by Wandile Sihlobo | Jan 7, 2025 | Agricultural Trade
Few things are as important in South Africa’s agriculture as working to expand export markets. We have a sector that has more than doubled since 1994. In addition to improving farm productivity, export growth is one of the key growth catalysts in South Africa’s agriculture.
South Africa is the world’s 32nd largest agricultural exporter and the only African country within the world’s top 40 largest agricultural exporters in value terms. This was made possible by a range of trading agreements the South African government secured over the past decades, the most important being with the African continent, Europe, the Americas, and some Asian countries. The agricultural subsectors that have benefited the most from the rise in exports are horticulture (and wine) and grains.
Many of these markets were opened when the world was focused on “globalization” in the early 2000s. The conversation has now changed, and “fragmentation” is the day’s topic. We see this through frequent non-tariff trade barriers in places such as the EU in the case of citrus and even occasional trade friction in Southern Africa. Botswana and Namibia have often banned imports of vegetables from South Africa. However, the region is correcting these policy mistakes, and Botswana is gradually lifting the bans.
However, the central focus of South Africa is not only on maintaining the existing markets but also on the one promising area we must explore, which is the BRICS.
Indeed, many people are correct in asking me: What is the benefit of the BRICS for agriculture?
The agricultural benefits of the BRICS countries to South Africa remain minimal. The member countries’ high import tariffs and some non-tariff barriers (phytosanitary barriers) distort trade, which is understandable as we are not a trade bloc.
But the grouping is now expanding. Indonesia has formally joined the BRICS. The expansion of this group presents opportunities for South Africa’s agriculture. Indeed, the agricultural benefit of BRICS countries remains minimal.
But as the grouping matures and expands, it is opportune that, amongst many things, we form an agricultural trade agreement or move with speed in supporting intra-agricultural BRICS trade by lowering import tariffs and addressing the phytosanitary barriers that we face in this group. This was South Africa’s central agricultural message during the Summit in Russia 2024 and Johannesburg in 2023. Brazil is also one of the countries that shares South Africa’s enthusiasm for trade. I hope they continue to push this message this year and that they will have our support.
Importantly, we should not get too excited and forget that the EU, Africa, the broader Asia and Middle-East and the Americas remain valuable trading partners for our agricultural sector.
Our focus on BRICS agricultural trade possibilities is not to replace them but to diversify the export markets. Other strategic export markets for South Africa’s agricultural sector include South Korea, Japan, Vietnam, Taiwan, Mexico, the Philippines, and Bangladesh. We must also pursue these markets and expand South Africa’s agricultural export markets.
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by Wandile Sihlobo | Jan 6, 2025 | Agricultural Trade
About a year ago, European farmers were on the streets in various regions protesting against government policies. The core challenges were the EU’s declining agricultural subsidies, the stringent environmental policy to reduce chemicals and fertiliser use, and the need for protection against imports.
The protests only eased when the European Commission, the EU’s executive arm, announced it would delay implementing environmental policies involving reducing pesticides and other farm inputs.
On the environmental issue, it was easy to sympathise with farmers. A drastic reduction in agrochemicals and fertilisers is not ideal, as that would negatively affect harvest quality and output. Hence, a reasonable transition under the framework of a moderate approach with feasible timelines, which EU farmers advocated for, was reasonable.
I also paid attention to this matter because the EU would apply the same rules to the exporting countries to the region. Therefore, the delay in its implementation also offered a breathing space to exporters such as those in my home country, South Africa.
As we started to forget this episode and start the new year focusing on the US trade policy and other issues, the French farmers began another conversation. They are out on the streets protesting again.
But this time, the emphasis is not on environmental issues but on trade policies. The French farmers are unhappy about the EU-South America trade agreement, the EU-Mercosur trade deal. The deal will remove tariffs on around 90% of trade in goods between the two sides, primarily over a period of roughly 12 years. Agricultural exports from Mercosur will be subject to gradually rising quotas.
The French farmers say this is unfair competition, and the EU authorities do not understand the ” level of misery and distress that farmers are going through at the moment”.
This line of argument of farmers has found sympathetic voices in some corners. Writing in The Spectator, a weekly British magazine, on January 6, 2025, James Tidmarsh stated that:
“the French press will dance around the elephant in the room, but the farmers know the truth. This is about Brussels, not Paris. The policies strangling French agriculture – crippling environmental regulations, predatory trade deals, and dwindling subsidies – are made in the European Union’s corridors of power. France, despite its posturing as Europe’s leader, doesn’t have the weight to shape Brussels’s decisions. For French farmers, it’s become painfully clear: their government isn’t calling the shots. The real power lies with Ursula von der Leyen and her ideological crusade for a greener, more globalised Europe.”
That is quite something from Tidmarsh! And I don’t like his tone on trade issues.
Anyways, why am I writing about this issue?
I am presenting it because the EU is an important trading partner for South Africa’s agriculture. According to data from Trade Map, the region is the second-most important market for South Africa’s agricultural products, accounting for 27% of the country’s total agricultural exports. Therefore, the unfavourable trade conversation in that region is relevant to us.
The South African agricultural sector has faced various protectionist tendencies in the EU market, particularly in citrus. For example, the EU recently used non-tariff barriers by alleging a “False codling moth“, a citrus pest, in South Africa and requiring citrus products to be kept at certain temperatures before accessing the EU market.
This happens while South Africa has already treated the products to eliminate the chances of such pest occurrence. This was a subtle form of protecting Spanish farmers, who are also major citrus producers within the EU market.
With an outright view from farmer groupings in the EU that they face unfair competition in the global agricultural market, we worry that using various non-tariff barriers may be common.
Policy considerations
Given farmers’ rising discontent and protectionism worldwide, South African agribusinesses and the government should work to diversify agriculture’s export markets. Some key growing markets with larger populations are within the BRICS, such as China, India, and Saudi Arabia.
Still, South Africa must look broadly and deepen its agricultural trade with South Korea, Japan, the USA, Vietnam, Taiwan, India, Saudi Arabia, Mexico, the Philippines, and Bangladesh.
This export expansion should occur while South Africa works to maintain its access to critical markets in the EU, Africa, and various Asian and American countries.
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by Wandile Sihlobo | Jan 4, 2025 | Agricultural Trade
Higher white maize prices in South Africa may be a reality in the first quarter of 2025. Relief may start in the second quarter of the year. On January 3, 2025, South Africa’s white maize spot price traded around R6 871 per tonne, up over 50% from the previous year.
The fundamental challenge we face is that white maize stocks are tight. If we continue using about 428 667 tonnes of white maize monthly, the 2024-25 marketing year may end with closing stocks of just 277 884 tonnes by April 30, 2025.
To understand how tight such closing stocks are, consider the 2023-24 marketing year: the white maize closing stocks were 1.3 million tonnes, and in the 2022-23 marketing year, they were 1.1 million tonnes.
The tighter stocks also imply that South Africa must have early deliveries for the 2025-26 marketing year (which corresponds with the 2024-25 production year) starting May 1, 2025. Such early deliveries would ease some market participants’ concerns about the supplies.
But how did we get here?
The past 2023-24 maize production season (corresponding with the 2024-25 marketing year) was challenging following a mid-summer drought between February and March. The drought resulted in a poor maize harvest across the Southern African region.
Zambia lost half of its maize crop, Zimbabwe lost nearly two-thirds of its maize, and other countries, such as Malawi and Lesotho, also experienced significant maize losses.
South Africa was a slight exception because the impact was less severe than the region. The higher fertilizer usage and improved biotech seed cultivars we use, amongst other things, helped a bit. South Africa’s maize harvest fell by 23% to 12,7 million tonnes. About 6,0 million tonnes is white maize, and 6,7 million tonnes is yellow maize. The overall maize harvest of 12,7 million tonnes is slightly above the annual consumption of 11,7 million tonnes.
The maize harvest (12.7 million tonnes) in the 2023-24 production season, combined with the large carryover stock from the last season (about 2.4 million tonnes), placed South Africa in a relatively comfortable position regarding maize supplies—at least for a moment.
Of the previous season’s 2.4 million tonnes of carryover stock, about 1.3 million tonnes were white maize, and 1.1 million tonnes were yellow maize.
Combining the white maize carryover stock with the white maize harvest for the season meant South Africa had just over 7,0 million tonnes of white maize supplies in the 2024-25 marketing year. With the local white maize demand set to decline to about 5,2 million tonnes, I viewed South Africa as better placed to continue to export to the neighbouring countries. There are few white maize producers in the world. The major producers are South Africa and Mexico. With Mexico facing supply shortages due to unfavourable weather conditions, South Africa was left uniquely responsible for serving the Southern Africa region.
South Africa had sufficient supplies for domestic consumption and exports to the region and continued to export. For example, in the week of December 6, 2024, South Africa exported about 1.4 million tonnes of maize. About 65% of this is white maize, and the remainder is yellow maize. The overall maize export forecast for the season is 1.9 million tonnes (down from 3.4 million tonnes in the 2023-24 marketing year because of the mid-summer drought).
Zimbabwe has been one of the primary beneficiaries, accounting for 55% (788k tonnes) of the 1.4 million tonnes exported in the 2024-25 marketing year. The rest is distributed among Southern African countries, and a small volume is sent to Saudi Arabia.
Moreover, while South Africa will likely remain the net exporter of maize in the 2024-25 marketing year, the coastal regions will import small volumes of yellow maize for animal feed because of price advantage. We have recently seen the imports of yellow maize from Argentina and Brazil through Cape Town. South Africa’s 2024-25 maize imports currently stand at 353k tonnes.
The 2024-25 marketing year started on May 1 2024, and will end by April 2025.
What now?
We all knew the 2024-25 market year had heightened uncertainty in the South African maize market. We cannot close the exports. Any policy that suggests such a move would put the Southern African countries that depend on South Africa at immense risk. Such a policy would also reduce South African farmers’ incentive to plant more in the following seasons. Remember – the cure for higher prices is higher prices.
My policy suggestion to government leadership in 2024 was that we must do nothing for the reasons I have explained above and more I wrote here.
I also hoped that the 2024-25 production season (which corresponds with the 2025-26 marketing year) would start early, and we would benefit from the early deliveries. Indeed, farmers were upbeat about the start of the season. South African farmers intend to plant white maize on 1.58 million hectares (up 1% year over year) and yellow maize on 1.06 million hectares (down 2% year over year).
Overall, maize planting intentions are at 2.64 million hectares (up 0.2% year over year), which aligns with the five-year average area. I was at ease, given that we are in the La Niña period, which typically brings above-normal rainfall to Southern Africa.
What changed?
What worries me now is that the rains may have arrived late in some areas and sporadic in some regions. This presents doubt about the size of the early maize producer deliveries. Still, these are anecdotal observations, and we have yet to have a better view of the area planted and the extent of delayed plantings.
However, this uncertainty causes me to believe that white maize prices may be elevated for much of the first quarter (even for a few months until we know the size of the potential harvest) and possibly moderate towards the start of the second quarter, when we get the new season harvest.
Another upside risk is the production conditions in Zambia, Zimbabwe, Malawi and other countries in the region. We have yet to have a clearer view of crop conditions, but there are regions to watch closely.
Consumer perspective
From a consumer perspective, grain-related food product prices will rise in the first part of the year. Of course, there will be delays of between three and four months before we see the farm-level prices translate to the retail level. But there should be moderation as the year progresses.
Substitutes such as rice, wheaten products, and potatoes are also available to ease the pressures on households, and these prices have moderated notably in recent months.
Policy recommendation
From a policy perspective, we have limited choices. I remain convinced that we must maintain the current policy path and allow exports.
However, market participants and traders must report trading activity promptly and clearly through SAGIS and other platforms so the market can adjust for grain movements through price.
Any other intervention, such as temporarily limiting exports, would have undesirable long-term consequences. I understand the challenge, but South African households will have to deal with some pain in the near term until we get the new season crop in the market.
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by Wandile Sihlobo | Dec 19, 2024 | Agricultural Trade
I should be resting by now, but I noticed that the vegetable issues continue in Botswana. So, here I am, blogging again!
The farmers in Botswana are meeting with the country’s Minister of Agriculture regarding easing the ban on vegetable imports from South Africa. I hope the discussions will focus more on how Botswana could improve its domestic production by leveraging technologies from South Africa. We need regional collaboration more. The restrictive trade policies are not in the spirit of SACU and regional agricultural growth.
There are already some cases of effective collaboration in which various countries in the region benefit from South Africa’s agricultural technologies. A case in point is the citrus industry, where research is primarily done in South Africa and shared with the Citrus Growers Association of Southern Africa members. Similarly, South Africa imports some vaccines from Botswana for the livestock industry. We could build on such collaboration and avoid using trade policy within a Southern African Customs Union – a free trade area.
The government’s easing restrictions on South Africa’s vegetable imports will benefit households struggling with higher prices and limited supplies. There is no neglect of local farmers, whose frustrations I understand. We must work on regional collaboration and coordination of agriculture and trade policy.
I have written on this issue recently; you can read the note by clicking here.
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by Wandile Sihlobo | Dec 17, 2024 | Agricultural Trade
There is a noteworthy development in the European Union (EU) and South America. These regions are progressing towards finalising the EU and Mercosur (South America) trade deal. And yes, this has been in the works for some time, but it is moving towards finalising. The deal will remove tariffs on around 90% of trade in goods between the two sides, but primarily over up to roughly 12 years. Agricultural exports from Mercosur will be subject to gradually rising quotas.
This agricultural point caught my attention. The EU is one of South Africa’s essential agriculture markets, accounting for nearly 20% of SA’s agriculture exports. Growing competition from South America in the EU market is something we must watch closely following this deal.
However, I am comforted that South Africa’s agricultural exports to the EU are of high value. For example, citrus, fruit juices, wine, dates, figs, pineapples, avocados, mangoes, nuts, apples and pears, berries, cut flowers, and wool are amongst the primary agricultural products South Africa exports to the EU.
Meanwhile, South America, especially Brazil and Argentina, mainly consists of grains, oilseeds, and beef. Still, we must watch these developments.
The issue of generally increased competition, even if not at the initial stages, underscores the point I have made before that South Africa must consistently seek new export markets for its agricultural exports. The new markets are not meant to replace the EU and other existing markets; they should be a means of diversification. South Africa already exports half of its agricultural produce (US$13, 2 billion in 2023) and expects an increase in domestic production in the coming years.
The new produce must reach markets; it won’t all be existing markets. We must expand to the BRICS and other growing markets. My insistence on BRICS countries is not an attempt to minimise South African agriculture’s relationship with other regions such as the EU, African continent, Asia and Middle East, Americas, etc.
These regions are crucial to South Africa’s agriculture, and the country must nurture its relations with them and agricultural trade.
The push for BRICS is in recognition of two things. First, South African agriculture has low trade with BRICS countries. And yes, BRICS is not a trade bloc, but if trade could be deepened, South Africa’s agriculture stands to benefit.
The original BRICS members only account for 8% of South Africa’s agricultural exports. Yet, the BRICS countries are big agricultural importers. The significant issues are higher import tariffs and phytosanitary barriers.
Second, there is growing protectionism in the existing export markets and competition, such as the EU and Mercosur (South America) trade deal.
Regarding protectionism, remember the EU farm protests earlier this year; they were not all about environmental policies; the farmers also complained about imports.
We also see challenges in the EU, such as the friction of citrus trade with South Africa, which is now at the World Trade Organisation.
So, while South Africa needs to maintain these existing trade relationships, it is equally important to diversify to new regions; thus, we are discussing deepening trade with BRICS countries.
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by Wandile Sihlobo | Dec 13, 2024 | Agricultural Trade
I am starting to believe that South Africa’s 2024 agricultural exports may reach a new record high and surpass the 2023 record level of US$13, 2 billion. The better prices and output in various fruits, red meat, wool, and wine will be the major driver of the improvement in exports this year.
Already, South Africa’s cumulative agricultural export value for the first three quarters of 2024 is up 4% from last year, at US$10,55 billion. The top exported products by value include citrus, nuts, maize, apples and pears, wine, fruit juices, sugar, dates, figs, avocados and mangos, berries, and grapes, amongst other products.
While logistics infrastructure efficiency remains a primary concern for the farming sector, the ongoing collaboration between Transnet, private industry, and the various logistical organizations assists in ensuring the continuous flow of products, even if there are delays in specific periods.
From a regional perspective, the African continent maintained the lion’s share of South Africa’s agricultural exports in the third quarter of 2024, accounting for 39% of the total value. As a collective, Asia and the Middle East were the second-largest agricultural markets, accounting for 25% of the share in overall agricultural exports in the third quarter of 2024. The EU was South Africa’s third-largest agricultural market, with a share of 20%. The Americas region accounted for 6% of South Africa’s agricultural exports in the year’s third quarter. The rest of the world, including the United Kingdom, accounted for 10% of the exports.
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by Wandile Sihlobo | Dec 10, 2024 | Agricultural Trade
Some of us in South Africa’s agriculture often talk of the need to grow export markets to BRICS countries. But such statements are not minimizing the relationship South African agriculture has with other regions such as the EU, African continent, Americas, etc.
These regions are super important to South Africa’s agriculture, and the country must nurture its relations and agricultural trade with them.
The push for BRICS is in recognition of tow things. First, South African agriculture has low trade with BRICS countries. And yes, BRICS is not a trade bloc, but if trade could be deepened, South Africa’s agriculture stands to benefit.
At the moment, the original BRICS members only account for 8% of South Africa’s agricultural exports. Yet, the BRICS countries are big agricultural importers. The significant issues are higher import tariffs and phytosanitary barriers.
Second, there is growing protectionism in the existing export markets. Remember the EU farm protests earlier this year, they were not all about environmental policies, the farmers also complained of imports.
We also see challenges in the EU, such as the friction of citrus trade with South Africa, which is now at the WTO. There are also these frictions in the neighbouring Botswana and Namibia.
So, while South Africa needs to maintain these existing trade relationships, it is equally important to diversify to new regions. Thus, we talk of deepening trade with BRICS.
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by Wandile Sihlobo | Dec 8, 2024 | Agricultural Trade
In the first three quarters of this year, the country’s cumulative beef exports were up 25% from the same period in 2023, at US$136 million. The key markets include China, Egypt, UAE, Jordan, Mozambique, Kuwait, Qatar and Saudi Arabia.
But this has not always been the case. The industry has struggled in recent years.
First, I must clarify that the exports are also up in volume, not just the price gains. So, now that is out of the way, what are these struggles that I am talking about? Well, one of the challenges we have focused on this year in South Africa’s agriculture is – livestock health.
We had roughly three years of animal disease outbreaks across the country – foot and mouth disease in cattle, avian influenza in poultry, and African swine fever in pigs. Sure –animal disease outbreaks are not unique to South Africa and are common across the world, but South Africa’s challenges have intensified in the recent past because of some biosecurity weaknesses.
In 2022, six of South Africa’s nine provinces reported foot-and-mouth disease outbreaks. This was the first time in the country’s history that the disease had spread this wide. The challenging place the country found itself in prompted the government and industry stakeholders to increase their focus on strengthening farm biosecurity controls and surveillance.
Other interventions that are still underway include efforts to improve South Africa’s veterinary and related support services (mainly the laboratories) that deal with vaccine production needs.
The cost of diseases in the livestock industry is felt through the loss of livestock and reduced exports to the world market during outbreaks. This was the case in 2022, where exports declined notably (-16% y/y). Thus, I started by highlighting the recovery in exports.
Livestock and poultry account for roughly half of agriculture’s gross value added. Moreover, livestock also significantly contributes to the inclusion of black farmers in commercial agricultural production. Therefore, the prevalence of animal disease outbreaks in the past few years slowed transformation.
The good news only came on October 25, 2024, when the Department of Agriculture signalled that the country had made excellent progress in controlling the disease. And yes, KZN and EC still face some challenges.
The Department announced that the foot and mouth disease outbreak, which occurred during 2021-2022, has been successfully resolved in the NW, FS, GP, and MP. These provinces, initially impacted by the outbreak, have now completed comprehensive testing of animals on quarantined farms. The results indicate that the foot and mouth disease virus is no longer present.
It is this improvement in the control of diseases that has partly contributed to the recovery in exports. This is an excellent work of industry and government.
Of course, the promotion of exports by many great private South African companies, organizations and industry representatives such as RMIS is vital. We must work more strongly to open export markets, especially in the BRICS grouping, broader Middle East, and EU, amongst other areas.
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