A case for South Africa’s beef exports to Saudi Arabia

A case for South Africa’s beef exports to Saudi Arabia

The Kingdom of Saudi Arabia has not featured prominently in South Africa’s beef export markets in the past, with only small volumes last exported in the early 2000s. The renewed access to this market since the start of 2024 is critical to South Africa’s ambition to expand beef exports. The Saudi beef market is sizable, with annual imports worth around US$647 million.

About 62% of the Saudi beef imports were frozen beef, while 38% were chilled or fresh beef imports. Some leading suppliers to Saudi Arabia include Brazil, Australia, Pakistan, The US, New Zealand, and Canada.

Beyond beef, the Saudi meat market is large, with all meat imports valued, on average, at US$1,9 billion annually over the past five years. This means over time, as South Africa increases its production in other meat value chains, Saudi Arabia could remain a strategic country for growing exports.

This positive news of export market development provides some relief when the South African beef industry has faced a challenging operational environment for several reasons. One of the significant challenges was the rise in feed prices since 2020, especially for maize and soybeans.

The rise in animal feed prices coincided with a worsening financial strain on consumers due to the COVID-19 pandemic’s damaging effects. Thus, we saw a decline in the demand for red meat products as consumers opted for relatively cheaper forms of protein.

Moreover, the spread of foot-and-mouth disease to six of South Africa’s nine provinces for the first time in history was another challenge for the industry. This brought temporary bans in specific export markets, extending to auctions and livestock movement, mainly cattle, for some time in 2022.

Fortunately, the feed prices have now softened somewhat. This is in response to large domestic maize and soybean harvests and the easing of global grain prices (irrespective of lingering worries about the Black Sea Grain Deal).

Therefore, opening beef export opportunities to the Kingdom of Saudi Arabia adds to this improving operational environment in the future.

Despite the foot-and-mouth disease challenge, South African beef exports did not collapse. Some markets remained open, although with strict controls. This is evident in South Africa’s beef exports for 2022, which amounted to 28 422 tonnes (albeit down 12% from 2021). This is only mildly below the ten-year average.

Overall, the broadening of South Africa’s beef export markets is a welcome development and shows the possibilities the country could achieve through collaboration and aligned interests between the government and private sector.

These efforts of opening key markets such as the Kingdom of Saudi Arabia should extend to other commodities, mainly fruits and wine, that are eager to expand the export markets while retaining the existing markets in the EU, the African continent, Asia and the Americas, amongst other regions. Addressing the daily challenges at the ports, roads, and municipalities is equally essential for the success of this export initiative.

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South Africa’s agricultural trade surplus rockets

South Africa’s agricultural trade surplus rockets

The collaboration between Transnet, organised business and agriculture sector stakeholders to improve efficiency at SA ports must go on. Efficient logistics are the lifeblood of SA agriculture and other exporting sectors of the economy.

Admittedly, the deciduous fruit industry faced many challenges at the Port of Cape Town at the start of 2024 related to delays that proved costly to farming businesses. Still, continuous collaboration to ensure improvements is the only viable path forward.

We are already seeing the benefits of the improvements in the agricultural sector through the rise in the value of exports. In the first quarter, agricultural exports increased 6% year on year, reaching $3.1bn according to Trade Map data, a result of both higher volumes and prices. The products leading the export list were grapes, apples and pears, maize, wine, apricots, sugar, wool, fruit juices, peaches and apricots.

From a regional perspective, Africa received the lion’s share of SA’s agricultural exports, accounting for 42%. The main export products were maize, cereal meals and pellets, sugar, prepared foods, apples and pears, fruit juices, wheat, ciders and other fermented beverages, and soya bean oil.

The EU regained its position as SA’s second-largest agricultural market, overtaking Asia, with a share of 22%. Grapes, apricots, peaches, cherries, plums, wine, apples and pears, dates, figs, avocados, guavas, mangos, wool and fruit juices were the primary products exported to the EU in the first quarter.

Asia and the Middle East as a collective were the third-largest agricultural markets for SA, accounting for 19% of exports. The main products were apples and pears, grapes, wool, sugar, beef, citrus, apricots, cherries and peaches, mutton and lamb, and soya beans.

The Americas region accounted for 6% of SA’s agricultural exports in the first quarter, manly grapes, wine, fruit juices, apples and pears, nuts, apricots and cherries. The rest of the world, including the UK, accounted for the remaining 10% of our exports.

Of course, SA doesn’t engage in one-way trade — the country imports various agricultural products. In the first quarter, these imports amounted to $1.6bn, down 4% year on year, according to data from Trade Map. The drop resulted from slightly lower volumes and prices of the major products SA imports, such as wheat and rice, whose prices cooled off at the start of this year from the rally we saw in 2023.

As in most years, SA’s major imports in the first quarter were wheat, rice, palm oil, poultry products and whiskies. SA lacks favourable climatic conditions to grow rice and palm oil, and thus relies on imports of these products. In the case of wheat, we import nearly half of our annual consumption because of unfavourable climatic conditions to expand domestic wheat production beyond the regions where we already cultivate winter wheat.

In the Free State, once one of the country’s major wheat-growing regions, production has declined notably over time because of unfavourable weather conditions and profitability challenges of wheat relative to other crops. SA also imports about 20% of the annual domestic consumption of poultry.

Accounting for both exports and the imports, SA’s agriculture recorded a trade surplus of $1,4bn in the first quarter, up 20% from the first quarter of 2023. The sharp rise resulted mainly from imports falling, while exports lifted slightly.

Policy considerations

The first-quarter export figures are encouraging, but the trend may not be sustained in subsequent quarters due to a decline in grain exports, a major part of SA exports in the first quarter and much of 2023. Grain and oilseed production suffered due to the midsummer drought, which resulted in major yield losses.

Beyond the quarterly activities, there are some policy considerations that would support agricultural exports:

  • SA should stay focused on improving the logistical infrastructure efficiency and on the export market expansion mission for the agricultural sector. There is a need for increased investment in port and rail infrastructure and improving roads in the farming towns that continue to constrain the sector’s growth.
  • We must work hard to retain existing markets in the EU, Africa, Asia, the Middle East and the Americas. Importantly, in an increasingly divided and fragile world SA must walk a careful path so that its foreign policy approach does not result in a negative trade policy response from its traditional trading partners. This is fundamental for the country’s agricultural growth, sustainability and job creation.
  • SA should expand market access to some of the key Brics+ countries, such as China, India and Saudi Arabia. Other strategic export markets for SA’s agricultural sector include South Korea, Japan, Vietnam, Taiwan, Mexico, the Philippines and Bangladesh. The private sector and the government share this ambition for export market expansion.
  • The departments of trade, industry & competition and agriculture, land reform & rural development should lead the way for export expansion in these agricultural strategic markets. The outcome of the 15th Brics conference in agriculture also focused on deepening trade within the Brics+ countries while retaining other markets outside this grouping. This was anchored on the emphasis for Brics members to lower import tariffs and address sanitary and phytosanitary barriers hindering deeper trade within this grouping.

Written for and first published on Business Day.

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South Africa’s agricultural trade surplus rockets

An excellent year for maize exports ends, a likely more challenging one begins

April marked the end of South Africa’s 2023/24 marketing year for maize. This marketing year corresponds with the 2022/23 production season, as the crop harvested mid-year in 2023 was marketed from then through to the end of April 2024.

According to data from the Crop Estimates Committee (CEC), the 2022/23 production season was characterized by an excellent harvest of 16,4 million tonnes. This was on the back of large plantings and the favourable summer rainfall that boosted the yields.

The ample harvest allowed South Africa to maintain its position in export markets. South Africa is the world’s ninth largest maize exporter, trailing the US, Brazil, Argentina, Ukraine, Romania, France, Paraguay and Poland. Data from the South African Grains Information Services shows that in the 2023/24 marketing year, the exports amounted to 3,4 million tonnes, down by 6% from the previous year. About 63% of the exported maize was yellow, with 37% being white maize.

In the past, South Korea, Japan and Taiwan were the leading markets for South Africa’s maize exporters. But in the 2023/24 marketing year, Zimbabwe took the lion’s share of the exports, accounting for 18% of the 3,4 million tonnes of exports.

The surge in exports to Zimbabwe comes after a few years of modest exports to the country because of decent domestic harvest and the restrictions on genetically modified maize, which the government often used as a barrier to imports in certain seasons. However, the regulations have changed, and Zimbabwe now imports genetically modified maize.

Other large maize export markets in the African continent are Botswana and Mozambique, which accounted for 9% and 6% of South Africa’s total maize exports, respectively. South Korea, Japan and Taiwan remained significant export markets for South African maize, accounting for 14%, 13% and 13% shares in the total exports, respectively. Another important maize export market for South Africa in the Asian region is Vietnam. Still, its exports were slightly lower than other countries, accounting for a 5% share in the overall export markets.

While the export season was a success, the coastal regions of South Africa started worrying about the maize supplies at the end of the 2023/24 marketing year, specifically pricing when considering the transport costs from central regions of the country that are main maize producers. Disappointingly, the excellent 2022/23 maize production season is followed by a less promising season.

In the 2023/24 production season (which corresponds with the 2024/25 marketing year), South Africa’s maize harvest is forecast to fall by 19% year-on-year to 13,3 million tonnes. This is according to data from the CEC. This decline in harvest is primarily due to unfavourable weather conditions in February and March, where dryness and heatwave caused widespread crop damage in various regions of South Africa.

Subsequently, the coastal areas in South Africa worry about tight supplies in the new marketing year. This led to 32 691 tonnes of yellow maize imports from Argentina in the last week of the 2023/24 marketing year. We suspect there will be additional imports in the 2024/25 marketing year, primarily for the country’s coastal regions. These imports will help increase supplies for the animal feed industry.

Notably, while South Africa expects a significantly lower harvest this year, the country could remain a net exporter of maize. With an annual maize consumption of approximately 12,0 million tonnes and a harvest of 13,3 million tonnes, South Africa will have over a million tonnes of maize for exports.

We also believe there are decent carryover stocks from the past season, which will help increase the maize supplies for the new marketing year of 2024/25. Still, there remains heightened uncertainty about the actual size of the maize crop this year. The forecast of 13,3 million tonnes is the third estimate by the CEC. In the coming months, the Committee could still adjust the figures depending on their observations of the yields in the various regions of South Africa.

Moreover, it remains unclear what the impact of the rains in early April, after two months of damaging dryness, mean for the crop size. Many observers, ourselves included, were surprised when the CEC mildly lifted their crop forecast on April 25. The market expectation was a possible downward revision of the crop.

Another challenge that lingers as we start the 2024/25 marketing year is Southern Africa’s maize demand. The major maize producers and consumers in the region, such as Zambia, Zimbabwe, and Malawi, all saw notable crop failures because of dryness at the start of this year. While the limited harvest from the fields could cover the next few months of domestic consumption in each country, these countries’ import needs could intensify at the end of the year and into 2025.

Aside from South Africa, the hope for these countries is that Mexico could export to the region. Still, this will depend on whether Mexico planted sufficient maize. Unlike in the past, South Africa will likely be unable to satisfy the needs of the regional maize. More information about the regional maize needs will be clearer in the coming months. The important thing for South African farmers and traders to do right now is to monitor regional maize developments closely.

In sum, May is the start of the 2024/25 marketing year for South African maize. Unlike the previous years of high export volumes, this new marketing year will likely see significantly lower export volumes. Still, the regional maize need should remain on the radar of the South African grain traders. Significantly, with all these maize trade difficulties, the South African government will thankfully not intervene in the maize markets.

The Department of Agriculture, Land Reform and Rural Development provided this assurance to market participants last month. The tight supply could cause price volatility in the coming months but this should not be a cause for deviations in the current agricultural policy.

What the government has urged, which is already a practice in South Africa, is a timely reporting of the export and import activities. Such data is critical for effective market functioning so that the participants know when the supplies are tight, and price adjustments could help moderate the export activities.

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BRICS+ offers an opportunity to lift South Africa’s agricultural exports

BRICS+ offers an opportunity to lift South Africa’s agricultural exports

Export opportunities for South Africa’s agricultural products are opening up within BRICS+ countries. Over the past two years, China, the Kingdom of Saudi Arabia, and Egypt have widened market access for various agricultural products from South Africa.

Admittedly, Egypt and the Kingdom of Saudi Arabia have recently joined the BRICS+ grouping, and market access is part of the long-term bilateral engagements with South Africa. South Africa has access to selected fruits, wine, wool, meat and grains.

However, South Africa aims to broaden market access to the majority of the agricultural products the country produces. For this reason, through the 2023 BRICS Summit in Johannesburg and the prior engagements, South Africa prioritized trade as a significant point on the agenda for discussion.

The political principals broadly agreed that deepening trade was necessary for the BRICS countries. Still, each country’s trade and agricultural authorities are responsible for taking the lead and seeking market access from member countries.

The idea of a BRICS agricultural trade agreement that some argued for has not yet been thoroughly ventilated. The priority so far was for each BRICS member to work to reduce import tariffs and address the phytosanitary constraints for various products that BRICS member countries would present.

Even before adding the new members, the original BRICS countries were already significant importers of agricultural products. Between 2019 and 2022, this group’s agricultural imports averaged US$255 billion annually, according to Trade Map data. China accounted for 71% of all the agricultural imports into the group, followed by India at 11%, Russia at 11%, Brazil at 4% and South Africa at 3%. Despite these sizeable agricultural import figures, the intra-BRICS agricultural trade remained relatively low.

The products these countries imported include soybeans, beef, maize, berries, wheat, palm oil, poultry meat, cotton, barley, dairy products, pork, apricots and peaches, sugar, wool, sunflower seed, nuts, sorghum, goat meat, wine, grapes, bananas, avocados, mangos, guavas, and fruit juices, among other products. South Africa produces some of these products in abundance and has surplus volumes for exports. Thus, the country championed a need to deepen trade in the 2023 BRICS Summit.

With BRICS adding new members to form a bigger BRICS+, the agricultural trade opportunities have increased. The Kingdom of Saudi Arabia and Egypt are some of the newest members. These two countries present enormous opportunities for widening South Africa’s agricultural exports. Egypt spends approximately US$16 billion a year importing agricultural products from the world market. These are mainly wheat, maize, soybeans, palm oil, beef, apples and pears, dairy, cotton, potatoes and tea, among other products. It is here that South African grain farmers, traders, and beef producers should focus on increasing exports.

Egypt even took the initiative of visiting South Africa at the start of this year in search of maize imports. The Department of Agriculture, Land Reform and Rural Development, and the South African Cereals and Oilseeds Traders Association were at the forefront of the engagements with Egypt for grain trade.

Similarly, the Kingdom of Saudi Arabia’s agriculture minister and senior leadership in agriculture visited South Africa earlier this year in search of grains and beef imports. The South African government authorities and industry also used the opportunity to showcase the various fruits South Africa could export to the Kingdom.

South Africa also raised the investment opportunities in the domestic business community that the Kingdom of Saudi Arabia could explore.

In the same view, China is steadily opening its markets for some South African agricultural products. With that said, there has been times where China has unfairly restricted South Africa’s wool exports. This issue has now been resolved and there is a unique protocol to handle wool exports even in times of animal disease outbreaks.

Russia is now the global chair of the agribusiness working group, having taken over from South Africa. Encouragingly, “deepening agricultural trade” amongst the BRICS+ community remains on the agenda for the year. During the year, the newly added members will also add their views on the working agenda of the agribusiness working group, which will later in the year be presented to the political leadership of the grouping.

Overall, while BRICS+ remains a political grouping with no formal trade structure, the bilateral agreements between BRICS+ countries for increasing trade are encouraging. South Africa will continue prioritizing the widening of agricultural exports in this grouping. Still, such efforts will not be at the expense of robust markets in Europe, Africa, the Americas, Asia, and the Middle East. South Africa’s agricultural sector still has room to grow, and trade is essential to the sector’s growth strategy.

Written for and first published on Business Day.

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

South Africa’s wool exports  increased by 11% in 2023

South Africa’s wool exports increased by 11% in 2023

We are finally seeing some signs of recovery after South Africa’s wool exports sharply declined in 2022. The temporary closure of the Chinese market in the second to third quarters of 2022 weighed on the industry’s exports and farmers’ finances.

China is a major buyer of South African wool and of wool globally. Over the past ten years, China accounted, on average,  for roughly 69% of South Africa’s annual wool exports in value terms. Thus, a temporary closure in 2022 was a major issue. China’s reason for this move was to protect their market from the Foot-and-Mouth Diseases spreading in the South African cattle industry.

But this was an oversight on the Chinese part. There is a unique protocol to handle the wool shipments and avoid contamination during a foot-and-mouth disease outbreak in South Africa. South Africa and China agreed on this protocol following the 2019 outbreak, which weighed on exports.

China temporarily suspended South Africa’s wool exports in the second quarter of 2022 and only opened the market in the last week of August 2022.

This resulted in a 21% year-on-year decline in the export value of wool in 2022, to US$255 million, according to data from Trade Map. Still, this is notable, accounting for 2% of South Africa’s record agricultural export value of US$12,8 billion in 2022.

Positively, 2023 was a recovery year. The wool exports lifted by 11% year-on-year to US$284 million. There was an improvement in both value and volumes. The Chinese market remained open, and the share of wool exported to China improved significantly. In 2023, wool accounted for 2% of South Africa’s new record agricultural exports of US$13,2 billion.

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

Why a South Africa-Middle East Agricultural Trade and Investment Strategy is Critical

Why a South Africa-Middle East Agricultural Trade and Investment Strategy is Critical

The Middle East is deepening its economic ties with Africa. This past weekend, The Economist magazine ran an article titled “The Gulf’s scramble for Africa is reshaping the continent“, which focused on growing geopolitical ties and significant investments in infrastructure projects such as ports in various African countries.

The leading countries are the United Arab Emirates (UAE), Saudi Arabia and Qatar. For countries like South Africa, with diverse interests worldwide, the Middle East’s growing interest in Africa requires proactive engagement, particularly for drawing in investments and opening up the market for exporting sectors of the economy.

Investment need

Agriculture is one sector that needs investment and a broadening of export markets. Consider the eastern regions of South Africa and the former homelands; these areas typically are on the periphery of agricultural progress because of poor land governance and weak infrastructure, which renders them effectively isolated from the formal value chains of the food, fibre, and beverage sectors. In some areas, the transaction costs of moving agricultural produce to the consumption points become too high because of the lack of roads, rail and storage facilities.

In the regions historically part of the commercial farming sector, the deteriorating network infrastructure is also increasingly a significant cost driver for businesses. These include roads, rail, water, dams, storage facilities and the on-farm infrastructure.

It is in these areas of South Africa’s agriculture, food, fibre and beverages value chain that one should ask whether it would be worthwhile to assess if the Middle-East countries that are in search of opportunities to invest would not, with the help of local stakeholders, form commercially viable business ventures that respond to the above challenges. Some investments would form part of joining with South African agribusinesses and farming enterprises that aim to expand their operations and require capital for such activities.

The significant funds in these Middle Eastern countries also have some form of government involvement. The South African government, particularly the Department of Trade, Industry and Competition (DTIC) and the Department of Agriculture, Land Reform and Rural Development (DALRRD), should lead the way in the formulation of a “Middle East-South Africa Agricultural Investment Strategy”.

Such a strategy would be helpful in formally starting a conversation with the Middle-East stakeholders and introducing South African firms and farming businesses.

South Africa is heading towards general elections in May, and the political leadership may have its eyes on the election, with perhaps limited time for such tedious but important activities. Still, the officials of the departments will remain regardless of potential changes in the political leadership.

This means the Directors General of the DTIC and DALRRD should consider starting such work and keeping their political leaders apprised of progress. Also, the current political leadership could start prioritizing such work even in the uncertain election climate, as this is a vital programme for the country regardless of the leadership.

Export drive

Beyond the investment need and the challenges South Africa’s agriculture faces, the country is export-oriented, with exports reaching a record US$13,2 billion in 2023, according to data from Trade Map. The Middle East region is increasingly important in the South African agricultural trade. For example, in 2023, Asia and the Middle East accounted for 28% of South Africa’s agricultural exports, the second largest region.

The African continent remains the leading market, accounting for 38% of South Africa’s agricultural exports in 2023 in value terms, while the EU comes in third at 19%, the Americas fourth at 6%, and the rest of the world at 9%.

South Africa primarily exports citrus, apples and pears, beef, fresh berries, grapes, and sheep and goat meat to the Middle East. These industries have a potential for growth in South Africa and, therefore, prospects of large volumes for exports to the Middle East.

Still, if one focuses on the key economies in the Middle East, South Africa plays a peripheral role in agricultural markets. For example, Saudi Arabia imported US$29,5 billion of agricultural products in 2022, according to data from Trade Map. South Africa was a minor exporter, accounting for a mere 1% of the Saudi Arabian imports, and ranked 31st in the agricultural importers list.

Similarly, the UAE imported US$23,3 billion of agricultural products in 2022, with South Africa capturing a mere 2% market share as the 16th largest supplier. Qatar, which imported US$3,9 billion of agricultural products in 2022, with South Africa playing a small role, ranked 10th in the list of suppliers and with a 2% market share in Qatar’s agricultural imports.

The countries that occupied a larger market share in these Middle Eastern countries were generally India, Brazil, Australia, the United States, Canada, New Zealand, United Kingdom, Denmark, Netherlands, Italy, Spain, Argentina, Russia, France, and Turkey. Regarding the products, the Middle East primarily imports various meat products, grains, oilseeds, and fruits, amongst other products.

This means South Africa would benefit from increasing its market share; something that is only possible through targeted promotion and marketing of products, along with government support to nudge the Middle Eastern countries to address any remaining phytosanitary barriers for South African products in these countries.

Policy consideration

While South Africa faces challenges of drought in the near term, the goal of growing the agricultural sector should remain a priority for all stakeholders. The following should be the next steps in engaging the region:

  • The DTIC and DALRRD should formulate a Middle-East-South Africa Agricultural Investment and Trade Strategy. This Strategy would help rank the priority list of products for investments and map up any barriers that should be addressed within the government’s official channels, with timelines. The document would also outline possible investment paths aligned with industries highlighted in the Agriculture and Agro-processing Master Plan, as well as the opportunities presented on PLAS land and in the former homelands, amongst other opportunities.
  • The DALRRD should appoint attachés in the Middle-East region who would communicate and lobby for South African agricultural products in the area.
  • The DITC should engage with International Relations officials to actively promote South Africa’s agriculture and agro-processing sector as an investment destination.
  • The private sector and organized agriculture should be involved in all the above stages.

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

South Africa’s agricultural exports hit record despite logistical bars

South Africa’s agricultural exports hit record despite logistical bars

Despite challenges at the ports and in various export markets, the SA agricultural sector has continued to realise excellent export activity. Total agricultural exports reached a new record of $13.2bn in 2023, up 3% from the previous year, according to data from Trade Map.

The products that dominated the export list were citrus, maize, apples, pears, nuts, wine, soya beans, sugar, wool, grapes, berries, avocados and fruit juices. This improved export activity was a function of better volumes and prices. Pricing developments over the year were significantly more varied than the average data suggests. While fruit prices rose, grains and oilseed prices declined notably from 2022 levels.

The exports were widely spread across various key markets. The African continent remained a leading market, accounting for 38% of SA’s agricultural exports in 2023 in value terms. Asia was the second-largest market, accounting for 28% of exports, followed by the EU at 19%. The Americas region was the fourth largest (6%). The remaining 9% went to the rest of the world. The UK was one of the leading markets within this category, accounting for 7% of total exports.

The products exported to these markets were essentially the same, with the African continent and Asia importing a somewhat larger volume of maize, soya beans, wool and beef. Exports to other regions were primarily fruits and wine.

These robust export earnings were achieved despite challenges in SA ports and electricity supply and in critical export markets. Some credit must go to organised agriculture groupings, the government, Transnet and logistical groups that have worked to smooth export flows.

The agricultural industry has established forums to continuously engage with Transnet and enhance communication about problems at the ports so that the response could be swift and drive exports of high-value and perishable products. Still, more work is needed as this success has come at a significant cost to producers and various stakeholders in the value chain.

Trade surplus

SA’s trade is not one way. The country is also a notable importer of various agricultural products. In 2023 agricultural imports amounted to $7bn, down 4% from the previous year, primarily due to a decline in commodity prices, while the volume of imported products remained essentially unchanged from the past year.

The top imported products were rice, palm oil, wheat, poultry and whisky. These products originated primarily from Asia, the EU, the UK and the Americas. Considering this import value against the export value of $13.2bn, agriculture realised a record trade surplus of $6.2bn.

While the recent export expansion is encouraging, SA should stay focused on improving infrastructure efficiency and its export market expansion mission for the agricultural sector.

Agricultural exports remarkably improved in a year featuring severe load-shedding and big logistical infrastructure constraints at ports. In the absence of these constraints, exports could perhaps have been far higher even than the current level.

There is a need for increased investment in port and rail infrastructure and better road infrastructure in the farming towns otherwise the sector’s growth will continue to be constrained. Any expansion of SA’s export markets will require better-performing logistical infrastructure.

The ambition of broadening the export markets is particularly important as various countries increasingly turn inward and raise various kinds of protectionism. Such protectionist tendencies are seen in the EU, and in Southern Africa in countries such as Botswana and Namibia.

This means there is a need to work hard to retain existing markets in the EU and Africa, Asia, the Middle East and the Americas, while simultaneously searching for new markets.

Written for and first appeared on the Business Day.

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

The Kingdom of Saudi Arabia is vital for expanding SA’s agricultural exports

The Kingdom of Saudi Arabia is vital for expanding SA’s agricultural exports

On February 26, we participated in South Africa-Saudia Arabia Agricultural Ministers engagements in Pretoria. The sessions focused on deepening trade, specifically in beef, sugar, and grains, and investment opportunities within South African agriculture and agro-processing sectors. These are areas the Saudi authorities and businesses wanted to explore.

Some of our members, like Beefmaster Group (Pty) Ltd, Sparta Beef, Red Meat Industry Services (and friends at KARAN BEEF, GRAIN SA/GRAAN SA and BERLIN BEEF) made valuable inputs to the meeting.

In further engagements, horticulture, a pillar of our agricultural trade, will be on the table for deepening trade.

The Kingdom of Saudi Arabia is a strategic agricultural export market, and it is fitting that South Africa explores agricultural trade and investment possibilities.

Over the past five years, Saudi Arabia imported, on average, about $20 billion of agricultural products. The dominant suppliers of farm products to Saudi Arabia are Brazil, India, the US, the United Arab Emirates, Germany, France, Turkey and Egypt.

The top imported agricultural products were meat and edible offal, rice, barley, milk and cream, cigars, cheese, live sheep and goats, sugar cane, maize, chocolate, citrus, palm oil, oilcake, bananas, tea, vegetables and fruit juices.

South Africa is a minor player in the Saudi Arabian agricultural market, accounting for less than 2% of all the imports. The essential exportable products to the Saudi kingdom were oranges, lemons, pears, grapes, mandarins, apples, plums, grapes and avocados.

Another product that has recently joined this list is beef, as South Africa now has established market access for exports to Saudi Arabia.

Notably, South Africa is generally a net exporter of some of the products mentioned above that Saudi Arabia imports from the world, albeit mainly concentrated in European, African and Asian markets. Therefore, the possibility of close cooperation and deepening of agricultural trade will benefit South Africa.

Again, this is not to minimize South Africa’s close relationship with the EU, the US, the African continent, or other regions. These current markets remain strategically crucial to South Africa’s agriculture.

South Africa is driven to expand its export markets, and today’s engagements align with this ambition. This is a view or ambition of the South African government and the private sector.

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

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