Saudi Arabia’s inclusion in BRICS+ bodes well for South Africa’s agricultural exports

Saudi Arabia’s inclusion in BRICS+ bodes well for South Africa’s agricultural exports

This past week, the Kingdom of Saudi Arabia was mentioned as one of the countries that are set to join the BRICS in January 2024. This is a major development and one that offers another avenue for diversifying the geographic destinations of South Africa’s agricultural exports.

There is no doubt that South Africa’s agriculture stands to benefit enormously from close cooperation with Saudi Arabia. As chair of the 15th BRICS Summit, South Africa championed the need to deepen trade and investments amongst the BRICS countries, a point that other members overwhelmingly supported. The agribusiness working group of the BRICS Business Council, in particular, raised the trade aspect and the need to resolve non-tariff barriers that would distort agricultural trade amongst BRICS countries.

Initially, South African agribusinesses had their eyes on China and India as countries with reasonably higher tariffs on some agricultural products and a range of non-tariff barriers. With the inclusion of Saudi Arabia in the BRICS, South Africa would now look at three significant markets to broaden agricultural exports. It is important for a country like South Africa to push for geographic diversification of trade, especially in the light of intensifying geoeconomics tensions and the growing protectionism in traditional markets.

The original BRICS countries are already an important agricultural market. According to data from Trade Map, they collectively import about US$320 billion of agricultural products from the world market in 2022. About 74% of the Group’s agricultural imports come from China, 12% from 12% from India, 8% from Russia, 4% from Brazil and 3% from South Africa.

The key agricultural products the BRICS grouping imports are soybeans, palm oil, beef, maize, berries, wheat, cotton, poultry, pork, apricots and peaches, sorghum, rice, and sugar. These are products that are produced at scale by some BRICS countries. Yet, intra-BRICS trade remains low because of tariffs and non-tariff barriers.

Saudi Arabia is a major agricultural importer. Over the past five years, Saudi Arabia imported, on average, $21bn of agricultural products. The dominant suppliers of farm products to Saudi Arabia are Brazil, India, the U.S., 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. An additional product likely to join this list in the coming months will be beef, as South Africa recently 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 through the BRICS+ forum from early 2024 will benefit South Africa.

Again, this is not to minimize South Africa’s close relationship with the E.U., the U.S., the African continent and other regions. These current markets remain strategically crucial to South Africa’s agriculture.

For example, South Africa exported a record US$ 12.8 billion agricultural products in 2022. The African continent was the leading market, accounting for 37% of South Africa’s agricultural exports in 2022. Asia was the second largest agricultural market, accounting for 27% of exports, followed by the E.U., the third largest market, accounting for 19%. The Americas region was the fourth largest, accounting for 7%, and the remaining 10% went to the rest of the world. The U.K. was one of the leading markets within the ‘rest of the world’ category.

So, crucial markets such as these cannot be overshadowed by the BRICS+ possibilities. The enthusiasm around BRICS+ is not at the expense of these key markets but an addition. South Africa is driven to expand and diversify its agricultural export markets. This is a view or ambition of the South African government and the private sector. Therefore, the possibility of accessing new markets serves this national ambition.


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

The re-opening of beef export markets is positive for South Africa

The re-opening of beef export markets is positive for South Africa

One positive development in SA agriculture in the past week was the reopening of the Chinese beef market and the firm establishment of beef access to the kingdom of Saudi Arabia.

The latter has not featured prominently in SA’s beef export markets in the past, with small volumes last exported in the early 2000s. The renewed access is critical to SA’s ambition to expand its beef exports, as the Saudi beef market is sizeable at more than $647m in 2021, according to Trade Map data.

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

Beyond beef, the overall Saudi meat market is large, with total meat imports valued at about $1.9bn a year on average over the past five years. This means as SA increases its production in other meat value chains over time, Saudi Arabia could become a strategic country for export growth.

China has an established trade relationship with SA. Over the past six years China has been the leading importer of SA frozen beef cuts in value terms. Therefore, the easing of import restrictions put in place after an outbreak of foot-and-mouth disease is a welcome development because it is likely to lead to an increase in exports.

These positive developments provide some relief while the SA beef industry has faced a challenging operational environment for several reasons. One of the most significant challenges is the rise in feed prices since 2020, especially for maize and soya beans. The rise in animal feed prices coincided with rising financial strain on consumers due to the Covid-19 pandemic’s damaging effects.

Demand for red meat products fell as consumers opted for relatively cheaper forms of protein. Moreover, the spread of foot-and-mouth disease to six of SA’s nine provinces for the first time yet was particularly challenging for the industry since it brought about temporary bans in specific export markets, extending to auctions and livestock movement, mainly cattle, for some time in 2022.

Feed prices have now softened somewhat, with maize and soya bean prices down 13% year on year on average. This is a response to large domestic maize and soya bean harvests and the easing of global grain prices (irrespective of lingering worries about the Black Sea grain deal). The resumption of exports to China and the opening of export opportunities to Saudi Arabia adds to this improved operational environment.

Despite the foot-and-mouth disease challenge, SA beef exports did not collapse. Some markets remained open, though with strict controls. This is evident in SA’s beef exports for 2022, which amounted to 28,422 tonnes, down 12% from 2021. This is only mildly below the 10-year average.

The key markets for SA’s beef include China, Lesotho, Kuwait, Jordan, Mozambique, United Arab Emirates, Qatar, the Netherlands, Lesotho, Canada, Zimbabwe, Mauritius and Eswatini.

Overall, the broadening of SA’s beef export markets is a welcome development and shows what the country could achieve through collaboration and aligning interests between the government and the private sector.

The type of effort that has led to the opening of key markets such as Saudi Arabia should be extended to other commodities, especially fruits and wine, in which producers are ready and eager to expand their export destinations while retaining existing markets in the EU, rest of Africa and within Asia and the Americas.

Organised agriculture, agribusinesses and the government share this ambition and should therefore continue to collaborate to find new growth opportunities.

Written for and first published on Business Day.


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

South Africa’s agricultural interests in BRICS are not at the expense of the existing key export markets

South Africa’s agricultural interests in BRICS are not at the expense of the existing key export markets

Folks, South Africa’s agricultural interests in the BRICS markets are not at the expense of the existing and vital export markets in the African continent, EU, Asia, Americas, Middle-East and others. These current markets are essential; thus, South Africa exported a record US$12,8 billion in agricultural products in 2022.

The African continent was the leading market, accounting for 37% of South Africa’s agricultural exports in 2022. Asia was the second largest agricultural market, accounting for 27% of exports, followed by the E.U., the third largest market, accounting for 19%. The Americas region was the fourth largest, accounting for 7%, and the remaining 10% went to the rest of the world. The U.K. was one of the leading markets within the ‘rest of the world’ category.

Maize, wine, grapes, citrus, berries, nuts, apples and pears, sugar, avocados, and wool were some of the top exportable products 2022.

In value terms, South Africa already exports roughly half of its annual agricultural produce annually. As we expect our production to increase in the coming years with additional land put into production, we will need other export markets. It is at this point that BRICS becomes essential.

As things stand, BRIC(S – excluding South Africa) countries account for a relatively small share of South Africa’s agricultural exports – an average of 8% over the past ten years in total agricultural exports of US$9,9 billion.

China is the leading market, accounting for an average of 5% of South Africa’s agricultural exports worldwide. The top products were wool, citrus, beef, nuts and grapes.

The second largest market within BRIC(S) was Russia, accounting for an average of 2%, with citrus, apples, pears, grapes and wine as some of the top products. At the same time, India and Brazil were negligible importers of South African agricultural products.

While the BRIC (with South Africa excluded in this calculation) countries imported an average of US$764 million of agricultural products from South Africa, a small share in the nearly US$10 billion South Africa exported over the past decade annually, the grouping – BRICS — imported an average of US$241 billion worth of agricultural products from the world market. This is according to data from Trade Map.

The US$764 million imported by BRIC from South Africa over the past ten years makes South Africa a small player in the agricultural trade of this grouping.

China is the largest importer accounting for 67% of the total BRIC agriculture import of US$196 billion, followed by Russia (16%), India (12%), and Brazil (5%).

These realities imply that within the agribusiness stream of the BRICS Business Council and the broader political grouping, the South African representatives should continue to advocate for lowering import tariffs for agricultural products, specifically within India and China.

At the same time, the business community will have to actively promote the “proudly South African” agriculture (and broadly food, fibre and beverages) products within the bloc.

So, when one calls for increased focus on the BRICS, this is not at the exclusion of other existing and important agricultural export markets for South Africa.

Policy considerations

Beyond the BRICS matters, I must stress that South Africa’s agriculture is export-orientated. Thus, the focus should be on maintaining smooth relations with these critical export markets while searching for additional new markets.

The priority countries for expanding agricultural exports should be China, South Korea, Japan, the USA, Vietnam, Taiwan, India, Saudi Arabia, Mexico, the Philippines and Bangladesh. All have sizeable populations and large imports of agricultural products.

The Department of Trade, Industry and Competition, along with the Department of Agriculture, Land Reform and Rural Development, all share the view of widening the export markets for South Africa’s agriculture. This should be at the top of the policy agenda, with many domestic production-oriented interventions for the sector.


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

South Africa’s agricultural exports may soften this year from the record US$12,8bn in 2022

South Africa’s agricultural exports may soften this year from the record US$12,8bn in 2022

South Africa’s agricultural export earnings will likely soften this year from the 2022 record. The lower commodity prices, ongoing restrictions to exports of some livestock products because of the foot-and-mouth disease and the stringent regulations of the citrus black spot disease in the EU market are among some of the factors likely to result in lower export earnings.

While SA’s agricultural exports have remained relatively solid in the first few months of the year, we are expecting the effects of these challenges to be more evident in the second half. South Africa’s agricultural exports for the first five months of this year were still robust, amounting to US$5,06bn, roughly unchanged from the corresponding period in 2022.

The export destinations remained the same as the previous years, with the African continent as a leading market, followed by the EU as well as selected Asian and Middle-East markets. Outside these regions, the US was also a prominent export market.

With the citrus industry and nuts benefiting from AGOA in the US market, its continuation is vital for these industries. In terms of products, citrus, maize, apples and pears, soybeans, wine, wool, sugar, flour meals, fruit juices, and various nuts were the leading products in the exports.

The citrus challenges in the EU are not new. In the 2022 export season, South Africa experienced another challenge in that market, where the EU proposed changes to its plant safety regulations for citrus without notifying its trading partners within a reasonable time.

These changes purported to protect the EU from a quarantine organism, the false codling moth, by introducing stringent new cold treatment requirements, particularly on citrus imports from Africa, mainly impacting South Africa, Zimbabwe and the Kingdom of Eswatini.

But South Africa had already put rigorous measures to control false codling moth. As such, we viewed this as a measure to protect the EU’s citrus-growing countries like Spain. The engagements on this issue between South Africa and the EU are ongoing, and the citrus black spot disease issue adds to this challenging environment.

The appropriate channel for resolving the matter is through the continuous engagement of the South African government with the EU authorities. From a South African perspective, the EU is a crucial export market for the citrus industry. A speedy resolution of these matters and clarity for long-term rules is so important beyond the near-term dissatisfactions on both sides.

Regarding foot-and-mouth, the livestock industry continues to struggle with the tail-end challenges of last year’s outbreaks. As we stated in a previous note, the South African government, along with organized agriculture and industry bodies, should closely work together to address biosecurity challenges in the country.

Notably, the government must assist at such times to ensure the sustainability of farming businesses and jobs in rural South Africa. Fortunately, this year, the wool exports have not been interrupted as was the case in 2022 when China temporarily banned wool from South Africa because of fears of foot-and-mouth disease. Hence, wool was amongst South Africa’s top ten agricultural export products in the first five months of this year.

Beyond these industry challenges, another constant matter worth continuous engagement is the effectiveness of the ports. This year is arguably better than last year regarding delays the agricultural sector faces.

The ongoing engagements between Transnet and the industry help ensure effective communication and that glitches in logistics are resolved quickly. Still,  more work is needed to improve the logistics and, by extension, lower the cost of exporting.

There is no alternative for South Africa’s agriculture, as the sector is export-oriented, and therefore efficient logistics are necessary for the sustainability of farming businesses.

South Africa’s agricultural sector will remain a net exporter in 2023. But the value may not be as robust as in 2022 when the sector reached a record US$12,8bn. At the time, the increase in the volume and value of exports was the key driver.

This stemmed from a good agricultural season and higher global prices. We have yet another good agricultural season this year, but commodity prices have, on average, declined by roughly 11% from a year ago. Moreover, the biosecurity challenges and ongoing constraints in key fruit export markets such as the EU remain a constant worry.


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

Some brief comments on the ongoing grain export issues in the Black Sea region

Some brief comments on the ongoing grain export issues in the Black Sea region

Ok, folks, the news on Reuters this morning is that the Kremlin is halting the Black Sea grain deal, brokered by the United Nations and Turkey to combat a global food crisis.

Now, one has to appreciate that the major contributor to the slowing global agricultural commodities prices (food prices) is the Black Sea Grain Deal, which allowed for a safe grain movement from Ukraine and Russia since July 2022.

Russia’s refusal to renew the Black Sea Grain Deal presents an upside risk to global grain prices, which may undermine the gains we were all starting to enjoy from the slowing grain prices, specifically in the major importing regions.

While the majority of grain from the Black Sea was primarily exported to Europe, the Middle East, and North Africa, the availability of grain and the decline in prices indirectly benefited the global community.

Regarding my home country, South Africa, we are not directly at risk as we have large domestic grain supplies. With that said, we still import about 1,5 million tonnes of wheat annually, but most of this for the 2022/23 season is already on our shores.

Still, the price reaction to the news of Russia’s refusal is worth monitoring and could impact South African consumers. But the extent of that will depend on how global grain markets react to this current glitch caused by Russia.


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

South Africa’s agricultural interests in BRICS are not at the expense of the existing key export markets

South Africa’s agricultural trade surplus up 9% y/y in the first quarter of 2023

South Africa’s agricultural sector had a rough start to the year regarding production and exports. The excessive rains brought production challenges that delayed the summer crop planting activity by roughly a month but later improved.

Regarding exports, the slowing agricultural commodity prices reduced profitability from the levels farmers enjoyed a year ago, specifically grains and oilseeds. Moreover, some logistical challenges persisted in Cape Town port and thus negatively affecting the table grapes and various horticultural products exports.

Still, this was not as harsh as in the previous years. The cooperation between organized agriculture groups and Transnet has helped improve agricultural export efficiencies somewhat. With that said, there is still room for improvement, which is essential for all the ports as South Africa has an export-oriented agricultural sector.

Against this backdrop, South Africa’s agricultural exports fell by 2% y/y in the first quarter of 2023 to US$2,9 billion. However, when viewed quarterly, the exports are up 5% from the last quarter of 2022. The top exportable products were grapes, maize, apples and pears, wine, wool, apricots and peaches, sugar, fruit juices, and soybeans, amongst other products.

We expect some of these products to continue dominating the export list, with the additions being citrus, where harvest and export activity is underway. While the start of the year was rough with excessive rains, improving weather conditions from the end of January supported agricultural activity.

South Africa has one of the best agricultural seasons from a production perspective. For example, the 2022/23 maize harvest could reach 16,4 million tonnes, 6% higher than the 2021/22 season’s harvest and the second-largest harvest on record. In addition, the soybeans harvest is estimated at a record 2,8 million tonnes. South Africa’s sugar cane crop will likely increase by 3% to 18,5 million tonnes in 2023/24. Other field crops and fruits also show prospects for decent harvest this season, which supports better employment prospects in the sector.

The one area that continues to worry us is citrus export out of the Western Cape, following the infrastructure damage in Citrusdal because of heavy rains in June 2023. The destruction of the bridge slowed the citrus exports from the region. The impact of this will likely show in the second and third-quarter export data.

Also worth noting is that the impact of load-shedding may continue to influence production conditions as all of South Africa’s fruits and vegetables are under irrigation, and roughly a third of field crops are produced under irrigation.

Still, the various interventions to ease the load-shedding burden on farmers, such as load curtailment, expansion of the diesel rebate to the food value chain, and, most recently, the launch of the Agro-Energy Fund, all support the production conditions. Hence, the production figures we highlight above are robust. With that said, the effectiveness of these energy support measures differs across farming enterprises and food companies, and the costs to food producers, mainly those not fully benefiting from the above efforts, remain high because of all the necessary mitigation measures.

Notably, the rainy season also helped ease the pressure to irrigate crops. As we transition to a potentially drier El Niño season in the 2023/24 production season, the need for irrigation may intensify, which will require a reliable energy supply.

From a destination point of view, the African continent remained the largest market for South Africa’s agricultural exports in the first quarter of this year, accounting for 39% in value terms. The European Union was South Africa’s second-largest market, accounting for 23% of all agricultural exports. Asia and the Middle East combined accounted for 21%.

The Americas region accounted for 8% of South Africa’s agricultural exports. The United Kingdom is one of the most important agricultural markets for South Africa and accounted for 7% of overall exports in the first quarter. The balance of 2% value constitutes other regions of the world.

South Africa’s trade approach is not one-sided, perusing only exports. The country imports a significant amount of agricultural products. And thus, in the first quarter of 2023, South Africa’s agricultural imports amounted to US$1,7 billion, down 9% y/y (but up 4% quarter-on-quarter). The imported products are primarily wheat, rice, palm oil, sunflower, and poultry.

Because of unfavourable climatic conditions, rice and palm oil cannot be sustainably produced in South Africa. The annual decline in the import bill is mainly because of the relatively lower agricultural commodity prices compared to a year ago. We believe rice, wheat, and palm oil will continue leading the annual agricultural import product list.

Ultimately, South Africa recorded an agricultural trade surplus of US$1,20 billion in the first quarter of 2023, up 9% from last year’s corresponding period. The widening trade surplus is mainly a result of a notable decline in import value, not necessarily a growth in exports, as the figures above illustrate.

From a policy perspective, from now on, the focus should be on improving logistics efficiency (roads, rail and ports) and intensifying the promotion of South African agriculture, food, fibre and beverages to export markets. South Africa is an export-oriented sector, where roughly half of the produce, in value terms, is exported.

Therefore, an industry and government approach to promoting South African products in export markets is key. The agriculture and agribusiness role players have identified the countries where the government should prioritize this sector’s export expansion.

These are China, South Korea, Japan, the USA, Vietnam, Taiwan, India, Saudi Arabia, Mexico, the Philippines and Bangladesh.

These efforts should be well-sequenced and complement the ongoing attempts to boost domestic production through various interventions outlined in the Agriculture and Agro-processing Master Plan.


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

Pushing farm exports to Brics partners tops SA agenda

Pushing farm exports to Brics partners tops SA agenda

The business council of the Brics group gathered virtually in May to discuss priorities for the year, in preparation for the summit in August. The business council works collaboratively with the political heads and primarily focuses on commercial opportunities.

South Africa, the Brics chair this year, led the meeting and proposed the areas of focus. Within the agribusiness working group, which I chair, there are five priority areas:

Best practices on agriculture sustainable development. All the Brics members are major agricultural countries and agricultural production faces significant challenges in tackling climate change. This workstream is crucial and will build on the work already started by the China chapter in 2022.

Improve fertiliser availability in Brics countries and the broader African continent. This theme will explore ways of boosting fertiliser production and trade among Brics countries.

The drive towards smart climate agriculture and new farming methods, such as the EU’s green deal, requires new ways of production and investments in global agriculture. This requires innovative ways of financing. Given that some Brics members are more advanced in their agricultural sectors than others, information sharing is critical. This could be through virtual seminars and reports.

Trade and investment — although the Brics countries are primarily agricultural powerhouses, there is room to improve trade, with a focus on market access issues.

Academic interactions for private sector benefit — the working group will explore the academic programmes to align research and collaboration between academic and private-sector roleplayers.

These focal points were adopted by the global business council chapters and will inform the main programme of work of the agriculture and agribusiness sectors. The expected outcome or delivery model in each of the priority areas will include business facilitation, seminars and research papers.

Importantly, Brics is a political grouping, not a free-trade agreement; therefore, limitations in facilitating trade will remain, although the group offers the opportunity to highlight the barriers that each country experiences. South African agricultural roleplayers will be represented in these discussions.

Of these priority areas, the most urgent for South Africa are trade and investment, as well as the improvement of fertiliser availability. On trade, the main interest for South Africa is advancing agricultural exports, specifically to China and India. These countries have relatively solid economic growth prospects and large populations (and therefore markets). Brazil tends to be a competitor with South Africa in major agricultural commodities, while Russia is an important market for South African fruit and in turn, a major supplier of wheat. Still, since the Russia-Ukraine conflict, advancing commerce with the country is generally risky.

Brics countries account for a relatively small share of South Africa’s agricultural exports — an average of 8% over the past 10 years in total annual agricultural exports of $9.9bn (about R187bn). These calculations are based on data from Trade Map. China is the leading market, accounting for an average of 5% of South Africa’s farm exports. The top products were wool, citrus, beef, nuts and grapes. The second largest market within Brics was Russia, accounting for an average of 2%, with citrus, apples, pears, grapes and wine as some of the top products; while India and Brazil were negligible importers of South African agricultural products.

While the other Brics members imported an average of $764m annually in agricultural products from South Africa over the past decade, their total average annual farm imports were worth $196bn. This data excludes South Africa, to provide a view of the size of the agricultural market that South Africa is part of within Brics. South Africa a small player.  China is the largest importer, accounting for 67% of total Brics agriculture imports, followed by Russia (16%), India (12%) and Brazil (5%).

These realities imply that within the agribusiness stream of the Brics business council and the broader political grouping, South African representatives should continue to press for lower import tariffs for agricultural products, specifically in India and China. At the same time, the business community will have to promote “proudly South African” agriculture (and broadly food, fibre and beverages) products within the bloc.

Overall, there is progress within Brics in identifying critical areas of focus, which the five business council chapters have now adopted. The next step will be to drill down on the delivery methods in these focal areas and ensure that each partner country benefits. The coming months will be seized with work on these issues, ahead of the meetings in August, where the business council will submit its recommendations to the heads of state.

  • Wandile Sihlobo, the chief economist of the Agricultural Business Chamber of South Africa, writes in his capacity as the chair of the Brics business council agribusiness working group

Written for and first appeared in the Sunday Times.


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

South Africa’s economic choice between Washington and Moscow is clear

South Africa’s economic choice between Washington and Moscow is clear

Geopolitical risks are back on the SA agricultural agenda. Over the past year the country has felt the effects of Russia’s invasion of Ukraine indirectly through the disruption caused to various commodity supply chains and the consequent surge in prices. This was especially so with grains, vegetable oils, fertiliser, liquid fuels and natural gas.

Now the US accusation that SA supplied military equipment to Russia has raised diplomatic tensions between the two countries, leaving much uncertainty over future political and trade relations.

The matter is likely to be ventilated through diplomatic channels over the coming days and weeks, and it remains unclear where things will settle. But while this unfolds it is worth looking at our economic ties with the rest of the world.

SA benefits far more from trade with the US than with Russia. Therefore, from a purely economic standpoint the obvious approach in an increasingly uncertain world is to nurture relationships with countries with which the country already has strong economic ties.

The US was SA’s second-largest export market in 2022, accounting for 9% of the total, according to data from Trade Map. China was the leading export market, accounting for 10% of our exports. Other important markets include Germany, Japan, the UK, the Netherlands, Mozambique, India, Botswana, Belgium, Namibia and Zimbabwe.

Russia is one of the least important export markets for SA’s exports, accounting for a mere 0.2% in 2022. Over the past five years SA’s total exports to Russia averaged 0.4% of the total per annum.

Economic interests

In the current environment of global geopolitical uncertainty SA should ideally be seeking to deepen relationships with countries that serve the country’s economic interests and, by extension, support domestic employment. Tensions with the US present significant economic red flags for SA.

The first risk is that of negative sentiment rising among critical trading partners against a country allegedly arming an invader, and the loss of credibility regarding SA’s claim to be nonaligned in the Russia-Ukraine conflict.

There are already anecdotal stories about companies delaying investments in SA over fear of rising geopolitical tension and SA’s position on the war. The country’s political leadership should be building on the work of the president’s annual investment conferences in attracting foreign direct investment to drive manufacturing and other sectors and job creation.

Trade is critical from an agricultural perspective. SA exports about half of its agricultural production in value terms, totalling a record $12.8bn in 2022. Maize, wine, grapes, citrus, berries, nuts, apples and pears, sugar, avocados and wool were some of the top exported products last year. Russia is a small market for these, accounting for just 2% of SA’s agricultural exports over the past five years.

The African continent remains an important market for SA produce, accounting for 37% of our agricultural exports in 2022. Asia was the second-largest at 27% of exports, followed by the EU at 19% and the Americas in fourth place, accounting for 7%.

Within the Americas the US is an important agricultural trading partner, accounting for an average of 4% of SA’s annual agricultural exports over the past five years. Fruits, nuts, processed vegetables, wine, dairy products, industrial alcohol, and fruit and vegetable juices are some of the agricultural products SA exports to the US. These products benefit from duty-free access to the US under the African Growth & Opportunity Act (Agoa).

SA is a small, open economy that is highly integrated with the global economy through numerous complex channels. This means the political leadership should primarily position the country in an attractive way for investment, and to gain market access to the world’s fastest-growing economies.

Written for an first appeared on Business Day.


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

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