A slowdown in crop and fish production drag agriculture sector

November 07, 2022

The agriculture sector grew by 3% and 1.6% in the first and second quarter of the year respectively, lagging far behind overall GDP growth rates of 6.5% and 5.6% in the same period.

Research firm Simonis Storm said the slowdown in the agriculture sector was due to all sub-sectors recording lower growth rates in Q2 2022, with crop and fishing contributing most to the overall sluggish growth.

Namibia’s agriculture sector accounts for 10.1% of GDP in the first half of 2022 and employs about 23% of all employed Namibians, according to the latest available Labour Force Survey from 2018.

Theo Klein, an Economist with Simonis said the sector is expected to expand by 2.7% over the next 3 years when taking an average of local forecasts.

"One positive development for the crop sector would be the Daures Green Village pilot project north of Swakopmund. This is a green hydrogen pilot project headed by UNAM and other European universities. At an estimated cost of US$15.1 million, this project aims to produce 500kg of Anhydrous Ammonia per day. The project will also establish a green scheme program to be used by the local community making use of ammonia-based fertiliser. With Namibia being a net fertiliser importer, we believe the local crop sector can benefit from locally produced fertiliser," he explains.

Meanwhile, local livestock slaughtering remains on a downward trend since April 2022, where cattle slaughtering decreased by 23.8% yearly, sheep by 14.0%, goats by 96.0% and pigs by 2.9% in September 2022.

On the other hand, Klein noted that live exports are still significantly higher compared to exports a year ago. Cattle exports decreased by 34.5% y/y, sheep (48.9%) and goats (33.39% y/y) in September 2022. 

The Meat Board recently noted that a ban of livestock movement in neighbouring South Africa during the third quarter also put a dent on the performance of live exports at a time when demand from feedlots for the festive season was high.

Klein said that livestock prices globally are on a downward trend due to reduced demand from China.

"This has created a stockpile in various parts of the world and could further weigh on prices for the remainder of 2022. Prices have also decreased in Australia, Brazil and the EU. This should assist in lowering food price inflation in Namibia during 4Q2022," he said.

The value of fish exports decreased by 10.9% y/y in August 2022, compared to -10.3% y/y in July 2022.

"On a monthly basis, fish exports increased by 8.8% m/m in August 2022, compared to -27.9% m/m in July 2022 (Figure 5). YTD, the value of fish exports is marginally below the value of exports recorded in the same period (January to August) last year," said Klein.

He said the sub-sector is expected to expand by 2.2% over the next 3 years when taking an average of local forecasts.

"With local fish companies operating at maximum sustainable yield, we do not see much room for growth in actual fish production. Instead, we see improved processing and value addition activity taking place in the sector as discussed in previous reports. However, this will reflect in the manufacturing sector’s GDP growth figures," Klein explained.

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Last modified on Friday, 11 November 2022 00:41

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