution towards South Africa’s economic growth and social development

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  • Venter, Diaan
  • Marais, Hanco
  • Makhura, Moraka N.

Abstract

In 2020 and 2021, the South African agricultural sector continued to grow amidst the SARS COVID-19 (Coronavirus) pandemic, ranking amongst the top sectors contributing towards positive-growth, linkages and interconnectedness with other sectors. The study used a 2015 Social Accounting Matrix (SAM) for South Africa developed by the SATIED (Southern Africa – Towards Inclusive Economic Development) collaboration to acquire a multiplier model consisting of output, value-added and income multipliers. The results from the general multiplier analysis indicated that the agricultural sector plays an integral role in the economy, varying from 16th to 32nd in rank amongst the 40 top performing accounts out of 104 commodity accounts. Thereafter, the analysis simulated pandemic-related economic conditions to investigate the impact of an increase in investment subsidies in the agricultural sector in the form of $ 4.3 billion relief-funds received by the country. About 38 accounts were positively impacted by the investment. The results also showed a R1 million increase in demand for increased agricultural commodity output caused a R8.33 million increase in agricultural output, R3.5 million in value added, and R2.91 million in additional household income generated. The study also simulated trade restrictions, experienced by the country, during the high-level containment measures. Results showed that a R1 million increase in demand for increased agricultural commodity output led to a R3.67 million increase agricultural output, R1.59 million in value added, and the generation of R1.27 million in additional household income. Covid restrictions seem to have led to negative outcomes and investments. Agriculture’s role in growth and development is still emphasised through the sector’s production and consumption linkages. These linkages demonstrate economic interconnectivity.

Suggested Citation

  • Venter, Diaan & Marais, Hanco & Makhura, Moraka N., 2023. "Analysis of agriculture’s contribution towards South Africa’s economic growth and social development," 2023 Seventh AAAE/60th AEASA Conference, September 18-21, 2023, Durban, South Africa 365929, African Association of Agricultural Economists (AAAE).
    • Handle: RePEc:ags:aaae23:365929
    DOI: 10.22004/ag.econ.365929
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    References listed on IDEAS

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    1. Murray Leibbrandt & Vimal Ranchhod & Pippa Green, 2018. "Taking stock of South African income inequality," WIDER Working Paper Series wp-2018-184, World Institute for Development Economic Research (UNU-WIDER).
    2. Luc Christiaensen & Lionel Demery, 2007. "Down to Earth : Agriculture and Poverty Reduction in Africa," World Bank Publications - Books, The World Bank Group, number 6624, April.
    3. Federico Cingano, 2014. "Trends in Income Inequality and its Impact on Economic Growth," OECD Social, Employment and Migration Working Papers 163, OECD Publishing.
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