In 2023 SA assumed the role of chair of the Brics bloc of countries, taking over from China, which chaired it last year. While SA has chaired the grouping in 2018, each tenure is different and brings a new opportunity to influence the agenda inside this economically influential grouping of countries.
Not a formal economic or trade bloc, the business communities from each country typically seek ways to deepen trade and investment with other Brics partners. The SA Brics Business Council has various working groups that engage with other member states to this end. This year the council will also lead the agenda, in line with its political principals chairing Brics.
The main interest of SA agriculture and agribusiness in the grouping is to advance agricultural exports, specifically to China and India. These are countries that have relatively solid economic growth prospects and large populations (and therefore markets), though Brazil tends to compete with SA in big agricultural commodities.
Russia is an important market for SA fruit and a big supplier of wheat to SA, though since Russia invaded Ukraine advancing commerce with the country has become risky. Yet, some businesses have opted to follow the national policy on matters concerning the Russia-Ukraine war.
The Brics countries account for a small share of SA’s agriculture exports — an average of 8% over the past 10 years, of total annual agricultural exports of $9.9bn. China is the leading market, accounting for an average of 5% of SA’s agricultural exports to the world. The top products exported to China were wool, citrus, beef, nuts and grapes. The second-largest market for SA agribusinesses within Brics was Russia, accounting for an average of 2% over the past decade. India and Brazil were negligible importers of SA agricultural products.
While the Brics countries imported an annual average of $764m of agricultural products from SA, a small share of the nearly $10bn SA exported annually over the past decade, the grouping imported an average of $196bn worth of agricultural products from the world market. This data excludes SA to provide a view of the size of the agricultural market we could be part of within Brics.
The $764m the Brics countries imported from SA over the past decade makes us a small player in the grouping’s agricultural trade. China is the largest importer, accounting for 67% of the total Brics agriculture import of $196bn, followed by Russia (16%), India (12%), and Brazil (5%). This implies that within the agribusiness stream of the Brics Business Council and the broader political grouping, the SA representatives should continue to advocate lower import tariffs on agricultural products, specifically from India and China.
The business community will have to actively promote the “proudly SA” agriculture (and broadly food, fibre and beverages) products in this grouping of countries.
Regarding the import tariffs within Brics, consider the case of the wine trade with China. The likes of Australia and Chile access the Chinese market at 0% preferential tariffs, while SA producers face duties as high as 14%. This is understandable as Australia, New Zealand, Peru and Chile have a bilateral agreement with China. SA does not have such agreements and thus faces higher duties. Still, our involvement in Brics, though it is a political grouping and not a trade bloc per se, should provide an opportunity to lobby for lower duties on food, fibre and beverage products.
Such engagements will not all be smooth sailing, as China and India would most likely want a reciprocal agreement with SA. This will put us in a challenging position as the government is simultaneously pushing its “localisation” strategy.
Written for and first appeared in Business Day.
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