Although agriculture contributes a relatively small share (2.5%) to the total gross domestic product (GDP) in South Africa (SA), it is important in providing employment and earning foreign exchange. When taking into account the whole agricultural value chain, the sector is estimated to contribute about 12% to the national GDP.
Water scarcity due to drought, declining rainfall and/or an over demand for water, is the key driver for the uptake of agricultural technology (agtech) in SA. SA is ranked as the 30th driest country in the world, making water a key constraint to agricultural development.
The Western Cape (WC) province of SA experienced one of the worst droughts on record from 2014/15 to 2017/18, which resulted in water restrictions and large economic losses. Despite this, there has been an expansion in land use under high-value export crops. In the Western Cape, from 2013 to 2017, there was growth in the production areas of citrus (35%), berries (33%), sub-tropical fruits (21%), and nuts (79%).
This is an important trend, particularly when coupled with growing water scarcity. International market pressure for low carbon, environmentally-friendly products is an increasingly important driver for the uptake of practices and technologies that also reduce the use of chemical inputs and carbon dioxide emissions.
Given this shift, there are emerging investment opportunities in: remote sensing technologies for precision agriculture applications (driven specifically to improve water efficiency and climate adaption); undercover farming (UF), which includes low-tech infrastructure such as shade netting and higher-tech controlled environment agriculture systems; and well-established investment opportunities in renewable energy (RE) and conservation agriculture.