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DIRECTORATE: AGRO-PROCESSING SUPPORT

agriculture,forestry & fisheries

Annual Economic Review of

the Agro-processing industry

in South Africa.

2018 ________________________________________________________________

Volume 3, number 1

Contents

PREFACE ............................................................................................................................. i

EXECUTIVE SUMMARY ....................................................................................................... ii

1. INTRODUCTION .......................................................................................................... 1

2. THE AGRO-PROCESSING INDUSTRY ......................................................................... 2

3.1 FOOD PRODUCTS ....................................................................................................... 3

3.2 BEVERAGES .................................................................................................................. 6

3.3 TOBACCO ................................................................................................................... 9

3.4 TEXTILES ........................................................................................................................ 9

3.5 WEARING APPAREL .................................................................................................. 12

3.6 LEATHER AND LEATHER PRODUCTS ......................................................................... 15

3.7 FOOTWEAR ................................................................................................................ 18

3.8 WOOD AND WOOD PRODUCTS ............................................................................. 20

3.9 PAPER AND PAPER PRODUCTS ............................................................................... 24

3.10 RUBBER PRODUCTS ................................................................................................. 26

3.11 FURNITURE ................................................................................................................ 29

4. CONCLUSION .............................................................................................................. 32

REFERENCES ..................................................................................................................... 33

LIST OF ACRONYMS

DAFF Department of Agriculture, Forestry and Fisheries

GDP Gross Domestic Product

SA South Africa

IPAP Industrial Policy Action Plan

FAO Food and Agriculture Organization.

i

PREFACE

The agro-processing industry is among the sectors identified by the IPAP of the New Growth

Path and the National Development Plan for its potential to spur growth and create jobs

because of its strong backward linkage with the primary agricultural sector. DAFF established

a Directorate: Agro-processing Support in 2011 to complement the interventions undertaken

by several governmental departments, notably, the Department of Trade and Industry. One

of the main purposes of the directorate is to provide timely and updated economic

information regarding agro-processing industry in order to monitor the performance of the

sector and provide an insight into the effects of economic policies and exogenous factors. To

achieve this purpose, the Directorate: Agro-processing Support publishes regular annual

review of the agro-processing industry.

This publication Annual Economic Review of the Agro-processing Industry in South Africa by

the directorate evaluates the economic performance of the 11 agro-processing divisions

during 2018. These divisions, which are in line with the Standard Industrial Classification, are

food products, beverages, tobacco, textiles, wearing apparel, leather and leather products,

footwear, wood and wood products, paper and paper products, rubber products and

furniture. The main economic indicators reviewed are the changes in the volume of

production, sales, trade, utilization capacity and employment.

Any comments and suggestions on the content of the publication are most welcome.

Mahlogedi Victor Thindisa

Director: Agro-processing Support

Pretoria

ii

EXECUTIVE SUMMARY

As the global economy moderated in growth in 2018, the South Africa’s GDP moderated by

0.8% in 2018 from a 1,4% growth recorded in 2017. The slowdown in the economy is as a result

of a slowdown in the agricultural sector which declined in the first two consecutive quarters of

2018. The decline in agricultural output was due to the decline in production of horticultural

goods.

In 2018, the seasonally adjusted volume of production for the following divisions of the agro

processing sector grew as compared to the last year: food (4,7%), beverages (3,9%). However,

for footwear and paper and paper products division it rebounded by 2,4% and 1,3%

respectively, while for wood and wood products, textiles and leather and leather products

division it decelerated by 5,2%, 3,8% and 4,8%, respectively, in 2018. The volume of production

for rubber and furniture divisions contracted by 2,6% and 2,8%, while for wearing apparel

division it improved from its previous contraction of 4,2% to a 3,3% negative growth in 2018.

The following divisions’ seasonally adjusted value of sales moderated in growth during 2018:

textiles (0,8%), wearing apparel (1,6%), leather and leather products (2,7%), footwear (3,2%),

wood and wood products (2,6%), paper and paper products (5,2%). However, sales for rubber

and furniture divisions contracted by 5,0% and 8,9%, respectively. Sales for food and beverages

divisions grew by 7,3% and 6,3%, respectively in 2018.

The agro processing sector trade deficit widened from R11 222,3 million in 2017 to R12 691,7

million in 2018 which represents an increase of about 13,0% in 2018 from a 2,4% growth in 2017.

The following divisions’ trade deficit widened in 2018 as compared to 2017: furniture (R992,7

million), rubber (R397,2 million), footwear (R1 261,7 million), leather and leather products

(R161,3 million), wearing apparel (R5 476,5 million), textiles (2 166 million) and food (R2 513,9

million). However, tobacco and beverages divisions’ trade surplus narrowed by R270,3 million

and R237,4 million, respectively, in 2018, while wood and wood products division’s trade surplus

widened to R583,9 million during the current period of review.

During 2018, the agro processing sector employment rebounded by 1,6% from a 0,1%

contraction recorded in 2017. This represents a number of 455 687 jobs in 2018 as compared

to a 451 710 jobs in 2017, which translates to 3 976 more jobs created in the sector in 2018. The

following divisions shed jobs during the period: paper and paper products (1 919), textiles (1

420), wearing apparel (842), leather and leather products (130) and wood and wood products

(118). However, furniture, food, footwear and rubber divisions created jobs by 4 920, 1 638, 595

and 514 respectively in 2018.

1

1. INTRODUCTION

The global economic growth moderated in 2018. Similarly, the South African economy realised

a moderate growth in 2018, mainly as a results of contraction in output of agriculture and

mining. This annual review analyses the economic performance of the agro-processing

industry as the South African economy moderated in 2018.

The annual review is organized as follows: the first section presents an, overview of the state

of the domestic economy, to provide an insight into the growth in domestic demand, which is

largely determined by a firm growth of the economy, employment and inflation. The second

section gives a brief effect of the global and domestic economic situation on the 11 divisions

of the agro-processing industry and lastly, it the conclusion. The variables that are analysed in

the review are the volume of production, sales, trade, employment and utilisation capacity of

the 11 agro-processing divisions.

2. THE STATE OF THE DOMESTIC ECONOMY

Table 3.1 shows that the South African economic growth moderated by 0.8% in 2018 as

compared to a 1,4% growth in 2017. The slowdown in the economy is notably in the agricultural

sector which declined in the first two consecutive quarters of 2018. The decline in agricultural

output was due to the decline in production of horticultural goods. The manufacturing sector

bounced back by 1,0% from a 0,2% contraction in 2017. Mining sector declined also in the third

and fourth quarter of 2018 resulting in a decline in 2018 output as compared to a 4,2% growth

noted in 2017(South African Reserve Bank, 2019).

Table 3.1: South African economic growth rate (percentage change at seasonally adjusted annualized

rates)

2017 2018

Sector Q3 Q4 YEAR Q1 Q2 Q3 Q4 YEAR

Primary sector 19.7 5.8 8.0 -16.4 -7.3 -4.0 -1.1 -2.5

Agriculture 47.8 44.9 21.1 -33.7 -42.3 13.7 7.9 -4.8

Mining 11.7 -5.5 4.2 -9.1 5.1 -8.9 -3.8 -1.7

Secondary

sector

1.3 4.1 -0.2 -6.2 1.3 4.9 3.0 0.5

2

Manufacturing 3.4 6.0 -0.2 -8.4 1.4 7.5 4.5 1.0

Tertiary sector 1.2 2.8 1.0 0.4 -0.1 2.9 1.7 1.3

Non primary

sector

1.2 3.1 0.7 -1.1 0.2 3.3 2.0 1.1

Non-

agricultural

sector

2.1 2.3 1.0 -1.8 0.8 2.2 1.5 0.9

Total 2.8 3.4 1.4 -2.7 -0.5 2.6 1.4 0.8

Source: Reserve Bank (2019)

2. THE AGRO-PROCESSING INDUSTRY

The FAO (1997) defines agro-processing as a subset of manufacturing that processes raw

materials and intermediate products derived from the agricultural sector. Therefore, the agro-

processing industry basically transforms products originating from agriculture, forestry and

fisheries. According to the Standard Industrial Classification, the agro-processing industry

comprises the following 11 divisions: food products, beverages, tobacco, wearing apparel,

leather and leather products, footwear, paper and paper products, wood and wood

products, rubber and furniture.

3

3.1 FOOD1 PRODUCTS

Source: Statistics SA (2019)

Figure 1 above depicts volume of production in the food division of the agro-processing sector.

During 2018, output in the meat, fish, fruit etc., and dairy products grew by 4,1% and 5,0% from

a 1,4% and 1,7% growth recorded in the previous year, respectively. The output of grain mill

products, on the other hand, rebounded by 3,6% in 2018 following a 5,3% contraction

registered in 2017, while output of ‘’other food products’’ stagnated at 5,8% in 2018 as

compared to last year’s growth. The output of food products division a whole grew by 4,7% in

2018 .

1 Food products in this case will include meat, fish, fruit etc., dairy products, grain mill products and other food

products.

0

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120

Ind

ex 2

015 =

100

Figure 1: Average Annual seasonally adjusted volume of production:

Food products 2018

Meat , fish, fruit etc. Dairy products Grain mill products Other food products

4


Figure 2 above shows the seasonally adjusted value of sales of food products division which is

comprised of meat, fish, fruit etc., dairy products, grain mill products and ‘’other food

products’’. In 2018 meat, fish, fruit etc., dairy products, grain mill products and ‘’other food

products’’ grew by 7,4%, 7,0%, 7,3% and 7,3% from a 1,2%, 0,6%, 1,5% and 4,4% growth in 2017,

respectively. The value of sales for food products division as a whole grew by 7,2% in 2018.

Source: Trade map (2019)

In 2018, food imports contracted by 3,6% as compared to a 6,5% growth in the previous year.

However, food exports rebounded by 2,8% in 2018 following a 3,5% growth in 2017 (see Figure

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60000

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nFigure 2: Food sales at current prices, 2018

Dairy products Grain mill products Other food products Meat , fish, fruit etc.

0

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12000

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18000

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Figure 3: Annual trade perfomance for food products, 2018

Imports Exports

5

3). As a result of contraction in food imports coupled with a rebound in food exports, trade

deficit of the food division narrowed from R3 410, 1 million in 2017 to R2 513,9 million in the 2018..

Period Utilisation Reasons for underutilisation

Total

under-

utilisation

Shortage of Insufficient

demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2016 82.0 18.0 2.1 1.3 0.3 10.3 4.1

2017 81.7 18.3 2.3 1.4 0.4 10.9 3.4

2018 81.1 18.9 1.9 1.3 0.4 11.0 4.3


The utilization of production capacity by large enterprises in the food products division

declined in 2018 as compared to the previous year. The decline was by 0.6 percentage points.

Insufficient demand was the main reason for underutilisation during 2018, followed by other

reasons such as seasonal factors (see Table 4.4).


Figure 4 above depicts employment in the food division during 2018. Employment in the meat,

fish, fruit, vegetables, oils and fats; and grain mill products, starches and starch products

rebounded by 2,5% in 2018 from a 3,7% growth in the preceding year. However, the

0

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40000

60000

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120000

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Figure 4: Average Annual employment: Food products, 2018

Production, processing and preservation of meat, fish, fruit, vegetables, oils and fats

Dairy products

Grain mill products, starches and starch products and prepared animal fat

Other food products

6

employment in the dairy products division contracted by 1,7% in 2018 from a 3,3% growth in

2017,while employment in grain mill products division rebounded by 1,4% in 2018 from a 2,4%

growth in 2017. The employment in ‘’Other food products’’ division grew by 8,9% in 2018 from

a 7,7% growth in 2017. The employment in the food products division as a whole grew by 3,3%

in 2018 from a 2,2% growth in the previous year, which represents about 6 555 jobs created in

2018 as compared to 4 317 jobs created in the preceding year.

3.2 BEVERAGES


Figure 5 shows the seasonally adjusted volume of production for beverages division. In 2018,

the output of beverages grew by 3,9% following a growth of 1,7% recorded in the preceding

year. Over the past 10 years, though at a slower pace, the average annual seasonal adjusted

volume of production for beverages division depicts an increasing trend.

0

20

40

60

80

100

120

Ind

ex 2

015

=10

0


Beverages, 2018

Beverages

7


Figure 6 above demonstrates the value of sales for beverages division. In 2018, sales of the

beverages division grew by 6,3% as compared to a growth of 4,8% in the previous year. Similar

to growth observed in volume of production, though at a slightly sharper pace, sales of

beverages division have shown an upward trend over the past ten years.


In 2018, beverages exports grew modestly by 8,0% following a growth of 2,8% in the previous

year. However, imports of beverages accelerated by 21,5% in 2018 from a 1,2% growth

recorded in the prevous year. As a result, the trade surplus in the beverages division narrowed

from R2 419,2 million in 2017 to R2 374,5 million in 2018.

0

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35000

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nFigure 6: Beverages sales at current prices, 2018

Beverages

0

500

1000

1500

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3000

3500

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4500

5000

R m

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Figure 7: Annual trade perfomance for beverages, 2018

Imports Exports

8

Table 4.9: Utilisation and reasons for underutilisation of production capacity by large enterprises:

Beverages (percentage)


Total

under-

utilisation


demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2016 86.1 13.9 2.1 1.1 0.3 7.1 3.5

2017 84.9 15.1 3.4 0.9 0.3 7.8 2.8

2018 84.3 15.7 3.8 0.8 0.3 7.9 3.0


The utilization of production capacity declined by 1,2 percentage points (see Table 4.9). The

main reasons for under-utilization in 2018 are insufficient demand, followed by shortage of raw

materials and other reasons such as seasonal factors. The shortage of raw materials was due

in part by the drought experienced in 2018.


Figure 8 above shows the number of employment in the beverages and tobacco division from

2010 to 2018. During 2018, the number of employment in the beverages and tobacco

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Figure 8: Average annual employment: Beverages and tobacco products,

2018

Beverages and tobacco products

9

contracted by 4,2% as compared to a 0,9% growth in the previous year. As a result 1 796 jobs

were shed in 2018 as compared to 398 jobs created in 2017.

3.3 TOBACCO


During 2018, tobacco imports grew marginally by 7,7% as compared to a 6,5% growth in 2017.

Tobacco exports, on the other hand, contracted by 13,5% in 2018 from a 2,2% growth in the

preceding year. Over the period 2010 to 2018, South Africa has enjoyed a favourable trade

balance in tobacco, however it has narrowed down subsequent to 2015 (see Figure 9).

3.4 TEXTILES


0

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400

500

600

700

800

R m

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Figure 9: Annual trade perfomance for tobacco, 2018

Imports Exports

0

20

40

60

80

100

120

140

Ind

ex 2

015

=1

00


Textiles 2018

Textiles Other textile products

10

During 2018, the volume of production for textiles division contracted by 3,5% from a growth of

0,1% recorded in the previous year. ‘’Other textile’’ on the other hand, rebounded by 0,4% in

2018 as compared to a 1,2% contraction in 2017. The divisions combined decelerated by 3,8%

from a 1,7% recorded in the previous year.


Figure 11 above depicts the value of sales for textile division. During 2018, sales in the textile

division moderated by 0,9% as compared to a growth of 4,4% growth in the previous year.

Similarly, ‘’other textiles products’’ moderated by 0,8% from a growth of 4,8% in the previous

year. The value of sales for textile division as a whole moderated by 0,9% in 2018 following a

4,6% growth in 2017.


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12000

14000

16000

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20000

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Figure 11: Textiles sales at current prices, 2018

Textiles Other textile products

0

500

1000

1500

2000

2500

3000

3500

4000

4500

R m

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Figure 12: Annual trade perfomance for textiles, 2018

Imports Exports

11

In 2018, textiles imports rebounded by 5,2% from a 0,7% contraction in the previous year.

However, textile exports contracted by 1,4% in 2018 as compared to a 7,4% growth registered

in the previous year. As a result, the trade deficit has widened from R1 941,2 million in 2017 to

R2 166,5 million in 2018. Therefore, textile imports continue to increase at an increasing rate

while exports appear to be stagnated (see Figure 12).

Table 4.18: Utilisation and reasons for underutilisation of production capacity by large enterprises: Textiles

(percentage)


Total

under-

utilisation


demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2016 68.6 31.4 1.3 0.8 0.0 26.1 3.2

2017 65.7 34.3 1.7 0.5 0.0 28.8 3.3

2018 66.4 33.6 1.7 0.6 0.0 28.0 3.4


Table 4.18 illustrates the utilization capacity by large enterprises in the textiles division. The

utilisation capacity increased by 0,7 percentage points in 2018. Insufficient demand remains

the main reason for underutilization in 2018, followed by other reasons such as a decline in

production volume.


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Figure 13: Average annual employment: textiles, 2018

Preparation and spinning of textile fibres; weaving of textiles Other textiles

12

Figure 13 above shows the annual employment growth in the textiles division in 2018. The

number of employment in the whole textiles division decelerated by 9,1% in 2018 from a 4,1%

contraction registered in the previous year. As a result the textiles division as a whole shed 2

841 more jobs in 2018 as compared to 1 341 jobs in the previous year.

3.5 WEARING APPAREL


During 2018, the volume of production in the knitted, crocheted articles division experienced

an improved negative growth of 1,8% as compared to the contraction of 1,8% recorded in

previous year. Output in the wearing apparel division also improved its negative growth by

5,0% in 2018 from 7,6% in the previous year. The divisions combined registered a better negative

growth of 3,3% in 2018 as compared to a 4,2% growth registered in the preceding year.

Production in the knitted, crocheted articles division has been declining since 2010 until 2018.

Wearing apparel on the other hand, was highest in 2009 and lowest in 2017 (see Figure 14).

0

20

40

60

80

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120

140

160

180

200

Ind

ex 2

015 =

100

Figure: 14 Average annual seasonally adjusted volume of production:

wearing apparel 2018

Knitted, crocheted articles Wearing apparel

13


In 2018, sales in the wearing apparel division moderated by 1,7% following a growth of 4,2% in

the previous year. Similarly, knitted, crocheted articles sales moderated by 1,5% in 2018 from a

growth of 4,2% in the previous year. From the period of 2009 to 2018, there was an increase in

sales in the wearing apparel division. However, the knitted, crocheted article sales were lower

as compared to wearing apparels (see Figure 16).


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nFigure 15: Wearing apparel sales at current price, 2018

Knitted, crocheted articles Wearing apparel

0

1000

2000

3000

4000

5000

6000

7000

8000

2010 2011 2012 2013 2014 2015 2016 2017 2018

R m

illio

n

Figure 16: Annual trade perfomance for wearing apparel: 2018

Imports Exports

14

During 2018, the wearing apparel division imports and exports rebounded by 8,9% and 0,8% as

compared to a 4,6% and 0,5% contraction in the preceding year, respectively. As a result, the

trade deficit widened to R5 476,5 million in 2018 from R4 911,7 million in 2017. It can be noted

from the graph that imports of wearing apparel division have been higher than exports from

2010 to 2018 (see Figure 16).


Wearing apparel (percentage)


Total

under-

utilisation


demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2016 77.5 22.5 0.7 1.4 0.4 16.7 3.4

2017 75.8 24.2 0.6 1.4 0.4 18.4 3.6

2018 75.3 24.7 0.6 1.4 0.4 18.8 3.5


Table 4.23 above shows that the utilization capacity declined in 2018. It declined by 0,5

percentage points. Insufficient demand still remains the main reason for underutilisation of

production capacity during 2018, followed by other reasons such as lower productivity.


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Figure 17: Average Annual employment : Wearing apparel 2018

Knitted and crocheted fabrics and articles

Wearing apparel, except fur;dressing and dying of fur, articles of fur

15

During 2018, the Knitted and crocheted fabrics and articles and wearing apparel divisions

combined, registered an improved negative growth of 3,7% as compared to a 4,6%

contraction registered in 2017. As a result, 1 685 more jobs were shed as compared to 2 214

jobs shed in the previous year (see Figure 17).

3.6 LEATHER AND LEATHER PRODUCTS


Figure 18 above illustrates the seasonally adjusted volume of production in the leather and

leather products division. During 2018, the output in the leather and leather products division

decelerated by 4,8% from a 4,0% contraction in the previous year. In 2014, production in

leather and leather products was at peak, then started declining until the year under review.


0

20

40

60

80

100

120

Ind

ex 2

015 =

100

Fihure 18: Average Annual seasonally adjusted volume of production:

Leather and Leather products 2018

Leather and leather products

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4000

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12000

14000

16000

R m

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n

Figure 19: Leather and leather products sales at current price, 2018


16

Figure 19 above presents the value of sales in the leather and leather products division. During

2018, the seasonally adjusted value of sales in the leather and leather products division

moderated by 2,7% following a 4,8% growth in the preceding year. Furthermore, over the

period 2009 to 2018, sales of leather and leather products continue to increase.


In 2018, the leather and leather products division imports rebounded by 2,0% from a 5,8%

contraction registered in 2017. However, exports of leather and leather products decelerated

by 4,3% in 2018 as compared to a 0,6% contraction in the last year. As a result, the trade deficit

widened to R161,3 million in 2018 from R104,4 million in 2017. Imports of leather and leather

products division have been higher as compared to exports during 2018(see Figure 20).

Table 4.28: Utilisation and reasons for underutilisation of production capacity by large enterprises: Leather

and leather products (percentage)


Total

under-

utilisation


demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2016 74.4 25.7 4.5 0.6 1.3 17.7 1.6

2017 72.8 27.2 4.7 0.7 1.3 18.8 1.9

0

200

400

600

800

1000

1200

R m

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n

Figure 20: Annual trade perfomance for leather and leather products:

2018

Imports Exports

17

2018 71.2 28.8 4.8 0.6 1.2 20.7 1.6


The utilization of production capacity in the leather and leather products division decreased

during the period under review. It decreased by 1,6 percentage points (see Table 4.28).

Insufficient demand remained the main reason for underutilisation, followed by shortage of

raw materials.


Figure 21 above illustrates the average annual employment for leather and leather products

division in 2018. The number of employment in leather and leather products division

contracted by 2,5% in 2018 from a 4,5% growth registered in the previous year. As a result, 130

jobs were lost in the division in 2018 as compared to a 228 jobs created in 2017

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Figure 21: Average Annual employment: Leather and leather products

2018


18

3.7 FOOTWEAR


Figure 22 above shows the seasonally adjusted volume of production in the footwear division.

In 2018, the volume of production for footwear division rebounded by 2,4% as compared to a

6,0% contraction in the previous year. The volume of production for footwear division has been

characterized by fluctuating over the past ten years, which peaked in 2014, while the

recorded low volume of production was in 2017.


88

90

92

94

96

98

100

102

104

Ind

ex 2

015

=10

0


Footwear 2018

Footwear

0

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12000

14000

16000

R m

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Figure 23: Footwear sales at current prices, 2018

Footwear

19

The seasonally adjusted value of sales in the footwear division in 2018 moderated by 3,2% as

compared to a growth of 4,2% in the preceding year. The value of sales for footwear division

was approximately R13 371 million in 2018 (see Figure 23).


In 2018, the footwear imports rebounded by 12,7% as compared to a 13,8% growth in the

preceding year. The exports of footwear, on the other hand, contracted by 4,3% in 2018 as

compared to a 3,6% growth registered in the previous year. As result, the trade deficit widened

from R1 064,4 million in 2018 to R 1 261,7 million in 2018 (see Figure 24).


Footwear (percentage)


Total

under-

utilisation


demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2016 84.4 15.6 2.0 0.9 0.0 12.7 0.0

2017 84.3 15.7 2.0 0.9 0.0 12.6 0.3

2018 87.1 13.0 1.3 0.5 0.0 11.2 0.0


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1200

1400

1600

1800

R m

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Figure 24: Annual trade perfomance for footwear

:2018

Imports Exports

20

The utilization of production capacity in the footwear division declined by 2,8 percentage

points in 2018 (see Table 4.33). Insufficient demand remained the key reason for underutilisation

during the period, followed by shortage of raw material.


Figure 25 above shows annual employment in footwear division. In 2018, the employment in

the footwear division grew by 6,7% from a 1,2% growth in the previous year. This resulted in 595

jobs created in the division as compared to 112 jobs in the last year.

3.8 WOOD AND WOOD PRODUCTS


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Figure 25: Average Annual employment: Footwear 2018

Footwear

0

20

40

60

80

100

120

Ind

ex 2

015 =

100


wood 2018

Sawmilling and planing of wood Products of wood

21

During 2018, the seasonally adjusted volume pf production in the products of wood division

rebounded b 2,4% from a 3,4% contraction in the previous year. The volume of production for

sawmilling and planning of wood, on the other hand, contracted by 5,5% in 2018 following a

2,1% growth registered in the preceding year. The division a whole decelerated by 5,2% in 2018

(see Figure 26).


As shown in Figure 27, the value of sales for sawmilling and planning of wood division

moderated by 1,9% in 2018 from a 4,4% growth in the previous year. Similarly, sales for products

of wood moderated by 3,4% in 2018 as compared to a 6,1% growth registered in the preceding

year. The divisions combined moderated by 2,6% in 2018 following a 5,2% in the preceding

year. Sales in both sawmilling and planning of wood and products of wood showed an

increase during the period from 2009 to 2018.

0

2000

4000

6000

8000

10000

12000

14000

R m

illio

n

Figure 27: Wood and wood products at current sales, 2018

Sawmilling and planing of wood Products of wood

22

Source: trade map, 2019

In 2018, imports of wood and wood products rebounded by 3,9% from a 5,4% growth in the

last year. However, exports of wood and wood products, on the other hand, rose by 7,3% in

2018 following a 1,8% growth in the previous year. As a result, the trade surplus widened from

R504,3 million in 2017 to R 583,9 million in 2018 (see Figure 28).


0

200

400

600

800

1000

1200

1400

1600

1800

2000

R m

illio

nFigure 28: Annual trade perfomance for wood and wood products: 2018

Imports Exports

0

5000

10000

15000

20000

25000

30000

Nu

mb

er

of

em

plo

ym

en

t

Figure 29: Average Annual employment : wood and wood products: 2018

Sawmilling and planing of wood Products of wood, cork, straw and plaiting materials

23

During 2018, the sawmilling and planning of wood division and products of wood etc. division

combined registered an improved negative growth of 0,5% following a contraction of 5,1%

registered in the previous year. As a result, the division shed 236 jobs during the period under

review as compared to a 2 288 jobs shed in 2017 (see Figure 29).

Table 4.38: Utilisation and reasons for underutilisation of production capacity by large enterprises: Wood

and wood products (percentage)


Total

under-

utilisation


demand

Other

Raw

materials

Labour

Skilled Semi

and

unskilled

2016 85.1 14.9 1.5 1.1 0.0 7.8 4.6

2017 84.2 15.9 1.5 0.9 0.0 8.9 4.6

2018 82.7 17.3 1.6 0.9 0.0 9.1 5.8


Table 4.38 shows that the utilization capacity for wood and wood products division declined

during 2018. The decline is about 1,5% percentage points . Insufficient demand remained the

key reason for underutilisation during the period under review, followed by other reason such

as lower productivity.

24

3.9 PAPER AND PAPER PRODUCTS


Figure 30 above shows the volume of production in the paper and paper products division.

The seasonally adjusted volume of production in the paper and paper products division

rebounded by 1,3% in 2018 as compared to 3,5% contraction recorded in the previous year.


80

85

90

95

100

105

Ind

ex 2

015 =

100


Paper and paper products 2018

Paper and paper products

0

2000

4000

6000

8000

10000

12000

R m

illio

n

Figure 31: Paper and paper products sales at current prices, 2018


25

During 2018, the value of sales in the paper and paper products division moderated by 5,2%

as compared to a 7,2% growth recorded in 2017. Sales of paper and paper products

amounted to about R9 929 million in 2018(see Figure 31).


In 2018, the paper and paper products imports rebounded by 15,8% from a 4,6% growth in the

previous year. Similarly, exports of paper and paper products rebounded by 0,2% in 2018 from

a growth of 1,6% in the previous year. As a result, the trade surplus narrowed from R1 315,4

million in 2017 to R 624,5 million in 2018 (see Figure 32).

Table 4.43: Utilisation and reasons for underutilisation of production capacity by large enterprises: Paper

and paper products (percentage)


Total

under-

utilisation


demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2016 87.0 13.0 0.6 1.5 0.3 5.6 5.0

2017 87.1 12.9 0.6 1.3 0.0 6.0 5.1

2018 86.5 13.6 0.9 1.4 0.0 6.3 5.0


0

1000

2000

3000

4000

5000

6000

7000

R m

illio

n

Figure 32: Annual trade perfomance for paper and paper products:

2018

Imports Exports

26

The utilization of production capacity by large enterprises in the paper and paper products

division declined by 0.6 percentage points in 2018 (see Table 4.43). Insufficient demand

remained the main reasons for underutilisation of production capacity, followed by other

reasons such as seasonal factors.


During 2018, the employment in the paper and paper products division contracted by 5,1%

following a growth of 0,1% in the preceding year. This resulted in 1,919 jobs shed in the division

during the period under review as compared to 46 jobs created in 2017 (see Figure 33).

3.10 RUBBER PRODUCTS


0

5000

10000

15000

20000

25000

30000

35000

40000

45000

Nu

mb

er

of

em

plo

ym

en

t

Figure 33: Average Annual employment :Paper and paper products 2018


0

20

40

60

80

100

120

Ind

ex 2

015 =

100


Rubber 2018

Rubber products

27

As shown in Figure 34 above, the volume of production in the rubber division contracted by

2,6% in 2018 from a 1,2% growth in 2017. The volume of production in the rubber division was

highest in 2011, however, it has shown flat growth thereafter.


Figure 35 above demonstrates the seasonally adjusted value of sales in the rubber products

division. In 2018 the value of sales in rubber products division grew by 5,0% as compared to a

4,8% growth in the preceding year. The sales of rubber products reached about R2 719 million

in 2018 (see Figure 35).


0

500

1000

1500

2000

2500

3000

3500

R m

illio

n

Figure 35: Rubber sales at current prices, 2018

Rubber products

0

1000

2000

3000

4000

5000

6000

7000

R m

illio

n

Figure 36: Annual trade perfomance for rubber products products: 2018

Imports Exports

28

During 2018, the imports of rubber products rebounded by 7,0% as compared to a 0,8% growth

in the preceding year. However, rubber products exports grew by 2,3% in 2018 from a growth

of 0,2% in the previous year (see Figure 36).South Africa has a trade deficit in rubber products

division, which continue to widened as imports increase while exports appear stagnate (see

Figure 36),

Table 4.48: Utilisation and reasons for underutilisation of production capacity by large enterprises: Rubber

products (percentage)


Total

under-

utilisation


demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2016 84.2 15.8 0.5 0.9 0.0 12.3 2.2

2017 83.8 16.2 0.4 2.8 0.0 11.2 2.0

2018 84.1 16.0 0.4 2.6 0.0 10.7 2.4


The utilization of production capacity for rubber products division rose by 0.3 percentage

points (see Table 4.48). Insufficient demand remains the main reason for underutilisation of

production capacity in the division in 2018, followed by shortage of skilled labour.


10500

11000

11500

12000

12500

13000

13500

Nu

mb

er

of

em

plo

ym

en

t

Figure 37: Average Annual employment Rubber products: 2018

Rubber products

29

Figure 37 above illustrates number of employment for rubber products division. In 2018, the

number of employment for rubber products division moderated by 4,2% as compared to a

7,9% growth in the previous year. As a result, 514 more jobs were created in the division in 2018

as compared to 894 jobs in 2017..

3.11 FURNITURE


Figure 38 illustrates the volume of production in furniture division. During 2018, production in the

furniture division contracted by 2,8% from a 2,3% growth in 2017. The furniture division volume

of production was lowest in 2009, but reached is peak in 2014.

80

85

90

95

100

105

110

Ind

ex 2

015 =

100


Furniture 2018

Furniture

30


As illustrated in Figure 39, the value of sales in the furniture division contracted by 8,9% in 2018

as compared to a growth of 9,9% in the previous year. Sales for furniture division declined for

about R1 499 million in 2017 to around R1 366 million in 2018 (see Figure 39)


In 2018, the furniture imports rebounded by 8,2% as compared to a 4,8% contraction in the

previous year. However, exports improved its negative growth in 2018 by 2,3% from a 8,3%

0

200

400

600

800

1000

1200

1400

1600

R m

illio

nFigure 39: Furniture sales at current price, 2018

Furniture

0

500

1000

1500

2000

2500

R m

illio

n

Figure 40: Annual trade perfomance for Furniture: 2018

Imports Exports

31

contraction registered in the preceding year. From 2012 to 2018, it is evident that imports of

furniture have been high except in 2010 and 2011.


Furniture (percentage)


Total

under-

utilisation


demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2016 81.5 18.6 1.0 0.3 1.6 15.7 0.0

2017 85.4 14.6 0.9 0.0 1.6 11.9 0.3

2018 86.1 13.9 0.7 0.0 1.4 11.8 0.0


During 2018, the utilization capacity of the furniture division grew marginally by 0,7 percentage

points. Insufficient demand was the main reason for underutilisation of production capacity in

2018, followed by shortage of semi and unskilled labour (see Table 4.53).


Figure 41 depicts the number of employment for the furniture division in 2018. The number of

employment in the furniture division rebounded by 18,4% in 2018, as compared to a

24000

25000

26000

27000

28000

29000

30000

31000

32000

33000

Nu

mb

er

of

em

plo

ym

en

t

Figure 41: Average Annual employment :Furniture 2018

Furniture

32

contraction of 11,3% in the previous year. As a result 4 920 jobs were created in the division in

2018 as compared to 3415 jobs shed in 2017.

4. CONCLUSION

The global and South African economic growth, respectively, moderated in 2018. The

moderation in economic growth for South Africa was as a results of decline in output of

agriculture and mining. However, the output of manufacturing rebounded in 2018 as

compared to a contraction seen in 2017, while growth of the output of the tertiary sector

slightly accelerated in 2018.

The volume of production for the agro-processing industry rebounded by 0,3% in 2018 from a

contraction of 1,1% in 2017. In 2018, the seasonally adjusted volume of production for food

and beverages grew as compared to the last year. The volume of production for footwear

and paper and paper products division rebounded in growth, while for wood and wood

products, textiles and leather and leather products division it decelerated, respectively, in

2018. The volume of production for rubber and furniture divisions contracted in 2018, while for

wearing apparel division it improved from its negative growth as compared to the preceding

year.

The seasonally adjusted total sales grew by 4,9% in 2018 from a 3,1% growth in the preceding

year. The seasonally adjusted value of sales for textiles, wearing apparel, leather and leather

products, footwear, wood and wood products, paper and paper products moderated during

the period of review. Rubber and furniture divisions contracted, Food and beverages division

grew in 2018.

During 2018, the agro processing sector trade deficit widened from R11 222,3 million in 2017 to

R12 691,7 million in 2018. Furniture, rubber, footwear, leather and leather products, wearing

apparel, textiles and food divisions’ trade deficit widened in 2018. Tobacco and beverages

divisions’ trade surplus narrowed, while wood and wood products division trade surplus

widened.

In 2018, employment in the agro processing sector rebounded by 1,6% from a 0,1% contraction

recorded in 2017. The following divisions shed jobs during 2018: paper and paper products,

textiles, wearing apparel, (leather and leather products) and wood and wood products.

However, furniture, food, footwear and rubber divisions created jobs in 2018.

33

REFERENCES

FAO (1997), the State of Food and Agriculture. Rome: Food and Agriculture Organization.

Reserve Bank (2019), Various Quarterly Economic Reviews. South African Reserve Bank.

Statistics SA (2019), Manufacturing: Utilisation of Production Capacity by Large Enterprises.

Statistics SA: (2019) Volume of production and sales

Statistics SA: (2019), quarterly employment statistics

This document has been compiled by the Department of Agriculture, Forestry and Fisheries and every effort has been

made to ensure the accuracy and thoroughness of the information contained herein and the department cannot be

held responsible for any errors, omissions or inaccuracies in such information and data, whether inadvertent or

otherwise. The Department of Agriculture, Forestry and Fisheries therefore accepts no liability that can be incurred

resulting from the use of this information.

34

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annual economic review of the agro-processing industry in ... · figure 1 above depicts volume of...

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