Annual Economic Review of the Agro-processing industry in … · 2017. 10. 11. · The industry...

DIRECTORATE: AGRO-PROCESSING SUPPORT

agriculture,forestry & fisheries

Annual Economic Review of

the Agro-processing industry

in South Africa.

2016 ________________________________________________________________

Volume 3, number 1

i

CONTENTS

LIST OF ACRONYMS ..................................................................................................................................... ii

PREFACE ....................................................................................................................................................... iii

EXECUTIVE SUMMARY ................................................................................................................................ iv

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

2. OVERVIEW OF THE GLOBAL ECONOMY ............................................................................................. 1

3. THE STATE OF THE DOMESTIC ECONOMY ........................................................................................... 2

4.1 FOOD PRODUCTS ............................................................................................................................. 4

4.2 BEVERAGES ........................................................................................................................................ 8

4.3 TOBACCO ....................................................................................................................................... 13

4.4 TEXTILES ............................................................................................................................................. 16

4.5 WEARING APPAREL ........................................................................................................................ 21

4.7 FOOTWEAR ...................................................................................................................................... 30

4.8 WOOD AND WOOD PRODUCTS ................................................................................................. 34

4.9 PAPER AND PAPER PRODUCTS .................................................................................................... 39

4.10 RUBBER PRODUCTS ...................................................................................................................... 43

4.11 FURNITURE ...................................................................................................................................... 48

5. CONCLUSION ........................................................................................................................................ 52

REFERENCES ............................................................................................................................................... 54

ii

LIST OF ACRONYMS

CPI Consumer Price Index

DAFF Department of Agriculture, Forestry and Fisheries

EU European Union

FAO Food and Agriculture Organization

GDP Gross domestic product

IPAP Industrial Policy Action Plan

IMF International Monetary Fund

NAFTA North American Free Trade Agreement

NESOI Not Elsewhere Specified or Indicated

PPI Producer Price Index

SA South Africa

SADC Southern African Development Community

US United States

iii

PREFACE

The agro-processing industry is among the sectors identified by the Industrial Policy Action

Plan, 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 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 has started to publish a regular

annual review of the agro-processing industry.

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

2016 is the sixth annual economic review by the directorate and it evaluates the economic

performance of the 11 divisions within agro-processing during 2016. 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 real value added, real output values, real gross fixed

domestic investment, trade balance, capacity utilisation and total employment.

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

Mr Victor Mahlogedi Thindisa

Director: Agro-processing Support

Pretoria

Disclaimer

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.

iv

EXECUTIVE SUMMARY

Growth in the global economy remained subdued in 2016, with main advanced economies

together with emerging markets and developing economies experiencing uneven growth.

During 2016, global growth moderated by 3,1%, with advanced economies growing by 1,7%

while emerging markets and developing economies grew by 4,1%. However, global growth is

projected to grow by 3,5% in 2017. The South African economy grew by 0,3% in 2016,

following a 1,3% growth in 2015.

Real value added of the agro-processing industry remained unchanged in 2016, following a

3,5% growth in 2015. The divisions that showed growth in real value added were: food (0,6%),

tobacco (0,7%), beverages (0,9%), textiles (1,3%) and wood and wood products (3,0%).

However, decline in real value added was recorded in the following divisions: paper and

paper products (0,4%), footwear (1,9%), rubber (2,6%), wearing apparel (5,6%), furniture

(7,3%,) and leather and leather products (9,9%) in 2016.

Real output of the agro-processing industry further decreased by 0,1% during 2016, following

a contraction of 0,1% in 2015. The decrease was recorded in beverages (1,1%), wearing

apparel (9,6%), leather and leather products (8,0%), footwear (5,3%), paper and paper

products (3,5%) and furniture (14,2%). However, real output grew in the following divisions:

textiles (1,6%), food (1,7%), rubber (2,1%), tobacco (3,3%) and wood and wood products

(7,7%).

Real gross fixed investment in the agro-processing industry rebounded by 6,5% in 2016,

following a 13,3% improved negative growth in 2015. Among the divisions that showed an

increase in investment were: wood and wood products (7,1%), food (18,3%), beverages

(21,1%), wearing apparel (24,2%), leather and leather products (29,3%), footwear (29,5%),

furniture (32,3%) and rubber products (143,3). Conversely, divisions that showed a decrease

in investment were: textiles (15,5%), paper and paper products (18,1%) and tobacco (23,6%).

Real exports of aggregate agro-processing products contracted by 0,1% in 2016, following a

moderate growth rate of 1,1% in 2015. Among agro-processing products with an increase

exports were: food (1,3%) beverages (1,7%), textiles (4,9%), paper and paper products (7,0%)

and wood and wood products (10,0%). However, real exports dropped for the following

divisions: tobacco (5,3%), leather and leather products (10,2%), rubber products (14,4%),

footwear (19,1%), furniture (19,2%) and wearing apparel (19,8%).

Real imports of aggregated agro-processing products contracted by 9,4% in 2016, following

a rebound of 6,9% 2015. All agro-processing divisions except tobacco experienced a decline

in imports. Tobacco imports increased by 56,5% in 2016, while imports declined for the

following divisions: food (5,5%), wood and wood products (5,9%), rubber products (7,2%),

v

textiles (10,1%), beverages (10,2%), furniture (10,7%), paper and paper products (11,3%),

wearing apparel (15,9%), footwear (20,3%) and leather and leather products (24,6%).

As a result of higher rate of decline in imports relative to exports, the trade surplus of the

agro-processing industry widened from R82 million in 2015 to R9 259 million in 2016. The

divisions that maintained a trade surplus were: paper and paper products (R9 363 million),

beverages (R8 587 million), food (R7 087 million), wood and wood products (R5 371 million),

tobacco (R1 437 million) and leather and leather products (R801 million). Conversely, the

following divisions recorded a trade deficit during 2016: wearing apparel (R8 190 million),

rubber products (R7 029 million), textiles (R4 388 million), footwear (R2 207 million) and

furniture (R1 572 million).

Owing to the further negative decline in agro-processing real output by 0,1% in 2016 as

compared to 0,1% contraction recorded in the previous year, total employment in the

industry contracted by 0,2% in 2016 following a 3,0% rebound in 2015. The industry shed 1 285

jobs in 2016 compared to 16 391 jobs created in 2015. However, formal employment

recorded an improved positive growth of 2,5% as compared to a 1,6% rebound registered in

the previous year, meaning that the formal sector of the agro-processing industry created

11 331 jobs as compared to 6 987 created in the previous year. The divisions that created

jobs were food products (14 751), beverages (1 537), leather and leather products (480),

tobacco (255) and rubber products (73). However, furniture (1 940), paper and paper

products (1 495), wearing apparel (978), footwear (561), wood and wood products (520) and

textiles (272) shed jobs in 2016.

1

1. INTRODUCTION

The global economic growth moderated by 3,1% in 2016, with growth slowing down in both

advanced economies, and emerging markets and developing economies. The overall

moderation in global growth is attributed to, among other factors, current emergence of

inward looking policies, particularly in advanced economies. However, with improvement in

commodities prices, global growth is expected to grow by 3,5% in 2017.

In South Africa, the economic growth in 2016 moderated by 0,3% as compared to growth of

1,3% in the previous year. This annual review examines the economic performance of the

agro-processing industry, which is the main sub-sector in manufacturing, amid moderate

global economic growth and domestic economic growth registered in 2016

This annual review is organised as follows: the next section presents the overview of the

global economy during 2016. Section three provides a summary of the state of the domestic

economy. Section four presents a brief effect of the global and domestic economic on the

11 divisions of the agro-processing industry. The section reviews how the global and domestic

economy in 2016 affected the real value added, real output, gross fixed domestic

investment, trade balance, capacity utilisation and employment level of each division. Lastly

is the conclusion of the review, which is section five.

2. OVERVIEW OF THE GLOBAL ECONOMY

The global economic growth has moderated from 3,4% in 2015 to 3,1% in 2016. The growth in

advanced economies moderated by 1,7% in 2016, following a 2,1% growth in 2015. The

moderate growth in advanced economies was as a consequence of slowing down of

growth in the United States, the Euro Area and Japan. The economic growth in emerging

and developing economies also moderated by 4,1% in 2016 following a 4,2% growth in 2015.

China and India moderated by 6,7% and 6,8% in 2016 from the growth of 6,9% and 7,9% in

2015, respectively. Russia and Brazil, on the other hand, registered a negative growth of 0,2%

and 3,6%, respectively, in 2016 (IMF, 2017).

Countries/ area 2015 2016 2017

Estimates Projections

World output 3,4 3,1 3,5

Advanced economies 2,1 1,7 2,0

Table 2.1 Overview of the world economic growth (percentage change)

2

Source: IMF (2017)

3. THE STATE OF THE DOMESTIC ECONOMY

South Africa’s economic growth moderated from 1,3% in 2015 to 0,3% in 2016, which is mainly

as a result of the two quarters of negative quarter to quarter growth. The moderation in

annual growth is consistent with the South African economy currently being in downward

phase of business cycle. Despite the downward phase, the manufacturing sector rebounded

in the year under review. However, the non-primary sector and tertiary sector moderated,

while the primary sector contracted by 5,4% in 2016 (Reserve Bank, 2017).

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

rates)

Sector 2015

%

2016

%

Year Q1 Q2 Q3 Q4 Year

Primary sector 1,4 -19,0 9,1 3,2 -9,0 -5,4

Agriculture -6,1 -8,7 -7,8 -0,2 -0,1 -7,8

US 2,6 1,6 2,3

Euro area 2,0 1,7 1,7

Japan 1,2 1,0 1,2

Emerging markets and

developing economies

4,2 4,1 4,5

China 6,9 6,7 6,6

India 7,9 6,8 7,2

Russia -2,8 -0,2 1,4

Brazil -3,8 -3,6 0,2

Sub-Saharan Africa 3,4 1,4 2,6

South Africa 1,3 0,3 0,8

3

Mining 3,9 -21,8 14,6 4,2 -11,5 -4,7

Secondary sector 0,0 -0,1 4,8 -2,5 -1,8 0,2

Manufacturing -0,2 0,6 7,6 -3,3 -3,1 0,7

Tertiary sector 1,6 1,4 1,9 0,8 1,6 1,4

Non-primary sector 1,2 1,0 2,5 0,1 0,8 1,1

Total 1,3 -1,5 3,1 0,4 -0,3 0,3

Source: Reserve Bank (2017)

The deceleration in the agricultural sector was mainly a result of low production of field crops

and horticulture, which was affected negatively by the dry underground soil conditions. The

real gross value added by agriculture contracted for eight consecutive quarters up to the

fourth quarter of 2016, due to the prolonged drought on agricultural output which resulted in

a decline of about 7,8% in 2016. The growth of the secondary sector moderated from 0,0% in

2015 to 0,2% in 2016, which resulted to an increase in growth rate of the manufacturing

sector, which rebounded by 0,7% in 2016 after a contraction of 0,2% in 2015 (Reserve bank,

2016).

4. 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 of the following 11 divisions: food products, beverages, tobacco, textiles, wearing

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

wood products, rubber and furniture.

In 2016, the real value added share of the agro-processing industry in the manufacturing

sector and the economy is about 32,2% and 4,4%, respectively. Its contribution to the real

output of the manufacturing sector and the economy was 31,6% and 7,7%, respectively. Its

share of real domestic fixed investment in the manufacturing sector and the economy was

14,3% and 1,8%, respectively, during the year under review. In addition, 19,1% and 10,9% of

the total exports by the manufacturing sector and the economy originated from agro-

processing. The agro-processing industry accounted for 41,3% jobs created in the

manufacturing sector and 3,6% contribution to the economy. This section reviews the

economic performance of each division in the agro-processing industry during 2016.

4

4.1 FOOD PRODUCTS

Source: Quantec EasyData (2017)

Real value added for the food division moderated by 0,6% in 2016, following a significant

growth of 4,8% in 2015 (see figure 4.1). Real output, on the other hand, accelerated by 1,7%

in 2016, following a marginal growth of 0,7% in the previous year. The output price of food

increased modestly by 8,5% in 2016, following a growth of 5,9% in 2015, while the

intermediate input price also increased modestly by 9,3% in 2016, following a growth of 6,3%

in the preceding year.


The real gross domestic fixed investment in the food division rebounded by 18,3% in 2016,

following a 7,9% contraction recorded in the previous year (see Figure 4.2). The gross fixed

capital formation shows that the investment increased in machinery and other equipment

and in buildings and construction works by 17,9% and 29,5%, respectively, while for transport

equipment declined by 33,4% in 2016 (see Table 4.1).

0

50 000

100 000

150 000

200 000

250 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016 R m

illio

n (

2005 p

rices)

Figure 4.1: Real output and value added: food

Real value added Real output

0

2 000

4 000

6 000

8 000

10 000

12 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.2: Real gross domestic fixed investment: food

5

Table 4.1: Gross fixed capital formation by type of asset: Food products (R million)

Asset type

2014

2015 2016

% change

(2015-2016)

Total 10 555.8 8 700.2 10 292.3 18,3

Machinery and other equipment 8 644.3 7 952.5 9 379.0 17,9

Buildings and construction works 680.9 660.4 855.2 29,5

Transport equipment 120.6 87.3 58.1 -33,4



The growth in real export value for food grew by 1,3% in 2016, following a similar moderate

growth recorded in the previous year. However, the real food import values contracted by

5,5% in 2016, following a rebound of 10,4% in the previous year (see Figure 4.3). As a result of

the relative increase in exports compared to imports, the trade surplus widened from R4 712

million in 2015 to R7 087 million in 2016. In addition, export-to-output ratio increased

marginally by 15,7% in 2016 following a 15,4% moderate growth in 2015. Similarly, the import-

to-domestic demand ratio increased modestly by 17,3% in 2016 from a growth of 16,8% in

2015.

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.3: Trade balance of food

Export Import

6

Table 4.2: The top five exported food products in 2016

Product Description HS code R’ million % share

Fruit juice 2009 3 168,6 6,1

Fruit, nuts prepared 2008 2 408,0 4,6

Food preparations 2106 2 095,6 4,0

Cane or beet sugar 1701 1 707,2 3,3

Sauces

2103 1 566,1

3,0 Source: Quantec EasyData (2017)

The top five exported food products during 2016 are presented in Table 4.2. Fruit juice (6,1%)

is the main exported product; followed by fruit, nuts prepared (4,6%); food preparations

(4,0%); cane or beet sugar (3,3%) and sauces (3,0%). The main destination for the exports is

SADC, which accounted for the highest share (49,1%), followed by the EU (9,4%), Eastern Asia

(5,1%), Western Asia (3,5%), NAFTA (2,6%), Northern Africa (2,1%) and South Asia (2,0%)

Table 4.3: The top five imported food products in 2016


Rice 1006 5 067,2 8,8

Meat & edible offal of poultry 0207 4 605,5 8,0

Palm oil 1511 3 534,9 6,2

Cane or beet sugar 1701 3 025,3 5,3

Soya bean oilcake 2304 2 464,0 4,3 Source: Quantec EasyData (2017)

Among the top imported food products in 2016; rice accounted the highest share (8,8%);

followed by meat and edible offal of poultry (8,0%), palm oil (6,2%), cane or beet sugar

(5,3%) and soya bean oilcake (4,3%) (see Table 4.3). The main source of imports during 2016

were the EU (25,1%), South Asia (21,5%), Americas Rest (11,4%), SADC (11,1%) Eastern Asia

(4,9%) and NAFTA (3,6%).

Table 4.4: Utilisation and reasons for underutilisation of production capacity by large enterprises: Food

products (percentage)

Period Utilisation Reasons for underutilisation

7

Total

underutilisa

tion

Shortage of Insufficient

demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2014 81,7 18,3 2,5 1,5 0,2 10,8 3,4

2015 82,0 18,1 2,0 1,3 0,2 11,1 3,5

2016 82,0 18,0 2,1 1,3 0,3 10,2 4,1

Source: Statistics SA (2017)

Regardless of a moderate growth of output in the food division, the utilisation of production

capacity by large enterprises remained at 82,0% in 2016. Insufficient demand is the main

reason for underutilisation, followed by shortage of raw materials and skilled labour (see

Table 4.4).


Due to growth in output, jobs were created in the food division during 2016. Total

employment (formal and informal) increased modestly by 7,0%, following a growth of 4,3% in

the previous year. Similarly, formal employment also increased modestly by 7,9% in 2016,

following a 3,8% growth in 2015 (see Figure 4.4). Table 4.5 shows the number of employees in

different skill level categories. The highest share of employment in the food product division is

constituted by semi-skilled and unskilled (46,7%), followed by mid-level (39,5%), the high level

and informal both comprises of 6,9% share of employment in 2016.

0

50 000

100 000

150 000

200 000

250 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Figure 4.4: Number of employment: food

Informal Formal Total

8

Table 4.5: The skill level of employees: Food products

Skill level 2016 % share in 2016

High level 14 922 6,9

Mid-level 85 247 39,5

Semi-skilled and unskilled 100 975 46,7

Informal 14 943 6,9

Total 216 087 100,00


4.2 BEVERAGES


Real value added of the beverages division moderated by 0,9% in 2016, following a

significant growth of 7,5% in 2015. However, the real output of the beverages contracted by

1,1% in 2016, following a 0,9% growth recorded in the previous year (see Figure 4.1). The

output price of beverages increased modestly by 7,2% in 2016, following a growth of 7,1% in

2015. Similarly the intermediate input price increased modestly by 8,1% in 2016, following a

6,9% growth in the preceding year.

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.5: Real output and value added: beverages


9


The growth of the real gross domestic fixed investment in the beverages division rebounded

by 21,1% in 2016, following a deceleration of 21,8% in 2015 (see Figure 4.6). The value of gross

fixed capital formation by asset in the beverages division is presented in Table 4.6. The total

gross fixed capital formation increased by 21,1%, which was mainly driven by the increase in

machinery and other equipment, building and construction works and transport equipment

by 22,3%, 11,2% and 7,5%, respectively.

Table 4.6: Gross fixed capital formation by type of asset: Beverages (R million)

Asset type

2014

2015 2016

% change

(2015-2016)

Total 4 342.6 3 395.0 4 111.3 21,1

Machinery and other equipment 4 134.1 3 042.4 3 720.5 22,3


Transport equipment 39.5 31.9 34.3 7,5


0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.6: Real gross domestic fixed investment: beverages

10


Real exports of beverages rebounded by 1,7% in 2016, following contraction of 3,3% in 2015.

However, imports decelerated by 10,2%, following a 6,8% improved negative growth

recorded in 2015 (see Figure 4.7). As a result of the relative increase in exports compared to

imports, the trade surplus widened from R7 963 million in 2015 to R8 587 million in 2016.

Furthermore, export-to-output ratio increased modestly by 17,6% in 2016, following a 17,4%

growth in 2015. On the other hand, the import-to-domestic demand ratio moderated by

8,3% in 2016, following a growth of 8,5% in 2015.

Table 4.7: The top five exported beverages products in 2016

Product Descriptions HS code

R’ million % share

Wine 2 204 8 074,7 51,2

Ethyl alcohol, spirit beverage 2 208

1 498,4 9,5

Ethyl alcohol 2 207

1 199,1 7,6

Waters, sweetened 2 202

961,7 6,1

Beer 2 203

674,5 4,2 Source: Quantec EasyData (2017)

Table 4.7 shows that wine was the main product exported accounting for 51,2% of the total

beverages’ exports, which is followed by ethyl alcohol, spirit beverage (9,5%), ethyl alcohol,

(7,6%), waters, sweetened (6,1%) and beer (4,2%) in 2016. As a main destination for the

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

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2005 p

rices)

Figure 4.7: Trade balance of beverages

Export Import

11

exports, the EU has the highest share of about 30,9%, followed by SADC with (26,7%), NAFTA

(7,2%), Eastern Asia (4,7%) and Sub-Saharan Africa (excluding SADC) (3,8%).

Table 4.8: The top five imported beverages products in 2016

Product Description HS code R’ million

% share

Ethyl alcohol 2208 3 104,1 45,6

Waters, sweetened 2202 805,5 11,8

Beer made from malt 2203 699,1 10,3

Malt 1107 421,0 6,2

Wine 2204 357,4 5,3 Source: Quantec EasyData (2017)

Table 4.8 shows the top five imported beverages products in 2016. The leading imports are

ethyl alcohol, with a share 45,6%; followed by waters, sweetened (11,8%), beer (10,3%); malt

(6,2%) and wines (5,3%) (see Table 4.8). The EU was the largest source of imports of

beverages products (59,9%), followed by SADC (9,3%), NAFTA (5,6%), Western Asia (2,1%) and

Europe Rest (1,9%).

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

Beverages (percentage)


Total

underutilisa

tion


demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2014 84,6 15,4 2,3 1,2 0,3 8,1 3,5

2015 84,6 15,5 1,8 1,2 0,2 7,9 4,4

2016 86,1 13,9` 2,1 1,1 0,3 7,1 3,5


The utilisation of production capacity in the beverages division increased modestly by 1,5

percentage point in 2016 (see Table 4.9). Insufficient demand remains the main reasons for

12

underutilisation, followed by other reasons such as seasonal factors and shortage of raw

materials.


Figure 4.8 shows the number of employment in the beverages division. During 2016, total

formal and informal employment contracted by 1,0%, following a rebound of 5,2% recorded

in 2015. However, the formal employment increased significantly by 4,2% in 2016 from a

rebound of 1,8% registered in the previous year. Table 4.10 shows the percentage share to

the total employment by skill level category in beverages division. Informal comprises of 43%

share, followed by semiskilled and unskilled (28,4%) and mid-level and high level with a share

19,5% and 8,9%, respectively.

Table 4.10: The skill level of employees: Beverages



Mid-level 13 144 19,5

Semiskilled and unskilled 19 160 28,4

Informal 29 258 43,3

Total 67 556 100,00


0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Figure 4.8: Number of employment: beverages


13

4.3 TOBACCO


During 2016, the growth of real value added of tobacco rebounded by 1,3%, following a

contraction of 2,9% growth registered in 2015. However, the real output modestly grew by

3,3%, following a 0,3% moderate growth registered in the preceding year (see Figure 4,9). The

output price and intermediate input price of tobacco moderated by 4,2% and 5,8% in 2016,

following a growth of 7,7% and 8,1% in 2015, respectively.


Real gross fixed investments of tobacco decelerated by 23,6% in 2016, following a

contraction of 1,6% growth registered in the preceding year. The total value of gross fixed

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

2006

2007

2008

2009

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2011

2012

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2016

R m

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2005 p

rices)

Figure 4.9: Real output and value added: tobacco


0

50

100

150

200

250

300

20

06

20

07

20

08

20

09

20

10

20

11

20

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20

14

20

15

20

16

R m

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Figure 4.10: Real gross domestic fixed investment: tobacco

14

capital formation decreased by 23,6%, which was a result of declines in transport equipment

(-40,0%) and machinery and other equipment(-23,9%), respectively, in 2016 (see Table 4.1).

Table 4.11: Gross fixed capital formation by type of asset: Tobacco (R million)

Asset type

2014

2015 2016

% change

(2015-2016)

Total 75.0 73.8 56.4 -23,6

Machinery and other equipment 74.2 72.8 55.4 -23,9





During 2016, the real exports of tobacco products contracted by 5,3% as compared to the

1,5% rebound registered in the preceding year. However, the real imports increased

significantly by 56,5% in 2016, following a rebound of 23,0% recorded in 2015 (see Figure 4.11).

As a result of the decrease in exports as compared to imports, the trade surplus narrowed

from R1 796 million in 2015 to R1 437 million in 2016. During 2016, export-to-output ratio

moderated by 15,9%, from a modest growth of 17,8% in 2015 and import-to-domestic

demand ratio also increased significantly by 8,3% in 2016, following a growth of 5,1% in 2015.

0

500

1 000

1 500

2 000

2 500

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.11: Trade balance of tobacco

Export Import

15

Table 4.12: The top two exported tobacco products in 2016


Cigars, cigarettes, 2402 1 586,7 59,2

Tobacco and tobacco substitute products, 2403 693,1 26,2


As indicated in Table 4.12, the top two exported tobacco products are cigars, cigarettes

(59,2%) and tobacco and tobacco substitutes products (26,2%). In addition, during 2016,

SADC (48,2%), Northern Africa (18,2%), Western Asia (13,1%), Sub-Saharan Africa (excluding

SADC) (2,5%) and Eastern Asia (1,7%) were the top exporting destinations for tobacco.

Table 4.13: The top two imported tobacco products in 2016


Cigars, cigarettes 2402 972,6 77,3

Tobacco and tobacco substitute products NESOI 2403 103,3 8,2


As presented in Table 4.13, cigars, cigarettes (77,3%) and tobacco and tobacco substitute

products (8,2%) are also the top imported products in tobacco division (see Table 4.13). In

2016, the European Rest remained the main source of imports for tobacco products (69,1%),

followed by the EU (8,3%), Americas Rest (2,9%), SADC (1,2%) and South Asia (1,2%).


0

1 000

2 000

3 000

4 000

5 000

6 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Figure 4.12: Number of employment: tobacco

16

The total employment in the tobacco division moderated by 5,5%, following a 16,1% growth

registered in the preceding year, (see Figure 4.12). Table 4.14 shows the percentage share to

total employment in the tobacco division in terms of skill level. Semi-skilled and unskilled level

has highest share of 50,0%, followed by mid-level and high level by with a share of 34,3% and

15,7%, respectively.

Table 4.14: The skill level of employees: Tobacco


High level 772 15,7

Mid-level 1 690 34,3


Informal - -

Total 4 924 100,00


4.4 TEXTILES


During 2016, the growth of real value added for textiles rebounded by 1,3%, following a

contraction of 2,9% in 2015. Similarly, the real output rebounded by 1,6% in 2016 as

compared to 0,5% deceleration registered in the previous year. The intermediate input price

0

5 000

10 000

15 000

20 000

25 000

30 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.13: Real output and value added: textiles


17

and output price of textile increased modestly by 5,3% and 5,8% in 2016, following 5,0% and

4,8% growths in 2015, respectively.


The real gross domestic fixed investment of textiles decelerated by 15,5% in 2016, following a

contraction of 11,2% in 2015, (see Figure 4.14). Table 4.15 shows the gross capital fixed

formation by asset type for textile division, with buildings and construction works decline by -

73,6%, followed by transport equipment (36,0%), and machinery and other equipment(-

13,1%).

Table 4.15: Gross fixed capital formation by type of asset: Textiles (R million)

Asset type

2014

2015 2016

% change

(2015-2016)

Total 843.1 748.8 633.1 -15.5

Machinery and other equipment 785.6 711.3 618.1 -13.1

Buildings and construction works 41.5 23.9 6.3 -73.6

Transport equipment 16.0 13.6 8.7 -36.0


0

200

400

600

800

1 000

1 200

1 400 2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.14: Real gross domestic fixed investment: textiles

18


The real exports of textile products rebounded by 4,9% in 2016, following a 7,6% contraction

recorded in 2015. However, the real imports contracted by 10,1%, following a rebound of

6,3% in the preceding year. In addition, export-to-output ratio moderated by 21,5%, following

a 21,09% growth in 2015. Similarly, import-to-domestic ratio also moderated by 36,6% as

compared to 37,3% growth in 2015. As a result, the trade deficit narrowed by R4 388 million in

2016 as compared to R5 509 million in 2015.

Table 4.16: The top five exported textile products in 2016


Wool and fine or coarse animal hair 5105 860,4 11,9

Tarpaulins, sails, awnings, tents 6306 405,9 5,6

Stranded wire, ropes 7312 349,9 4,8

Woven fabrics 5407 330,9 4,6

Sacks and bags 6305 323,0 3,3


The top five exported textile products are shown in Table 4.16. Wool and fine or coarse

animal hair accounted for 11,9% share of the total textile exports, followed by Tarpaulins,

sails, awnings, tents (5,6%), stranded wire(4,8%), woven fabrics(4,6%) and sacks and bags

(3,3%) in 2016. The SADC, the EU, Eastern Asia, NAFTA and Oceania (including Australia and

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

10 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.15: Trade balance of textiles

Export Import

19

New Zealand) were the leading export destinations with a share of 39,7%, 16,9%, 6,2%, 4,4%

and 3,5%, respectively, in 2016.

Table 4.17: The top five imported textile products in 2016


Woven synthetic filament yarn 5407 1 447,8 9,5

Non-wovens 5603 1 091,2 7,1

Bed, table, toilet and kitchen linen 6302 817,3 5,4

Woven cotton fabrics 5208 642,9 4,0

Textile fabrics 5903 614,1 4,3


Table 4.17 shows top five imported textile products in 2016. The main imports of textile

products were woven synthetic filament yarn (9,5%); non-wovens (5,4%); bed, table, toilet

and kitchen linen by (5,4%); woven cotton fabrics (4,0%) and textile fabrics (4,3%). The major

source of imports were Eastern Asia (38,8%), South Asia (17,9%), the EU (14,7%), the SADC

(6,9%), Western Asia (3,9%) and NAFTA (2,9%).


Textiles (percentage)


Total

underutilisa

tion


demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2014 70,0 30,0 1,0 0,5 0,0 25,1 3,5

2015 70,4 29,6 1,1 0,4 0,0 24,7 3,5

2016 68,5 31,5 1,3 0,8 0,0 26,3 3,1


Table 4.18 shows that the utilisation of production capacity by large enterprises in the textile

division contracted by 1,9 percentage point in 2016, insufficient demand remains the main

reason for underutilisation, followed by other reasons such as seasonal factors.

20


In 2016, the total employment for textiles contracted by 4,7%, following a rebound of about

4,7% registered in 2015. Similarly, formal employment contracted by 0,8% as compared to the

rebound of 2,5% recorded in 2015 (see Figure 4.16). Table 4.19 shows the percentage share

to the total employment by skill level in the textile division. Semiskilled and unskilled

constitutes a share of 52,1%, followed by the informal sector (33,4%), mid-level (10,6%) and

high level (3,9%).

Table 4.19: The skill level of employees: Textiles






Total 48 392 100,00


0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Figure 4.16: Number of employment: textiles


21

4.5 WEARING APPAREL


During 2016, the growth of real value added in the wearing apparel division registered a

second consecutive deceleration of 5,6%, following a deceleration of 4,4% growth recorded

in 2015. The real output of wearing apparel, however, contracted by 9,6% in 2016, following a

moderate growth of 1,1% in 2015 (see figure 4.17). The intermediate input price and the

output price increased significantly by 17,4% and 17,2% in 2016, following growths of 3,6%

and 5,3% in the preceding year, respectively.


The real gross domestic fixed investment for wearing apparel rebounded by 24,2% in 2016,

following a deceleration of 5,2% in 2015 (see Figure 4.18). Table 4.20 shows that the total gross

fixed capital formation for the wearing apparel division increased by 24,3%, with a notable

0

5 000

10 000

15 000

20 000

25 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.17: Real output and value added: wearing apparel


0

50

100

150

200

250

300

350

400

450

500

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.18: Real gross domestic fixed investment: wearing apparel

22

increase in transport equipment (31,3%) and machinery and other equipment (28,1%).

However, buildings and construction works declined by -4,1% in 2016.

Table 4.20: Gross fixed capital formation by type of asset: Wearing apparel (R million)

Asset type

2014

2015 2016

% change

(2015-2016)

Total 304.4 288.5 358.5 24,3

Machinery and other equipment 291.1 259.7 332.7 28,1

Buildings and construction works 2.5 22.1 21.2 -4,1

Transport equipment 10.8 6.7 4.6 31,3



During 2016, real exports of wearing apparel contracted by 19,8%, following a growth of 3,7%

recorded in 2015. Similarly, the real imports also contracted by 15,9% in 2016, following a 5,6%

rebound registered in the previous year. The export-to-output ratio of wearing apparel

moderated by 28,7% as compared to a growth of 29,5% in the preceding year. Similarly, the

import-to-domestic ratio moderated by 58,2%, following a 58,3% growth in 2015. As a result,

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.19: Trade balance of wearing apparel

Export Import

23

the trade deficit of wearing apparel narrowed from R9 547 million in 2015 to R8 190 million in

2016.

Table 4.21: The top five exported wearing apparel products in 2016


Men's or boys' suits, 6203 614,5 7,9

Women's or girls' suits 6204 455,5 5,9

T-shirts, singlets, tank tops 6109 442,8

5,7

Men's or boys' suits, ensembles 6103 322,7

4,2

Women's or girls' suits, ensembles 6104 314,2

4,1


The top five exported wearing apparel products are presented in Table 4.21. The main

exported wearing apparel product group was men’s or boy’s suits (7,9%); women's or girls'

suits (5,9%); t-shirts, singlets, tank tops (5,7%); men's or boys' suits, ensembles (4,2%) and

women's or girls' suits, ensembles (4,1%). In 2016, the major export destinations of wearing

apparel products were the SADC (54,3%), NAFTA (1,9%), the EU (1,9%), Northern Africa (0,8%)

and Western Asia (0,8%).

Table 4.22: The top five imported wearing apparel products in 2016


Men's or boys' suits 6203 3 559,8

13,3

Women's or girls' suits 6204 2869,3 10,7

T-shirts, singlets, tank tops 6109 2525,3

9,4

Sweaters, pullovers, vests 6110 1504,8 5,6

Men's or boys' shirts, not knitted or

crocheted

6205 1090,1 4,1


The top five imported wearing apparel items during 2016 are presented in Table 4.22. Mens’

or boys’ suits, (13,3%); women’s or girls’ suits (10,7%); t-shirts, singlet’s, tank tops (9,4%);

sweaters, pullovers, vests (5,6%); and men's or boys' shirts, not knitted or crocheted (4,1%)

24

made up for most of the imported wearing apparel products. The major source of imports

were Eastern Asia (48,7%), followed by the SADC (18,9%), South Asia (10,4%), Sub-Saharan

Africa excluding the SADC (4,4%) and the EU (2,4%).


Wearing apparel (percentage)


Total

underutilisa

tion


demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2014 79,3 20,7 0,6 0,9 0,3 16,4 2,5

2015 79,2 20,8 0,6 1,2 0,3 16,0 2,8

2016 77,5 22,5 0,7 1,4 0,4 16,7 3,4


Table 4.23 shows that the utilisation capacity decelerated by 1,7 percentage points in 2016.

Insufficient demand remains the main reason for underutilisation of production capacity

during 2016, followed by other reasons such as seasonal factors.


Figure 4.20 above shows that during 2016 the total and formal employment in the wearing

apparel division contracted by 6,6% and 2,1%, following a rebound of 4,2% and 1,7%, in the

preceding year, respectively. Table 4.24 shows that the semi-skilled and unskilled level

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Figure 4.20: Number of employment: wearing apparel


25

comprises of about 49,6% share of total employment in the wearing apparel division,

followed by informal (39,7%), mid-level (7,8%) and high-level skilled workers (2,9%) in 2016.

Table 4.24: The skill level of employees: Wearing apparel



Mid-level 5 976 7,8



Total 76 397 100,00


4.6 LEATHER AND LEATHER PRODUCTS


During 2016, the real value added of leather and leather products decelerated by 9,9%,

following a 12,6% deceleration recorded in 2015. Similarly, the real output decelerated by

8,0% as compared to 5,8% deceleration in the preceding year. The intermediated input and

output price of leather and leather products increased significantly by 51,7% and 42,9% in

2016, following growths of 3,4% and 4,7%, respectively in 2015.

0

1 000

2 000

3 000

4 000

5 000

6 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.21: Real output and value added: leather and leather products


26


During 2016, the real gross domestic fixed investment in the leather and leather products

division rebounded by 24,2%, following a deceleration of 5,2% in the previous year. The gross

fixed capital formation increased for machinery and other equipment (44,4%) while buildings

and construction works and transport equipment decreased by -19,0% and -47,1%,

respectively (see Table 4.25).

Table 4.25: Gross fixed capital formation by type of asset: Leather and leather products (R million)

Asset type

2014

2015 2016

% change

(2015-2016)

Total 28.6 36.8 47.6 29,3





0

20

40

60

80

100

120

140

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.22: Real gross domestic fixed investment: leather and leather products

27


The real export value of leather and leather products decelerated by 10,2% in 2016, following

a growth of 3,7% registered in the previous year. However, the real imports of leather and

leather products decelerated by 24,6%, following a 1,5% deceleration in the previous year.

The export-to-output ratio moderated by 50,7% in 2016, following a growth of 60,3% in the

preceding year. Similarly, import-to-domestic ratio moderated by 46,4% in 2016, following a

growth of 59,5% in 2015. As a result, the trade surplus of leather and leather products

widened from R537 million in the previous year to R801 million in 2016.

Table 4.26: The top five exported leather and leather products in 2016


Bovine or equine leather 4104 1 033,7 21,2

Leather of animals 4107 531,3 10,9

Articles of leather 4205 448,8 9,2

Travel goods 4202 331,1 6,8

Composition leather 4113 314,2 6,4


The top five exported leather and leather products in 2016 are presented in Table 4.26.

Bovine or equine leather is the leading export of leather products and accounted for a 21,2%

share in 2016. In 2016, the top export destinations for South African leather products were the

0

500

1 000

1 500

2 000

2 500

3 000

3 500

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.23: Trade balance of leather and leather products

Export Import

28

EU (25,2%), the SADC (11,0%), Eastern Asia (7,1%), NAFTA (6,9%), Americas Rest (4,3%) and

South Asia (2,9%).

Table 4.27: The top five imported leather and leather products in 2016


Travel goods 4202 2 246,3

54,9

Leather of animals 4107 382,3 9,3

Bovine or equine leather 4104 275,2 6,7

Articles of apparel 4203 225,0 5,5

Articles of leather 4205 136,1 3,3


Table 4.27 shows the top five imported leather and leather products in 2016. Travel goods

(54,9%), leather of animals (9,3%), bovine or equine leather (6,7%),articles of apparel (5,5%)

and articles of leather (3,3%) were the leading imports of leather products in 2016. The major

sources of imports of leather and leather products were: Eastern Asia (48,9%), South Asia

(15,6%), the EU (9,0%), the SADC (5,5%) and Americas Rest (4,2%).


Leather and leather products (percentage)


Total

underutilisa

tion


demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2014 69,5 30,5 4,6 0,2 0,6 23,8 1,5

2015 73,4 26,6 4,5 0,5 1,0 18,8 1,9

2016 74,4 25,7 4,5 0,6 1,3 17,7 1,6


The utilisation of production capacity for the leather and leather products division increased

modestly by 1,0 percentage points in 2016 (see Table 4.28). Insufficient demand remained

the main reason for underutilisation, followed by shortage of raw materials and other reasons

such as downtime due to maintenance.

29


During 2016, total and formal employment of leather and leather products increased

modestly by 9,1% and 10,1%, following a 7,6% and 7,1% rebound, respectively, recorded in

the previous year (see Figure 4.24). Table 4.29 shows the skill level of employees in the leather

and leather products division, with semi-skilled and unskilled level comprises of 70,9% share,

followed by mid-level skills (18,3%), informal (7,4%) and then high level (3,4%) in 2016.

Table 4.29: The skill level of employees: Leather and leather products


High level 194 3,4



Informal 420 7,4

Total 5 658 100,00


0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Figure 4.24: Number of employment: leather and leather products


30

4.7 FOOTWEAR


The real value added in the footwear division decelerated by 1,9% in 2016, following a

contraction of 8,1% in the previous year. Similarly, the real output in the footwear division

decelerated by 5,3% in 2016, following a deceleration of 2,5% in the preceding year. The

output price and intermediate input price increased significantly by 12,4% and 12,4% in 2016,

following a growth of 7,2% and 4,7, respectively in 2015.


During 2016, the real gross domestic fixed investment of footwear division increased

significantly by 29,5%, following a moderation of 0,7% in 2015 .The value of gross fixed capital

formation by asset type, as shown in Table 4.30, for footwear division increased for building

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.25: Real output and value added: footwear


0

20

40

60

80

100

120

140

160

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.26: Real gross domestic fixed investment: footwear

31

and construction works (154,5%) and machinery and other equipment (13,5%). However,

gross fixed capital formation for transport equipment decreased by -20,0% in 2016.

Table 4.30: Gross fixed capital formation by type of asset: Footwear (R million)

Asset type

2014

2015 2016

% change

(2015-2016)

Total 105.7 106.3 137.8 29.6

Machinery and other equipment 91.5 93.5 106.1 13.5

Buildings and construction works 13.3 12.3 31.3 154.5

Transport equipment 0.9 0.5 0.4 -20.0



The real exports of footwear products decelerated by 19,1% in 2016, following a contraction

of 2,2% in the previous year. However, the real imports contracted by 20,3% in 2016, following

a 4,8% rebound in 2015. As a result, trade deficit of footwear widened from R2 594 million in

2014 to R2 806 million in 2015. The export-to-output ratio moderated by 13,7% in 2016 from

14,5% growth in 2015 and import-to-domestic demand ratio decreased to 42,9% in 2016 from

44,3% in 2015.

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.27: Trade balance of footwear

Export Import

32

Table 4.31: The top five exported footwear products in 2016


Footwear, outer sole rubber, plastic or

leather and upper leather

6403 481,4 34,5


leather and upper textile

6404 318,9 22,9

Footwear, 6405 289,7 20,8


The top three exports of footwear products in 2016 are presented in Table 4.31. The footwear,

outer sole rubber, plastic or leather and upper leather accounted for 34,5%, followed by

footwear, outer sole with plastic or leather and upper textile(22,9%) and footwear (20,8%) in

2016. Among the top export destinations in 2016, SADC comprised of 74,7% share of the

total exports of footwear products, followed by the Sub-Saharan Africa (excluding SADC)

(0,9%), the EU (0,8%), Northern Africa (0,5%) and Oceania( including Australia and New

Zealand )(0,3%).

Table 4.32: The top three imported footwear products in 2016



leather and upper textile

6404 3 211,1 48,9


leather and upper leather

6403 2 528,4 38,5

Footwear 6405 122,9 1,9


Table 4.32 presents the top three imports of footwear products in 2016. Footwear, outer sole

rubber, plastic or leather and upper textile were the major imported products in 2016 and

accounted for the largest import share of about 48,9% of the total footwear imports. The

Eastern Asia (47,7%), South Asia (29,9%),the EU (8,5%), SADC (1,2%) and Americas Rest (1,0%)

were the major import sources of footwear products.


Footwear (percentage)


Total

underutilisa


demand

Other

Raw Labour

33

tion materials Skilled Semi and

unskilled

2014 85,3 14,7 2,3 2,3 0,0 10,1 0,2

2015 85,0 15,0 1,9 0,8 0,0 12,3 0,2

2016 84,4 15,6 2,0 0,9 0,0 12,7 0,0


The utilisation of production capacity of the footwear division decreased by 0,6 percentage

points as a result of the decrease output of footwear (see Table 4.33). The division is among

few agro-processing industries that have the highest percentage of utilisation capacity.

During 2015, insufficient demand remained the key reason for underutilisation, followed by

shortages of raw materials and skilled labour.


During 2016, the footwear division total employment contracted by 8,1%, following a

rebound of 0,6% in the previous year (see Figure 4.28). However, formal employment

decelerated by 6,3% in 2016, following a contraction of 0,5% recorded in 2015. The semi-

skilled and unskilled levels category comprises of 75,4% share of total employment in the

footwear division, followed by informal, mid-level and high level skills categories with 16,9%,

5,1% and 2,6% share in 2016, respectively (see Table 4.34).

0

2 000

4 000

6 000

8 000

10 000

12 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Figure 4.28: Number of employment: footwear


34

Table 4.34: The skill level of employees: Footwear


High level 258 2,6

Mid-level 518 5,1


Informal 1 706 16,9

Total 10 105 100,00


4.8 WOOD AND WOOD PRODUCTS


During 2016, real output of wood and wood products increased significantly by 7,7%,

following a moderate growth of 1,1 % in 2015. However, the real value added moderated by

3,0%, following an 11,1% growth registered in 2015. The output price and intermediate input

price contracted by 0,4% and 1,0% in 2016, following a growth of 9,1% and 8,0%, respectively,

in the preceding year.

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.29: Real output and value added: wood and wood products


35


The real gross domestic fixed investment in the wood and wood products division is depicted

in Figure 4.30. During 2016, it rebounded by 7,1%, following a contraction of 1,4% in the

previous year. The gross fixed capital formation by type of assets for the wood and wood

products division declined for building and construction works (20,6%) and transport

equipment (48,2%), but increased for machinery and other equipment by 13,2% in 2016 (see

Table 4.35).

Table 4.35: Gross fixed capital formation by type of asset: Wood and wood products (R million)

Asset type

2014

2015 2016

% change

(2015-2016)

Total 697.2 687.3 736.1 7,1





0

500

1 000

1 500

2 000

2 500

3 000

3 500

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.30: Real gross domestic fixed investment: wood and wood products

36


As shown in Figure 4.31, the value of real exports for wood and wood products moderated

by 10,0% in 2016, following a growth of 15,6% in the previous year. However, the value of

imports contracted by 5,9% in 2016, following a 7,0% growth in 2015. Owing to a growth of

real exports compared to real imports, the trade surplus widened from R4 416 million in 2015

to R5 371 million in 2016. Export-to-output ratio moderated by 17,3% in 2016, following a 16.9%

growth in 2015. However, the import-domestic demand ratio moderated by 10,59% in 2016,

following a growth of 10,58% in 2015 (see Figure 4.31).

Table 4.36: The top five exported wood and wood products in 2016


Fuel wood in logs 4401 2 463,0 26,5

Builders' joinery and carpentry of wood 4418 682,4 7,3

Wood in the rough 4403 553,9 5,9

Wood sawn or chipped length 4407 533,2 5,7

Particle board and similar board of wood 4410 425,3 4,6


Table 4.36 shows the top five exports of wood and wood products in 2016. The leading

exports were fuel wood in logs with a share of 26,5%, followed by builders' joinery and

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.31: Trade balance of wood and wood products

Export Import

37

carpentry of wood (7,3%) and wood in the rough at around 5,9% share. The major export

destinations for wood and wood products were to the SADC (26,7%), Eastern Asia (21,3%),

South Asia (5,2%), the EU ( 3,3%) and Oceania (including Australia and New Zealand) (2,0%).

Table 4.37: The top five imported wood and wood products in 2016


Wood sawn 4407 1 316,6 25,0

Plywood 4412 565,9 10,8

Fibreboard of wood or other ligneous

materials

4411 483,7 9,2

Fuel wood in logs 4401 357,0 6,8

Casks, barrels, vats 4416 317,7 6,0


Table 4.37 presents the top five imports of wood and wood products in 2016. The main

imports of wood and wood products were wood sawn (25,0%), plywood (10,8%) and

fibreboard of wood (9,2%). In addition, the major sources of imports for wood and wood

products were from the SADC (22,4%), the EU (20,2%), South Asia (14,6%), Eastern Asia (14,2%)

and Americas Rest (6,5%).

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

and wood products (percentage)


Total

underutilis

ation


demand

Other

Raw

materials

Labour

Skilled Semi

and

unskilled

2014 82,3 17,8 1,9 1,6 0,0 9,6 4,7

2015 83,0 17,1 2,0 1,5 0,1 9,3 4,3

2016 85,1 14,9 1,5 1,1 0,0 7,8 4,6


38

Table 4.38 shows that the utilisation capacity for the wood and wood products division

increased by 2,1 percentage points during 2016. Insufficient demand is the main reason for

underutilisation, followed by other reasons and shortage of raw materials.


During 2016, the total employment in the wood and wood products division contracted by

4,2%, following a 0,2% growth in 2015. During the same period, formal employment registered

an improved negative growth of 1,2% as compared to the 1,5% contraction registered in

2015. Table 4.39 shows the number of jobs in the wood and wood product division for

different skill levels of employees categories, with the semi-skilled and unskilled level category

having a share of about 42,6%, followed by mid-level (28,8%), informal skilled employees

(26,1%) and high level at 2,5% in 2016 (see Table 4.39).

Table 4.39: The skill level of employees: Wood and wood products



Mid-level 17 231 28,8



0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

100 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Figure 4.32: Number of employment: wood and wood products


39

Total 59 764 100,00


4.9 PAPER AND PAPER PRODUCTS


During 2016, the real output of paper and paper products decelerated by 3,5%, following a

contraction of 1,0% registered in the previous year. However, the real value added of paper

and paper products contracted by 0,4%, following a 3,2% growth recorded in 2015. The

output and intermediate input price increased marginally by 11,2% and 10,3% in 2016,

following a 7,4% and 7,3% growth, respectively in the previous year (see Figure 4.33).


0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.33: Real output and value added: paper and paper products


0

2 000

4 000

6 000

8 000

10 000

12 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.34: Real gross domestic fixed investment: paper and paper products

40

The real gross domestic fixed investment in the paper and paper products division

rebounded by 7,1% in 2016, following a 1,4% contraction in 2015 (see Figure 4.34). Table 4.40

shows the gross fixed capital formation by type of assets for the paper and paper products

division, with machinery and other equipment, building and construction works and

transport equipment contracting by -17,0%, -51,1% and -8,2%, respectively, in 2016.

Table 4.40: Gross fixed capital formation by type of asset: Paper and paper products (R million)

Asset type

2014

2015 2016

% change

(2015-2016)

Total 4 795.9 4 312.6 3 532.1 -18,1

Machinery and other

equipment 4 584.0 4 162.0 3 456.4 -17,0

Buildings and

construction works 203.7 145.7 71.2 -51,1




During 2016, the paper and paper products division’s real exports increased modestly by

7,0% as compared to the 6,8% growth recorded in 2015. However, imports contracted by

11,3%, following a 4,5% growth registered in the preceding year. As a result of an increase in

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

20 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.35: Trade balance of paper and paper products

Export Import

41

exports relative to imports, the trade surplus widened from R7 030 million in 2015 to R9 363

million in 2016 (see Figure 4.35).

Table 4.41: The top five exported paper and paper products in 2016


Chemical wood pulp, dissolving grades 4702 8 845,6 33,9

Kraft paper and paperboard 4804 2 745,2 10,5

Chemical wood pulp 4703 1 226,0 4,7

Cartons 4819 1 032,2 3,9

Sanitary towels and napkins 9619 933,3 3,6


During 2016, the top five exported products were chemical wood pulp (33,9%), followed by

kraft paperboard, chemical wood pulp, cartons and sanitary towels and napkins with a

share of about 10,5%, 4,7%, 3,9% and 3,6%, respectively (see Table 4.41). The SADC (21,9%),

South Asia (19,9%), Eastern Asia (15,6%), the European Union (11,8%) and NAFTA(1,5%) were

the main export destinations for the paper and paper products.

Table 4.42: The top five imported paper and paper products in 2016


Paper, paperboard, wad 4811 2 675,5 14,5

Paper and paperboard, coated with

kaolin

4810 2 650,8 14,4

Self-adhesive plates, sheets, film 3919 1 733,5 9,4

Paper, uncoated 4802 1 526,4 8,3

Sanitary towels and napkins 9619 1 265,6 6,9


Table 4.42 presents the top five imports of paper and paper products in 2016. The main

imports were paper, paperboard, wad (14,5%); paper and paperboard, coated with kaolin

(14,4%); self-adhesive plates, sheets, film (9,4%), paper, uncoated (8,3%) and sanitary towels

42

and napkins (6,9%). The major sources of imports of paper and paper products in 2016 were

the EU, which accounted for about 43,4,0% share of the total imports, followed by Eastern

Asia (17,8%), NAFTA (6,1%), South Asia (5,4%) and Americas Rest (4,5%).

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

and paper products (percentage)


Total

underutilis

ation


demand

Other

Raw

materials

Labour

Skilled Semi

and

unskilled

2014 86,4 13,6 1,0 1,4 0,1 5,4 5,7

2015 85,0 15,1 0,8 1,5 0,3 5,7 6,8

2016 87,0 13,1 0,6 1,5 0,3 5,6 5,0


In accordance with an increase in the real output, the utilisation of production capacity by

paper and paper products increased by 2,0 percentage points in 2016 (see Table 4.43).

Other reasons such as seasonal factors and insufficient demand remained the main reasons

for underutilisation of production capacity by the division during 2016.


0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Figure 4.36: Number of employment: paper and paper products

43

The total employment in the paper and paper products division registered an improved

negative growth of 3,9% in 2016, following a deceleration of 5,6% in 2015 (see Figure 4.36).

Table 4.44 shows the number of jobs in paper and paper products division by skill level

categories. The semiskilled and unskilled levels of employees category comprises of about

60,2% share of the total employment in paper and paper products division, followed by mid-

level and high level with a share of 30,9% and 9,9%, respectively (see Figure 4.36).

Table 4.44: The skill level of employees: Paper and paper products



Mid-level 11 516 30,9


Informal - -

Total 37 274 100,00


4.10 RUBBER PRODUCTS


In 2016, the real output of rubber products rebounded by 2,1%, following a contraction of

5,4% in 2015. However, the real value added of rubber products registered an improved

negative growth of 2,6% in 2016. The output price of rubber products moderated by 3,7% in

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.37: Real output and value added: rubber products


44

2016, following a growth of 6,2% registered in 2015. While the intermediate input price

increased modestly by 3,9% in 2016, following a 3,8% growth it registered in 2015 ( see figure

4.37).


The real gross domestic fixed investment for the rubber division rebounded by 143,3% in 2016,

following a contraction of 1,4% in 2015 (see Figure 4.38). Table 4.45 shows the value of gross

fixed capital formation by type of asset. During 2016, gross fixed capital formation increased

for building and construction works and machinery and other equipment by 246,0% and

137,3%, respectively.

Table 4.45: Gross fixed capital formation by type of asset: Rubber products (R million)

Asset type

2014

2015 2016

% change

(2015-2016)

Total 462.8 450.0 1095.1 143,4





0

200

400

600

800

1 000

1 200

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.38: Real gross domestic fixed investment: rubber products

45


The real exports of rubber products decelerated by 14,4% in 2016, following a 2,3% growth in

2015. Similarly, the real imports of rubber products contracted by 7,2% in 2016, following a

6,9% rebound in 2015. As a result the trade deficit narrowed from R7 066 million in 2015 to R6

029 million in 2016. The export-to-output ratio moderated by 46,6% in 2016, following growth

of 50,2%, similarly, import-to-domestic demand ratio moderated by 66,8% in 2016, following a

growth of 67,6% in the preceding year.

Table 4.46: The top five exported rubber products in 2016


New pneumatic rubber tyres 4011 2 761,1 26,9

Articles of plastics 3926 932,9 9,1

Tubes, pipes & hoses & their fittings, of

plastics 3917 923,3 9,0

Footwear, outer sole & upper rubber 6402 455,5 4,4

Articles of vulcanised rubber 4016 436,6 4,3


The top five exported rubber products during 2016 are shown in Table 4.46. A new pneumatic

rubber tyre comprised of a 26,9% share of total exports of rubber products. The main export

destinations during 2016 for the rubber products division were the SADC (49,8%), the EU

(7,8%), Northern Africa (2,8%), NAFTA (2,5%) and ) Sub-Saharan Africa (1,8%).

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illi

on

(2005 p

rices)

Figure 4.39: Trade balance of rubber products

Export Import

46

Table 4.47: The top five imported rubber products in 2016


New pneumatic rubber tyres 4011 6 947,9 29,4

Footwear, outer sole & upper rubber 6402 3 673,1 15,5

Articles of plastics 3926 2 036,5 8,6

Articles of vulcanised rubber 4016 1 569,9 6,6

Footwear, outer sole rub 6404 1 292,7 5,5


Table 4.47 presents the top five imported rubber products during 2016. The new pneumatic

rubber tyres accounted for 29,4% of the total imports of rubber products. The main sources of

imports in 2016 were Eastern Asia (36,9%),the EU (22,8%), South Asia (14,7%), NAFTA (6,4%) and

Western Asia (1,8%).


Rubber products (percentage)


Total

underutilisa

tion


demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2014 83,1 17,0 0,4 0,9 0,0 15,5 0,2

2015 80,0 20,1 0,4 0,9 0,0 14,9 3,9

2016 84,2 15,8 0,5 0,9 0,0 12,3 2,2


The utilisation of production capacity for the rubber products division increased by 4,2

percentage points (see Table 4.48). Insufficient demand still remained the main reason for

the underutilisation of production capacity in the division, followed by other reasons such as

lower productivity.

47


The total employment in the rubber division moderated by 0,6% in 2016, following a 2,2%

rebound in the preceding year (see table 4.40). Table 4.49 shows the number of employees

in different skill level categories. The semi-skilled and unskilled employees (66,5%) comprises

of a high share of employment in the rubber products division, followed by mid-level and

high level at 23,2% and 10,3%, respectively, in 2016.

Table 4.49: The skill level of employees: Rubber products





Informal - -

Total 11 374 100,00


0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Figure 4.40: Number of employment: rubber products

48

4.11 FURNITURE


During 2016, the real output of furniture decelerated by 14,2%, following a deceleration of

5,7% in 2015. Similarly, the real value added decelerated by 7,3% in 2016 as compared to a

4,3% contraction registered in the previous year (see Figure 4.41). The output price in the

furniture division grew substantially by 19,6% in 2016, following a 8,2% growth in 2015. Similarly,

the intermediate input price grew substantially by 19,3% in 2016, following a 6,6% growth in

the preceding year.


During 2016, the real gross domestic fixed investment of the furniture division rebounded by

32,3%, following a 8,4% growth in 2015 (see Figure 4.42)). The gross fixed capital formation for

machinery and other equipment, building and construction works increased by 32,8% and

0

5 000

10 000

15 000

20 000

25 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.41: Real output and value added: furniture


0

50

100

150

200

250

300

350

400

450

500

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.42: Real gross domestic fixed investment: furniture

49

61,0% in 2016, respectively. However, it decreased for transport equipment by -46,7% in 2016

(see Table 4.50).

Table 4.50: Gross fixed capital formation by type of asset: Furniture (R million)

Asset type

2014

2015 2016

% change

(2015-2016)

Total 208.2 190.7 252.5 32,2






During 2016, the real exports of the furniture division decelerated by 19,2%, following a 17,1%

deceleration recorded in the previous year. However, the imports of furniture division has

contracted by 10,7% in 2016, following a 9,8% rebound registered in 2015. As a result, trade

deficit widened from R1 469 million in 2015 to R1 572 in 2016. However, the export-to-output

ratio moderated by 25,7% in 2016, following a growth of 26,0% while import-to-domestic

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

R m

illio

n (

2005 p

rices)

Figure 4.43 : Trade balance of furniture

Export Import

50

demand ratio moderated by 33,3% in 2016, following a growth of 33,0% in the preceding

year.

Table 4.51: The top four exported furniture products in 2016


Seats and parts 9401 1 521,8 27,9

Furniture 9403 1 256,5 23,0

Articles of aluminum 7616 367,7 6,73

Mattress 9404 363,4 6,7

Hardware, fixtures, castors 8302 135,2 2,5


The main exports of furniture products were seats and parts (HS9401) amounting to R1 521.8

million, with a share of approximately 27,9% in 2016. Furniture (H9403) constituted about 23,0%

(see Table 4.51). During the period under review, the SADC and the EU were the main export

destinations, followed by NAFTA, Western Asia and Sub-Sahara Africa (excluding the SADC).

) Table 4.52: The top four imported furniture products in 2016


Seats and parts 9401 3 659,0 46,5

Furniture 9403 1 984,2 25,4

Mattress supports 9404 45,8 0,6

Slates and boards 9610 25,3 0,3


Table 4.52 presents the top four imported furniture products in 2016. Seats and parts (46,5%)

and furniture (25,4%) were the main imported furniture products in 2016. The major sources of

imports were Eastern Asia (39,7%), followed by the EU (26,5%), South Asia (9,9%) and NAFTA

(3,8%).

51


Furniture (percentage)

Period Utilisation Reasons for underutilization

Total

underutilisa

tion


demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2014 86,5 13,5 1,0 1,5 0,0 10,9 0,2

2015 79,9 20,1 0,8 0,8 0,8 17,2 0,7

2016 81,5 18,6 1,0 0,3 1,6 15,7 0,0


During 2016, the utilisation capacity of the furniture division increased by 1,6 percentage

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

in 2016, which is followed by shortage of raw materials, skilled labour and semi and unskilled

labour (see Table 4.53).


The total number of employment in the furniture division, as shown in Figure 4.44, contracted

by 7,9% in 2016 as compared to the 0,1% contraction registered in the previous year. Formal

employment also decelerated by 6,4%, following a 0,8% growth in the preceding year. Table

0

10 000

20 000

30 000

40 000

50 000

60 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Figure 4.44: Number of employment: furniture


52

4.54 below shows the composition of jobs in the furniture division based on the skill level. The

semiskilled and unskilled employee level (60,5%) comprises of the larger share of jobs, which is

followed by mid-level, informal and high-level skill levels employees with a share of 21,1%,

13,7% and 4,7%, respectively in 2016.

Table 4.54: The skill level of employees: Furniture





Informal 4 542 13,7

Total 33 141 100,00


5. CONCLUSION

The global economy growth moderated by 3,1% in 2016, while South African economy grew

by 0,3% in 2016. However, with respect to the agro-processing industry, its real output further

decreased by 0,1% in 2016, following a contraction of 0,1% in 2015. The real value added of

the agro-processing industry remained unchanged in 2016 as compared to a 3,5%

acceleration growth in 2015.

The divisions that showed growth in real value added were food, tobacco, beverages,

textiles and wood and wood products. However, the decline was witnessed in the following

divisions: leather and leather products, furniture, wearing apparel, rubber products, footwear

and paper and paper products.

The divisions that grew in real outputs of agro-processing were: wood and wood products,

tobacco, rubber products, food products and textiles. However, furniture, wearing apparel,

leather and leather products, footwear, paper and paper products and beverages showed

a decline in 2016. The real gross fixed investment in the agro-processing industry rebounded

by 6,5% in 2016, following a 13,3% improved negative growth in 2015.

The real export of agro-processing divisions contracted in 2016, following a moderate growth

in 2015. Similarly, the real import of agro-processing divisions contracted in 2016, following a

rebound in 2015. As a result of a higher contraction in real import of agro-processing relative

53

to exports, trade balance of agro-processing industry widened from R82 million in 2015 to

R9 259 million in 2016.

Owing to further negative decline in agro-processing real output, the total employment in

the agro-processing industry contracted, with 1 285 jobs shed in 2016 in contrast to 16 391

jobs created in 2015. In 2016, the divisions that created jobs were food products, leather and

leather products, tobacco and rubber products, while jobs were shed in beverages,

footwear, textiles, wood and wood products, furniture and wearing apparel.

54

REFERENCES

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

IMF (2017), World Economic Outlook, March 2017. International Monetary Fund

Quantec EasyData (2017), EasyData by Quantec. Accessed in September 2017

Reserve Bank (2017), Quarterly Bulletin March 2017. South African Reserve Bank

Statistics SA (2017), Manufacturing: Utilisation of Production Capacity by Large Enterprises.

Statistics South Africa

55

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Annual Economic Review of the Agro-processing industry in … · 2017. 10. 11. · The industry...

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