Agro-processing Industries in the South AfricaN Economy

This chapter provides an overview of the agro-processing sector in the South African economy, focusing on the sector’s potential to contribute to inclusive growth through high value-added activities. The chapter shows that agro-processing industries have been the largest subsector of the manufacturing sector in the country since the 1970s, accounting for the largest share of both manufacturing output and employment. Apart from being the largest segment of the manufacturing sector, agro-processing industries have the potential to contribute to the broader national objective of transforming the structure of the economy through the creation of jobs and business opportunities for new small and medium enterprises on both sides of the agro-processing value chains. Employment creation potential lies in the fact that most agro-processing industries are labour intensive. Agro-processing industries, on average, use 40 per cent more labour per unit of capital relative to the manufacturing sector as a whole. However, the challenge is that several of the most labour-intensive agro-processing industries are experiencing declining or stagnating value-added, investment, and, most importantly, employment levels. Consistent and coordinated implementation of strategies which revive dynamism in labour-intensive industries is required to overcome this challenge.