Written for and first appeared in Business Day.
SA’s wool exports to China recently resumed after nearly four months’ suspension. China had cited the foot-and-mouth disease outbreak as a reason to suspend SA’s wool imports, despite the existence of a unique protocol to handle wool shipments and avoid contamination in the event of such an outbreak.
SA and China agreed on this protocol after the 2019 outbreak, which weighed on exports. However, China may have faced capacity constraints during the Covid-19-related lockdowns of recent months, possibly leading to delays in activating the protocol. Notably, this foot-and-mouth disease outbreak has been specific to cattle, not sheep. Industry role players were therefore appropriately dismayed when China suspended wool imports from SA citing this outbreak as the reason.
Credit for assisting in reopening this critical trade channel for wool must go to the practical and quiet cooperation over the past few months between the department of agriculture, land reform & rural development, the wool industry and the Agricultural Business Chamber of SA, among others. The reopening of exports comes at an opportune time as the wool season has recently started.
China is SA’s primary wool export market, accounting for an average of 70% of annual exports. Other SA wool industry markets are the Czech Republic, Italy, India, Bulgaria, Germany, the US, Malaysia, Japan and Mexico. But these are relatively small and thus could not absorb the volume usually destined for China over the past few months.
Wool is likely to remain a significant contributor to SA’s agricultural export revenue and not fall off the top of the exportable products list as initially feared. In the first five months of 2022 wool was the eighth-largest exportable agricultural product, accounting for 3% of the $5.1bn in total agricultural exports. Germany and Italy’s share of SA exports increased from April as Chinese exports declined, and accounted for a larger market share than China in May. The hope is that the European market will remain vibrant as the Chinese market reopens to SA wool.
The cooperation between the government, industry and organised agriculture during the wool ban is an example of the approach that should be taken to deal with the sector’s other challenges. The foot-and-mouth disease continues to affect the livestock industry, and the industry and regulators should come together to assemble a plan. On August 16 the department aptly decided to restrict the movement of cattle for 21 days, reviewable weekly, but the path forward at the end of this period requires the input and support of all cattle industry players while leaving sufficient room or flexibility for the regulators to do their job.
Industry input will help enrich the government’s understanding of the financial impact of their decisions on the industry, but collaboration on the scientific side in helping to curb the spread of the disease is just as important. Industry role players have various ideas, such as the need to issue cattle movement permits rather than a ban, or vaccination options. These are the kinds of discussions and richer scientific insights that specialists in the field could exchange for the good of the SA cattle and broader livestock subsector.
SA’s export-orientated agricultural sector faces numerous challenges in export markets. Still, the success of the reopening of wool exports to China and the effective collaboration between the government, industry and agribusiness offers an approach to future engagements, especially when dealing with foreign stakeholders and other domestic challenges.
As we continue to struggle with foot-and-mouth disease in the cattle industry, changes to the plant safety regulations in the EU affecting our exports, and the temporary ban on vegetable exports to Namibia and Botswana, the newfound collaborative approach between the government and industry will be a key to finding a productive path for the good of SA’s agriculture.
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