After ending on a stronger footing with confidence at its highest level, agriculture seems set for another stellar performance during 2026. Key factors driving the positive momentum into 2026 include favourable production conditions, input cost moderation, strong export demand, improved logistics performance, and finally, the improvement in the biosecurity regime in South Africa.
Paul Makube, Senior Agricultural Economist, FNB Commercial
A strong start to the 2025/26 agriculture season backed by La Niña conditions.
First, agricultural fortunes are highly correlated with positive turns in weather cycles as favourable production conditions encourage farmers to expand their operations, and the resultant bumper crop harvests boost farm revenues.
The increased farm activities in response to favourable production conditions benefit the whole agriculture value chain due to the demand pull for inputs and services from the downstream industries, thus boosting GDP outcomes.
Encouraged by better seasonal conditions, farmers planned to raise their overall summer crop plantings for the 2025/26 production season by 13% relative to the previous season to just over 4.9 million hectares (ha), with the country’s biggest crop up by 2.7% year-on-year to 2.67 million ha.
Though considered weak, the latest seasonal outlook confirms a La Niña weather pattern, which is characterised by good rains across Southern Africa. Even with a transition to an ENSO Neutral state (El Niño-Southern Oscillation), the country will still receive sufficient rains to ensure a good finish to the crop season.
The early seasonal rains have boosted soil moisture levels and replenished the country’s water reservoirs, with overall dam levels by mid-December 2025 over 90% full. This will help reduce costs for intensive irrigation farming due to the lower frequency of running irrigation pumps.
Input cost moderation boosts farming margins
On the agriculture input side, cost pressures varied with field crops facing cost inflation at the onset of the season as fertiliser and fuel prices increased towards the end of 2025.
Diesel prices increased while petrol started to decrease towards the end of 2025. However, the combination of a sustained rand strength to around R17/US$ as well as a decline in international Brent crude oil prices bodes well for further input cost moderation for the year ahead.
Input cost pressures dissipated significantly in the livestock industry as raw feed input prices fell sharply under pressure due to the bumper grain and oilseed crop harvest in 2025. For example, the price of yellow maize, a major raw animal feed ingredient, dropped by over 25% year-on-year to around R3,600/t by mid-December 2025.
Similarly, the price of soybeans, which are the biggest source of plant protein in animal feed, fell by 19% year-on-year to around R6,700/t during the same period. This, together with higher meat prices, boosted feeding margins in the livestock industry, and this is likely to continue for the remainder of the year, given the expected good grain and oilseed crop harvests.
Good 2025 export momentum sustained
Earlier in 2025, US President Donald Trump introduced the Liberation Day tariffs from 10% to 50% across all exporting countries to the US. South Africa faced a 30% tariff, which rendered our agricultural commodities, such as citrus, grapes, and wines, uncompetitive in the US market, given the lower tariffs faced by its competitors, such as Chile and Australia.
Facing internal pressure due to the rising food inflation, the US later exempted some agricultural food commodities, and in SA’s favour included oranges, fruit juices, and macadamias.
Nonetheless, the strong demand from the rest of the world saw SA’s agriculture cumulative export value for the first three quarters of 2025 increasing by 10% year-on-year to US$11.7bn, according to Trade Map data. Africa led with 34% of exports, followed by Asia and the Middle East (25%), the EU (23%), and the Americas (6%).
Hopefully, the continued SA/US trade negotiations on tariffs, including the issue of the Africa Growth Opportunity Act (AGOA) renewal, will yield positive results. Further, huge strides in improving port performance enhance the strong export performance in 202,5 and it is expected that this will continue into 2026.
Investment in new technologies, including Private and Public Partnerships to improve efficiencies and ensure resilient supply chains continues and benefits will be incremental in the longer term. For example, Transnet signed a concession agreement with the Philippines-based multinational port operator, International Container Terminal Services Inc (ICTSI), to expand the Durban main container terminal.
A silver lining for biosecurity
SA has historically battled with major animal and crop diseases and pests such as Foot-and-Mouth Disease (FMD), the Avian Influenza (AI), African Swine Fever (ASF), Citrus Black Spot (CBS), and False Codling Moth (FCM).
However, FMD was more disruptive in 2025, which resulted in an export ban on meat and animal products from cloven-hoofed animals by countries such as China and neighbours. However, due to the existing protocol, China exempted SA wool imports from the ban. The intermittent interruptions to the movement of animals and slaughter patterns caused serious financial strain on farmers in 2025.
The good news is that the Department of Agriculture, through input from organised agriculture, finally resolved to embark on national FMD vaccination as a long-term strategy to deal with the disease. This is in line with other countries that have successfully traversed that path, such as Brazil and Argentina.
We can finally have certainty regarding the stabilisation of this important industry, which (excluding poultry and wool) accounts for 23% of SA agriculture’s gross producer value (GPV).
Looking ahead
On the back of rising confidence, robust export outlook, accelerating mechanisation, and favourable La Niña rains, agriculture is well-positioned for sustained strong growth in 2026.
Industry players are positive about the industry outlook as reflected in the Agbiz/IDC Agribusiness Confidence Index (ACI), which climbed five points to 67 in Q4 of 2025, which is a whopping 17 points above the neutral level of 50.
Further, both the RMB/BER Business and the FNB/BER Consumer Confidence Indices showed a good rebound in Q4 of 202,5 which signals heightened economic activity and demand, which bodes well for the agriculture sector outlook.
While disease management and global trade dynamics remain key risks, the fundamentals are strong, and the outlook is positive.
Recent Comments