*This column first appeared in Business Day on 25 May 2017.

Contrary to market expectation of a mild uptick in South Africa’s GDP in the first quarter of 2017, the country has slipped into a technical recession after two consecutive quarters of negative economic growth. Every sector of the economy, except for mining and agriculture, contributed negatively to GDP.

After eight consecutive quarters of contraction, the agricultural sector has rebounded with the quarter-on-quarter growth reaching a significant 22.2% seasonally adjusted and annualised. The sector benefitted from a low base effect and a robust recovery in agricultural production, particularly for summer grains, oilseeds and horticulture.

This increase is largely attributed to good summer rainfall and increased summer grain acreage. The 2017 summer grain and oilseeds production are set to reach 18.03 million tonnes— a 92% annual increase. The key contributors to this are maize and soybean, which are to reach record levels of 15.63 million tonnes and 1.23 million tonnes, respectively.

Although this improvement is notable, the aforementioned record harvest will most likely only be fully reflected in the second quarter’s agricultural GDP numbers, which will probably be a peak, due to an expected increase in activity in the fields. Summer crops are typically harvested between April and August of each year.

Overall, this is a good year for agricultural production in all areas except in the Western Cape Province, where there is still uncertainty regarding the growing conditions of winter crops and horticulture due to dryness. Thus far, farmers have managed to plant approximately 90% of the winter wheat but they could reach the estimated area of intentions to plant of 325 000 hectares within the next few weeks.

In the near-term, however, the current storm and expected rainfall could ease concerns and improve soil moisture levels in the Western Cape Province. In the longer-term, there are still lingering concerns that the El Niño weather pattern, typically associated with hot and dry weather conditions, may return later this year to the detriment of the South African agricultural sector.

Data from the Australian Bureau of Meteorology shows that there is a 50% chance of El Niño developing in 2017, which is approximately twice the normal likelihood. Another important contribution of the South African agricultural economy is employment. Although the GDP data for the first quarter showed a substantial improvement, the sector also shed 44 000 jobs during the same period, reducing the sector’s total labour force to 875 000 jobs.

Notable job losses were in crops and horticulture, game farming and livestock. However, these job losses came as no surprise given the ongoing challenges in the poultry sector and the tail-end effects of the 2016 drought in the horticulture industry, particularly in the Western Cape Province.

Livestock industry job losses were in part due to the easing of slaughter activity as farmers restock their herds. Data from the Red Meat Levy Admin shows that South African farmers slaughtered 193 373 head of cattle in April 2017, which is 20% lower than the previous month and 19% lower than April last year. Meanwhile, the other sub-sectors— such as the animal husbandry, forestry, fisheries, as well as mixed farming (livestock and crops) — performed well.

Overall, agriculture plays a crucial role in the broader economy, constituting about 5% of South Africa’s total labour force. This percentage is double that of the noisiest industry of mining, and almost on par with the transport industry.

The outlook for the South African agricultural jobs market remains positive, particularly in the second quarter of this year. This is due to the grains and oilseeds harvesting period, which could lead to an increase in activity and opportunities for seasonal jobs.

Similarly, the positive agricultural economic growth could continue for the rest of the year, sustained by growing optimism in the industry and large grains and oilseeds harvests. The Agbiz/IDC Agribusiness Confidence Index—which signals the level of South Africa’s agricultural GDP performance in the succeeding quarters— has been on expansionary territory for three consecutive quarters, suggesting sustained optimism in the sector.

In the event of another El Nino occurrence later this year (as weather forecasters suggest), the agricultural economy will still show robust growth as 2017 summer crops output are already at harvesting stages and will not be affected by dryness. Any negative impact on the winter crops and horticulture would be reflected in GDP data for the first quarter of 2018— a period where harvesting intensifies for these crops in the Western Cape Province.

Although the effects on crop output would show only at a later stage, employment numbers would be negatively impacted as early as the fourth quarter of this year- when winter crop farmers begin to harvest. More so as the Western Cape Province is the largest agricultural employer in South Africa, contributing 25% of total agricultural jobs.

Overall, the weather will be the key factor as to whether the agricultural sector contracts or grows in the near to medium term.