Economically, by its very nature, agriculture is a volatile and at times uncertain business. Crops and livestock are living organisms, not inanimate commodities. Their health and growth are vulnerable to disease and climate changes. South African agriculture has a long history as a successful, profitable sector. The formation of the Government of National Unity (GNU) created an upturn in our domestic economy, and agriculture remains buoyant, so there may be reason for optimism.

However, global volatility brought about by geopolitical conflicts and changes in trade policy under the new administration in the USA may affect the picture. Here we summarise the views of Wandile Sihlobo, Chief Economist of the Agricultural Business Chamber of South Africa (Agbiz), on the 2025 outlook for the sector.

Macroeconomic outlook for 2025

The La Niña rains were late, but since mid-December, we have continued to receive widespread rains in most regions of the country.

At the end of October 2024, South African farmers intended to increase the area plantings for summer grains and oilseeds by 1% to 4.47 million hectares in the 2024–25 season, which is broadly in line with the long-term average. These are in-demand export crops for South Africa.

As a country, we have also progressed in controlling the spread of foot-and-mouth disease and other animal diseases, such as avian influenza and African swine fever. This means that our livestock and poultry segments are in an ideal position to rebuild, provided we can see a sustained recovery in the grazing veld across the country and increases in yellow maize production, which is a primary livestock feed.

The rain has already resulted in higher dam levels. Coupled with a more stable electricity supply for irrigation, this especially benefits the successful horticulture subsector – fruit, vegetables, and floriculture – and puts South African agriculture in an ideal position for recovery in 2025.

Geopolitical outlook and protectionism

Donald Trump has now levied trade tariffs, including a massive 104% tax on goods from China. China has retaliated by imposing a tariff of 34% on US imports. A trade war will disrupt global grains and oilseed prices at the very least, since China is a dominant player in the export and import of agricultural products. In 2023, the Asian giant was a leading agricultural importer, accounting for 11% of global agricultural imports.

This means more uncertainty for the global agricultural sector. While South Africa is a small player in global grains and has not participated in the US grains and oilseed markets, a major risk is that US farmers may divert their products to South Africa's traditional markets in the Far East, creating more competition.

The Trump administration’s offer to help ‘Afrikaner farmers’ (to use his phrasing) supposedly affected by the new Expropriation Act is another aggressive foreign policy move that may have implications for South African agriculture. What are the foreseeable implications of the new Act?

The Expropriation Act

Although the new Act explicitly provides the processes and procedures with which government can expropriate land with nil compensation in certain circumstances, the critical wording of the Act is that this must be ‘just and equitable’ under those circumstances, after the state has considered all relevant factors. The Act also states that it may be just and equitable to award nil compensation, but only in applicable circumstances. The expropriating authority will need to demonstrate that such circumstances do apply – they can’t arbitrarily decide that the owner is entitled to nil compensation.

The Act contains many checks and balances, including a provision that there must be an attempt to come to an agreement before the state decides to expropriate, and an opportunity to object to the intention to expropriate. The Act guarantees that expropriation can only be used as a last resort after all other attempts to buy the property have failed.

The South African government has over the years acquired about 2.5 million hectares of land through its Proactive Land Acquisition Strategy. Much of this land was previously used for various farming activities, but it has not always been used efficiently. Some land is under short-term leases to farmers who struggle to access the necessary capital to unlock the land’s potential. Government will continue to drive the process of trying to release land to appropriately selected beneficiaries and give them title deeds in 2025. However, this will be a collaborative process with the private sector and organised agribusiness.  

Policy shifts – BRICS

The changing geopolitical and global economic landscape will encourage BRICS countries to build greater economic cooperation between the members. BRICS members need to deepen regional economic integration and trade in the agricultural sector urgently.

Currently, the original BRICS countries (before members were added at the Johannesburg 2023 Summit), import on average almost US$300 billion worth of agricultural products a year. The key agricultural BRICS imports are soybeans, palm oil, beef, maize, berries, wheat, cotton, pork, apricots, peaches, sorghum, rice, and sugar. These are products that are produced at scale by some BRICS countries. 

However, BRICS intra-trade remained low, and much of the imports originated from outside BRICS countries. The higher tariffs and ambiguous – but strict – health and safety regulations have proved a barrier to agricultural trade within the BRICS grouping.

The need to correct this trade misalignment is even more urgent with the expanded BRICS grouping, or BRICS+. The new BRICS+ members plan to broaden the agricultural market of the group, which holds greater economic benefits for members. As BRICS matures from the political perspective and adds more members, deepening regional economic integration and trade is the most logical step towards expanding the ambition of the bloc, particularly in agriculture.

Agriculture and SA’s G20 leadership

Throughout the year, our leadership of the G20 presents many opportunities for agricultural market development and expansion. These presentations could focus on deepening agricultural trade by prioritising the theme of trade integration and ensuring that the current policies of relatively open borders on agricultural trade are maintained. We can also discuss developing the fertiliser trade in Africa. Except for South Africa, sub-Saharan Africa has poor agricultural productivity due to multiple factors, but a lack of effective fertiliser is one of them. South Africa can also lead discussion on agricultural technology and investment opportunities.

Agriculture policy priorities 2025

In summary, here are some key policy priorities for 2025 to make the most of the industry’s potential:

• Biosecurity
  Continued work on animal and plant health issues is key for long-term productivity gains in agriculture.
  
  
• Agricultural exports
  Inefficient ports remain an issue. We must work to make exports more efficient. Importantly, geopolitical tensions have raised concerns about export potential.
  
  
• Roads, municipalities, and rural crime
  While these are concerns in urban areas too, better rural policing, safety, and infrastructure are crucial to prevent stock theft and other crimes that undermine investment in agriculture.

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