Written for and first appeared on Business Day

SA’s agricultural exports lack sufficient diversification. Outside the African continent, they are heavily concentrated in a few Asian countries and the EU. Export diversification contributes to a country’s economic resilience, especially in the face of disruptions to global supply chains or if one of the major markets imposes non-tariff barriers to protect its producers from competition.

Recently we have seen how the Covid-19 pandemic and the Russia-Ukraine war destabilised global supply chains, with many countries looking inward for long-term security of supply. The pandemic and geopolitical friction have also increased protectionism, especially in the EU.

The EU recently imposed protectionist measures on agriculture by changing its regulations on plant safety for citrus without notifying its trading partners within a reasonable period. The new regulation purports to protect the EU from infestation by false codling moth, by introducing stringent new cold treatment requirements. This affects citrus imports from Africa in particular, mainly those from SA, Zimbabwe and Eswatini. These are the largest suppliers of citrus to the EU. For example, over the past five years SA has constantly been the leading supplier of citrus to the EU, accounting for an average of 12% in value terms.

According to the Citrus Growers’ Association of Southern Africa, SA has put in place rigorous measures to control the false codling moth. Every country has a right to apply safety measures to agricultural products to protect the well-being of its consumers, but in the case of the EU measures, there is no reasonable scientific basis for the regulation. The EU is simply using it as a cover to protect citrus-growing countries like Spain.

This measure will increase costs for citrus growers in SA, Zimbabwe and Eswatini. It also strains the trust between affected countries and the EU at a time when major power rivalries are forcing African countries to rethink their foreign economic relations.

The immediate challenge for SA is that there are already shipments of citrus products on the way to the EU that might be deemed non-compliant with arbitrary plant protection regulations on arrival in the coming weeks. This could be financially ruinous for the producers concerned and hurt SA’s economic interests in the longer term, as well as those of neighbouring countries.

The citrus industry is vital to SA and the broader Southern African rural economy. The industry provides employment and economic vibrancy to rural areas and brings in export earnings. In 2021, citrus was SA’s top exportable agricultural product, with a 15% share of overall exports valued at $12.4bn.

The EU was the leading export market alongside the UK. We should therefore be concerned as a country that the recent changes in regulations will likely have a detrimental effect on the industry.

While science should be at the centre of such measures, we believe a diplomatic solution between the SA authorities and the EU is urgently required in this case. Such an engagement should focus initially on ensuring that the citrus that is already on its way to the EU is exempted.

These unpredictable times also mean SA should redouble its efforts to broaden its export markets, focusing on China, India, Bangladesh, the Gulf Cooperation Council states and Japan. These are important markets that we already have some access to, albeit marginal.

The government and the agricultural industry should work on broadening access for all the country’s major export-orientated products: horticulture, beef and wine. We cannot afford to be concentrated in a few regions, however important and stable they have historically been. This is urgent because SA already exports about half its agricultural products yearly in value terms. Therefore, any improvement in production in the coming years will have to find export markets.

The department of trade, industry & competition, along with the department of agriculture, land reform & rural development, should make export diversification one of their top priorities.

Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

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