Market Analysis: Determining the Extent and Potential of a Water-Smart Agriculture Market in South Africa

The report identifies five key Water-Smart Agriculture (WSA) innovation clusters in South Africa: irrigation systems, smart farming, undercover farming, sustainable practices, and drought-tolerant crops. While commercial farms have adopted many of these technologies due to economies of scale, adoption remains low among smallholder and emerging farmers. The analysis estimates significant market sizes for high-tech greenhouses (R11.78 billion) and no-till machinery (R4.48 billion), while identifying remote sensing services as a high-growth area. Major barriers include high upfront costs, limited technical skills, and an unfriendly regulatory environment. The report recommends developing innovative financing models, increasing farmer awareness, and strengthening government support through tax rebates and policy integration.

• The South African agricultural sector is highly water-dependent, utilizing approximately 63% of the country's water allocation, with water availability being the "most limiting factor in agricultural production in South Africa".
• Surface drip irrigation has a high market readiness and an estimated annual market size of R1.48 billion, while sub-surface drip irrigation is estimated at R244.90 million per year.
• Smart farming technologies show high growth potential, particularly remote sensing services with an estimated market size of R459 million and soil sensors at R2.89 billion.
• Undercover farming systems are segmented into low-to-medium tech (shade nets and tunnels) with a market size of R2.4 billion, and high-tech systems (greenhouses) estimated at R11.78 billion.
• Sustainable practices, specifically no-till machinery, have an estimated market size of R4.48 billion and are driven by financial benefits from reduced operating costs.
• Biofertilisers in South Africa were valued at R410 million in 2017, with growth driven by international regulations on chemical fertilisers.
• There are currently no commercially available drought-tolerant biotech crops in South Africa, but economic gains from other biotech crops (insect and herbicide tolerant) are estimated to exceed R2.91 billion.
• The bioprospecting industry for underutilised indigenous crops has a potential market estimated at R2.5 billion per year.
• A significant gap in adoption exists between farm types; WSA innovations are prevalent in medium-to-large commercial farms, but "adoption of WSA technologies is still relatively low among smallholder and emerging farms".
• Major demand-side barriers to WSA adoption include high upfront investment costs, a lack of awareness regarding benefits, and the low cost of water, which "undermines the business case for investment in WSA innovations".
• Supply-side barriers include stringent licensing and compliance processes, limited access to markets, and competition from "imported low-cost technologies".
• The African Continental Free Trade Agreement (AFCTA) is identified as an opportunity to increase competitiveness and market access for products like apples, oranges, and wine grapes in Nigeria, Angola, and Senegal.
• The report recommends the development of innovative financing, such as leasing and rental options, and the establishment of blended finance options to de-risk loans for WSA innovations.

APA

Pengelly, C., Shai, T., & Kuschke, I. (2021). Market Analysis: Determining the Extent and Potential of a Water-Smart Agriculture Market in South Africa. GreenCape. https://greencape.co.za/assets/TT-859-final-web-v2.pdf

Chicago

Pengelly, C, T Shai, and I Kuschke. Market Analysis: Determining the Extent and Potential of a Water-Smart Agriculture Market in South Africa. GreenCape, 2021. https://greencape.co.za/assets/TT-859-final-web-v2.pdf.

Wikipedia

{{cite report |last1=Pengelly |first1=C |last2=Shai |first2=T |last3=Kuschke |first3=I |title=Market Analysis: Determining the Extent and Potential of a Water-Smart Agriculture Market in South Africa |publisher=GreenCape |date=October 2021 |url=https://greencape.co.za/assets/TT-859-final-web-v2.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{pengelly2021market, author = {Pengelly, C and Shai, T and Kuschke, I}, title = {{Market Analysis: Determining the Extent and Potential of a Water-Smart Agriculture Market in South Africa}}, institution = {GreenCape}, year = {2021}, month = oct, url = {https://greencape.co.za/assets/TT-859-final-web-v2.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }