South Africa’s agricultural exports are vulnerable because of reliance on a few markets and weaknesses in domestic logistics chains.
PODCAST: SA agricultural exports lifted by 5% y/y in the second half of 2022, reaching US$3,4 billion
Trade is at the core of SA’s agricultural progress. But the past few months brought challenges in key markets such as China and the EU, threatening SA’s export activity. Fortunately, some of these challenges have now been resolved, and SA could see continuous exports, specifically to China.
Co-operation between the South African government and farmers over the wool ban is a template for other issues
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.
SA’s agricultural export activity is likely to soften this year from the 2021 record of $12.4bn. Lower production of key crops, the spread of animal disease and changes in phytosanitary regulations in key markets such as the EU will all weigh on export activity this year.
If Russia keeps to the deal it has signed with Ukraine allowing for the resumption of grain exports, much-needed relief will be provided to importing countries, including many in Africa.
Russia agreed not to attack Ukrainian grain vessels, which could restore the grain trade in the Black Sea region. The deal was a multinational effort to avert the global food crisis and will likely contribute positively to grain supplies. The immediate benefit should be through softening of grain prices, although possibly marginal.
The obstacles faced by the SA wool and citrus industries illustrate growing protectionism across the world and a strong need for the SA government to actively assist in preserving these export routes. The threats to agribusinesses are severe, in a country that has flagged agriculture as a critical industry for economic growth and job creation.
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.