by Wandile Sihlobo | Mar 9, 2025 | Agricultural Trade
I just read a piece in the ChinaDaily about China’s efforts to improve food security. I thought it would be helpful to comment on how South Africa could participate in China’s journey toward food security.
China will continue to be a priority for South Africa’s efforts to enhance its agricultural exports. While we currently lack extensive access to China for our agricultural products, tremendous potential exists.
The latest comments by China’s Agricultural Minister, Mr Han Jun, that their grain supplies remain tight and food security remains a priority again underscores the importance of the Chinese market.
Indeed, China’s long-term ambition is somewhat self-reliance. The Agricultural Minister, Mr Han Jun, stated today, March 8, that:
“As a nation of 1.4 billion people, we must rely on ourselves to feed our population. We cannot depend on others,” .”Food security is a priority, and we must always remain vigilant.”
Still, as a country that accounts for 11% of global agricultural imports, China’s reality of being an importer won’t change soon.
China is the biggest opportunity, mainly because of its population and economic size. China, the world’s second-largest economy after the US, must feed its large population. To do this, China is a huge importer, resulting in an agricultural trade deficit with the rest of the world of about US$117 billion – see the featured chart. This suggests there’s a gap for countries with good agricultural offerings.
South Africa has lagged behind its competitors in gaining from this growth in Chinese imports. It stands at number 32 in the list of countries that supply China with food. South Africa’s agricultural exports to China accounted for a mere 0.4% of Chinese imports in 2023.
China’s size warrants more attention from South African policymakers. The South African agricultural sector has been calling for greater efforts to increase South African exports to China.
China’s top agricultural imports include oilseeds, meat, grains, fruits and nuts, cotton, beverages and spirits, sugar, wool, and vegetables. South Africa is already an exporter of these products to various countries in the world and is producing surpluses for some. This means there is room to expand to China, especially as South Africa’s agricultural production continues to increase, with more volume expected in the coming years.
Therefore, it makes sense for South Africa to focus more on widening export markets to China. This means arguing for a broad reduction in import tariffs that China currently levies on some of the agricultural products from South Africa. Removing phytosanitary constraints in various products is also key.
There is room for more ambitious export efforts. Three government departments must lead the conversation – Trade, Industry and Competition; Agriculture; and International Relations and Cooperation.
The South African authorities must continuously engage China to soften these barriers and encourage agricultural trade between our countries.
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by Wandile Sihlobo | Mar 7, 2025 | Agricultural Trade
The first week of February 2025 was eventful for global agriculture. Following U.S. President Donald Trump’s announcement of further tariffs on China, China retaliated.
On 4 March, China announced retaliatory tariffs on U.S. agricultural products, imposing a 10% tariff on sorghum, soybeans, pork, beef, aquatic produce, fruits, vegetables, and dairy products, alongside a 15% tariff on chicken, wheat, corn, and cotton.
During President Trump’s first term, when China imposed retaliatory tariffs targeting agriculture, U.S. farmers were among the most affected due to China’s significance in their exports. This time around, it will be no different.
One would even argue that China is now more prepared than in the past, as it has been building its domestic agricultural production for the past few years and switching to new suppliers of vital farm products in South and Latin America.
The featured chart clearly illustrates what is happening with China’s agricultural imports. What is clear now is that South America, like in 2018, may be among the winners as China searches for new sources of agricultural products.
The ASEAN countries and the Black Sea region are also among the primary beneficiaries of these changes in agricultural trade shifts.
With all the progress China has made in boosting its agricultural produce, it remains a major importer. In 2023, China was a leading agricultural importer, accounting for 11% of global farm imports, totalling over US$200 billion, as the chart above shows.
The top agricultural products China imports from the world market include soybeans, beef, various fruits, maize, wheat, rapeseed, palm oil, poultry meat, and sorghum, amongst other products.
The major suppliers of agricultural products to China are Brazil, the U.S., Australia, Thailand, Vietnam, New Zealand, Indonesia, Canada, France, Argentina, Chile, Russia, and Malaysia, amongst others.
South Africa is the only African country in China’s top 30 agricultural suppliers, which ranked 28 in 2023. Still, South Africa remains a negligible player in the Chinese agricultural market, accounting for a mere 0.4% (US$979 million) of China’s agricultural imports of US$218 billion in 2023.
Sudan and Zimbabwe are other African agricultural suppliers to China, ranked 33 and 34, respectively.
Are there any opportunities for South Africa during this disruptive time?
There certainly is an opportunity. Even without China’s clashes with the U.S., South Africa had a chance and was willing to expand its access to the Chinese market.
South Africa’s significant challenges in the Chinese markets are higher import tariffs and phytosanitary barriers for various products.
The higher tariffs make South African farm products less competitive than Australia and Chile, which access the Chinese market for duty-free products.
Given the reality of clashes between China and the U.S. and China’s efforts to diversify its agricultural suppliers, it is key that the South African message in engagements with the Chinese authorities is more firm and persuasive in promoting agricultural exports.
South Africa has an agricultural surplus yearly and has maintained a trade surplus for over a decade. In 2024, South Africa’s agricultural exports amounted to a record US$13.7 billion.
Indeed, this is far from the staggering US$218 billion that China spends each year on importing agricultural products from around the globe.
China is already one of South Africa’s major agricultural markets for fruits, wine, red meat, nuts, maize, soybeans, and wool.
However, there is room for more ambitious agricultural export efforts. Importantly, these products would be even more competitive if there were zero duties in accessing the Chinese market.
Ultimately, the South African agricultural sector—organized agriculture and researchers—consistently points out the need to lower import tariffs in China and remove phytosanitary constraints on various products.
The South African government must build on this momentum and message in its engagements with Chinese authorities.
At a time when South Africa’s export-oriented agricultural sector faces some uncertainty in some of its markets, mainly the U.S., it may be appropriate to argue for greater access to China to diversify our agricultural exports and help China diversify its sources.
Still, in engagements with China, South Africa should maintain an open-minded posture with other regions that are key markets. For example, South Africa must consistently work to retain the duty-free access we enjoy in the U.S. market and other key export markets in the African continent, EU, Middle East, Asia, and other regions.
Our engagements with China are primarily for diversification, not replacement of the existing export markets.
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by Wandile Sihlobo | Feb 11, 2025 | Agricultural Trade
Now that US President Donald Trump has followed through with his election promise to impose tariffs on imports from China, Canada and Mexico — and then suspended the latter two — what can we expect next?
And how should organised agriculture and the South Africa’s government prepare themselves for this “new normal”?
Trump’s use of tariffs to pursue America’s mercantilist objectives is no surprise. Similar tariffs were deployed in his first term in 2018, but that was against China, and Western countries were in silent consensus that this was a strategic rivalry. Now also targeting close allies such as Canada and Mexico, this takes trade friction to a whole new level.
In the coming years, as trade friction persists globally, we suspect there will be a change to various regions’ trade approaches, with some preferring more protectionism for their markets.
The EU is one such region. Farmers from France and other major EU countries have for months called for restrictions on imports of agricultural products. This is likely to intensify and in some instances it may take the form of less obvious nontariff barriers.
In the past EU officials have resisted pressure to impose tariffs, preferring to maintain a relatively open market approach. Nontariff barriers have been the EU’s preferred instrument to keep its producers happy. An example of this is SA’s citrus industry, which has a pending case against the EU at the World Trade Organisation.
If trade fragmentation and economic nationalism intensifies SA agriculture and other exporting industries will be at risk. The SA agricultural sector generated much of its growth over three decades through increased exports. Roughly half of what SA agriculture produces in value terms goes to export markets.
For 2024 these exports likely exceeded $14bn mark for the first time. Higher commodity prices and strong fruit exports were the main drivers. The actual figures we have so far are for 2023, where SA’s agricultural exports reached a record $13.2bn, according to Trade Map data.
The EU, broader Africa, Middle-East and Asia are part of our large export markets. In value terms the Americas accounted for only 6% of SA’s overall agricultural exports in 2023. Still, the region is important, for two reasons:
- Exports are concentrated in specific industries, mainly nuts, citrus, wine, grapes and fruit juices. This means while the risks associated with this market are not as significant as for overall agricultural exports, they present challenges to specific industries.
- Negative sentiment arising from any confrontation with the Americas would have a negative effect on SA agriculture. It is, therefore, vital that we maintain positive relations with this region.
SA must focus more on strengthening and revitalising relations with its trade partners beyond Europe. For each export-orientated industry there should be regular engagement between local business representatives, organised business and the government, to hone our export strategies.
In these times SA must maintain a posture as an open global actor that seeks to build relations across the globe on a pragmatic basis. This openness and pragmatism — rather than ideology and dogma — should be its leitmotif in bilateral and multilateral trade relations.
Beyond existing markets we must urgently widen exports of various agricultural products. This could be challenging at a time when the world is fragmented and looking “inward”, which will require considered economic diplomacy rooted in strategic collaborations between the government and industry.
Both the department of trade, industry & competition, and international relations & co-operation have a pivotal role to play. Beyond working together to advance SA’s economic diplomacy, these departments must build strong capabilities in their bilateral trade desks.
Written for and first appeared in the Business Day.
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by Wandile Sihlobo | Feb 4, 2025 | Agricultural Trade
Given the fragmented trade and South Africa’s quest to diversify its exports, we must explore a range of regions. The Middle East is one such interesting region, and it is deepening its economic ties with Africa.
In March 2024, The Economist magazine published an article titled “The Gulf’s scramble for Africa is reshaping the continent.” The article 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, which has diverse interests worldwide, the Middle East’s growing interest in Africa requires proactive engagement, mainly to attract investments and open 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 effectively isolate them 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 due to the lack of roads, rail, and storage facilities.
In the regions, part of the established commercial farming sector, the deteriorating network infrastructure—including roads, rail, water, dams, storage facilities, and on-farm infrastructure—is also increasingly a significant cost driver for businesses.
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 whether Middle-East countries seeking investment opportunities would not form commercially viable business ventures that respond to the above challenges with the help of local stakeholders.
Some investments would involve partnering with South African agribusinesses and farming enterprises that aim to expand their operations and require capital for such activities.
Significant funds in these Middle Eastern countries also involve the government in some way. The South African government, particularly the Department of Trade, Industry and Competition (DTIC) and the Department of International Relations and Cooperation (DIRCO), should lead the formulation of a “Middle East-South Africa Agricultural Investment Strategy.”
Such a strategy would help formally start a conversation with Middle Eastern stakeholders and introduce South African firms and farming businesses.
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.
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 Saudi Arabian imports. It 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.
India, Brazil, Australia, the United States, Canada, New Zealand, the United Kingdom, Denmark, the Netherlands, Italy, Spain, Argentina, Russia, and France. generally held the largest market shares in these Middle Eastern countries
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, which is only possible through targeted product promotion and marketing. Government support would also help nudge Middle Eastern countries to address any remaining phytosanitary barriers for South African products in these countries.
Ultimately, the DTIC and DIRCO should formulate a Middle-East-South Africa Agricultural Investment and Trade Strategy with the Department of Agriculture. This Strategy would help rank the priority list of investment products and map out 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.
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by Wandile Sihlobo | Feb 3, 2025 | Agricultural Trade
Some doubted whether US President Trump would implement all the tariff plans he promised during his election campaign, especially for Mexico and Canada.
In the case of China, the possibility was high as it would not be the first time that the Trump Administration imposed tariffs on China. We saw such steps in 2018 when the Chinese government retaliated, mainly targeting various agricultural products that the US exported to China.
Well, we were wrong. Over the week, President Trump pushed ahead and imposed 25% tariffs on goods from Canada and Mexico and 10% on China. These duties will be added to the existing tariffs. The Trump Administration accuses these countries of allowing the smuggling of fentanyl to the US and the immigration issues.
There have already been some developments, with Canada intending to retaliate by imposing 25% duties on various products imported from the US. Like China in 2018, Canada also targeted some agricultural exports from the US for the duties it would impose. These include beer, wine, bourbon, fruits, and fruit juices. China also intends to retaliate, and we will learn more about its actions in the coming days.
South Africa was also not spared of the headlines. Overnight, President Trump incorrectly stated that there is “confiscating” land and the country is “treating certain classes of people very badly”. This, of course, is not what is happening, as I recently outlined the implications of the Expropriation Act here.
So, how should South Africa’s agricultural community view these trade developments?
Our best guide is when President Trump first imposed tariffs on China in 2018. China retaliated, targeting partly the US agricultural sector, which Canada is doing right now.
The US soybean, maize, and pork farmers were among the most negatively affected by China’s retaliation policies in 2018. The switch in orders saw the demand for US agricultural exports to China decline. China started buying more agricultural products from South and some Central American countries.
Therefore, it is plausible that if China targets US agricultural exports again, soybean, maize, and pork farmers would be negatively affected. This would add to the Canadian tariffs on fruits, wine, and fruit juices.
Under such a scenario, as observers and agricultural stakeholders in South Africa, we will likely see the early impact through the global grain and oilseed prices. The US is a significant producer, and when its grain market activity is disrupted, the impact tends to be felt globally.
Moreover, the US farmers could also start exploring other export markets where they have not been as present to hedge against China’s risks.
Still, avoiding China on any global agricultural product will be hard. China is a dominant player in the export and import of agricultural products. In 2023, China was a leading agricultural importer, accounting for 11% of global agricultural imports.
According to Trade Map data, China spends just over US$200 billion annually on agricultural product imports. The US is China’s second-largest agricultural supplier after Brazil. Other suppliers include Thailand, Australia, New Zealand, Indonesia, Canada, Vietnam, France, Russia, Argentina, Chile, Ukraine, the Netherlands, and Malaysia.
Indeed, if one examines China’s agricultural imports, the top products include oilseeds, meat, grains, fruits and nuts, cotton, beverages and spirits, sugar, wool, and vegetables. The US has significant exposure to oilseeds and meat. The same can be said about the wine, fruit, and fruit exports to Canada.
Implications for South Africa
South Africa is a small player in global grains and has undoubtedly not been a participant in the US grains and oilseed markets. The major risk is when the US farmers divert their products from China, depending on the level of Chinese retaliation tariffs, to South Africa’s traditional markets in the Far East. This could further recreate more competition and downward price pressures. This is something we will have to monitor closely.
Similarly, the US fruit, wine, and fruit juice exports could also start looking to widen their export markets to areas similar to South Africa, which would present more competition.
And yes, I know some, like the economist Nimrod Zalk has hinted that South Africa must push ahead and market its wine in Canada and Mexico. This is something I am not particularly opposed to.
Anyway, I remain optimistic that the current US tariffs will have minimal direct impact on South Africa, and the confrontation seems far from us.
Whether the US imposes any other import tariffs that could directly affect the South African farming community in future remains to be seen. We live in strange times and can’t be sure of anything these days.
I want to emphasize that the current trade fragmentation further solidifies my view that South Africa must work to diversify its agricultural export markets. In a fragmented world like today, an export-oriented sector like South Africa’s agriculture should spend more time and resources on broadening export markets and diversifying risk.
After all, South Africa’s long-term agriculture growth prospects hinge on the country’s success in creating as many export markets as possible and improving the efficiency and quality of its domestic logistics (roads, rail, and ports).
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by Wandile Sihlobo | Jan 29, 2025 | Agricultural Trade
I am still largely away from my desk, seeing some South African agricultural stakeholders and our members in the country’s central regions. Amongst many things we get to discuss, we continue to talk about the need for South Africa to widen its agricultural export market beyond the countries we currently export to.
In this export growth conversation, one minor but essential theme is emerging in some conversations: the risks around BRICS. I guess the recent comments by US President Donald Trump, who had a “tough talk” towards this group of countries, partly explain the emerging worries.
There is a consensus that the BRICS should be an area of expansion for South Africa’s agricultural exports. The region accounts for over US$300 billion in farm product imports annually.
However, our emphasis on the BRICS must not be at the expense of other markets that have long supported South African agricultural exports. Indeed, the BRICS region accounts for less than 10% of South Africa’s agricultural exports, which were about US$13.2 billion in 2023 and possibly over US$14.0 billion in 2024.
The longstanding vital markets to South Africa’s agriculture are the likes of the African continent, the EU, the UK, parts of Asia and the Middle East, and the Americas. Therefore, we must emphasise the need for South African authorities to maintain sound and warm relationships with these regions.
Equally, South Africa’s association with the BRICS grouping must not be viewed as “siding” with particular countries. Like India, South Africa can maintain friendship and trade relations with various countries. However, this requires that the South African political leaders visibly maintain relationships with everyone.
In today’s fragmented world, it is easy to be drawn into conversations about which side one supports. Still, as a developing country with broad and varied interests in export markets and attracting foreign direct investments, I guess some level of what I would call “constructive ambiguity” is necessary when engaging with the world.
So, while some stakeholders may worry that BRICS brings certain risks, much depends on how South Africa presents our association with this grouping. We should emphasise the economic possibilities more than other interests.
From a purely agricultural perspective, there is much potential for expanding our exports. Indeed, at the moment, the BRICS is a political group that requires formal economic ambitions.
The major agricultural challenges are the higher import tariffs and phytosanitary barriers some countries impose on South Africa and other BRICS members. As a result, there is quite a low intra-BRICS agricultural trade. But with this group expanding, with Indonesia and Nigeria recently joining, it makes sense that we stay on. We continue to push for low import tariffs and some form of agricultural trade agreement in this group over time.
Broader access to this grouping while maintaining our agricultural export markets is vital for South Africa’s long-term agricultural growth.
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by Wandile Sihlobo | Jan 24, 2025 | Agricultural Trade
A friend recently sent me a Bloomberg article about China’s efforts to diversify agricultural imports. The idea is to lessen the reliance on the US in anticipation of trade friction under the Trump administration.
Central and South Americans seem to be on the way to becoming the major winners. They have a surplus of agricultural products that China imports, such as grains, oilseeds, red meat, wine, and nuts. The African continent has not benefitted much.
I have recently discussed President Trump’s trade policy’s possible impact on agriculture and how China retaliated against his administration’s tariffs in 2018. The Chinese retaliation hurt the US soybean, maize, and pork farmers at the time.
What we can expect in the coming months will depend on whether President Trump proceeds with the higher tariffs on China, he promised in his recent speeches.
What is clear now is that South America, like in 2018, may be amongst the winners as China searches for new sources of agricultural products.
South Africa’s standing
However, South Africa should also position itself among the key suppliers of agricultural products to China in addition to its current export activity.
I sometimes doubt if South Africans appreciate enough how big China is in global agricultural trade; thus, we keep discussing it. China is a dominant player in the export and import of agricultural products.
In 2023, China was a leading agricultural importer, accounting for 11% of global agricultural imports, which totalled over US$200 billion. The US, Germany, the Netherlands, the UK, France, and Japan trailed China.
Similarly, China played a notable role in exports. In 2023, it was the fifth-largest agricultural exporter in the world. The leading countries ahead of China were the US, Brazil, the Netherlands, and Germany.
Few African countries benefit from these imports due to low agricultural productivity in Africa. Most don’t have volumes to export.
The leading suppliers of agricultural products to China are Brazil, the US, Thailand, Australia, New Zealand, Indonesia, Canada, Vietnam, France, Russia, Argentina, Chile, Ukraine, the Netherlands, and Malaysia.
The only African country in China’s top 30 agricultural suppliers is South Africa, which ranked 28 in 2023. Still, South Africa remains a negligible player in the Chinese agricultural market, accounting for a mere 0.4% (US$979 million) of China’s agricultural imports of US$218 billion in 2023.
Sudan and Zimbabwe are other African agricultural suppliers to China, ranked 33 and 34, respectively.
Given this reality and China’s efforts to diversify its agricultural suppliers, it is key that the South African message in engagements with the Chinese authorities should be more firm and persuasive in promoting agricultural exports.
South Africa has an agricultural surplus each year, exporting about half of its yearly production. In 2023, South Africa’s agricultural exports amounted to a record US$13.2 billion. Indeed, this is nowhere close to the amount of money China spends annually importing agricultural products from the world, a staggering US$218 billion.
China is already one of South Africa’s major agricultural markets for a variety of fruits, wine, red meat, nuts, maize, soybeans, and wool. However, there is room for more ambitious agricultural export efforts.
The South African agricultural sector—organized agriculture and researchers—consistently points out the need to lower import tariffs in China and remove phytosanitary constraints on various products. From now on, this should be a topic of conversation in engagements with Chinese authorities.
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by Wandile Sihlobo | Jan 21, 2025 | Agricultural Trade
I planned to write about Nigeria’s agriculture this morning, but I suppose that can wait a day or so. This morning, the dominant theme in the news was President Trump’s inauguration and some executive orders he issued. There is also a lot of talk about tariffs, with President Trump threatening to issue 25% tariffs on goods from Mexico and Canada. There continues to be more talk about tariffs in China.
Therefore, revisiting some of my previous comments about his administration’s policy approach to agriculture may be helpful.
We are essentially back in the world of “tariffs” and “trade tension”, which escalated in 2018 when the US introduced import tariffs on Chinese products, and China retaliated with import tariffs on agricultural products.
When President Donald Trump imposed tariffs on China in 2018, US soybean, maize, and pork farmers were among the most negatively affected. China switched some orders to Brazil and Argentina, which became significant soybean suppliers.
President Trump indicated on his campaign trail that the US may impose up to 20% tariff on all imports and 60% on goods from China. Some of these may change in the coming days and months. Still, we don’t know how China would react to tariffs, regardless of what level. However, if China retaliates as it did the last time, the US soybean and maize farmers and pork producers would again be negatively affected.
This could be seen through disruptions in global grain and oilseed prices. The US is a significant producer, and when its grain market activity is disrupted, the impact tends to be felt globally. Moreover, US farmers could also start exploring other export markets in which they have not been as present to hedge against China’s risks.
Still, avoiding China on any global agricultural product will be hard. China is a dominant player in the export and import of agricultural products. In 2023, China was a leading agricultural importer, accounting for 11% of global agricultural imports. The US, Germany, Netherlands, the UK, France and Japan trailed China.
According to Trade Map data, China spends just over US$200 billion a year on agricultural product imports. The US is China’s second-largest agricultural supplier after Brazil. Other suppliers include Thailand, Australia, New Zealand, Indonesia, Canada, Vietnam, France, Russia, Argentina, Chile, Ukraine, the Netherlands, and Malaysia.
Indeed, if one looks at China’s agricultural imports, the top products include oilseeds, meat, grains, fruits and nuts, cotton, beverages and spirits, sugar, wool, and vegetables. The US has significant exposure to oilseeds and meat.
Similarly, China is a major exporter of agricultural products. In 2023, it was the fifth-largest agricultural exporter in the world. The leading countries ahead of China were the US, Brazil, the Netherlands, and Germany.
Implications for South Africa
This means that global agricultural trade has one additional risk factor to monitor closely. South African farmers must closely follow the formal trade policy developments in the US.
If President Trump follows through with promises of high import tariffs on China and China retaliates, there will be volatility in global oilseeds and grain prices. US farmers will likely feel more pressure than other regions. The South American farmers stand to benefit as an alternative source for China to procure soybeans.
South Africa is a small player in global grains and has undoubtedly not been a participant in the US grains and oilseed markets. The only risk is when the US farmers divert their products to South Africa’s traditional markets in the Far East, further recreating more competition and downward price pressures. This, too, is something we will have to monitor closely.
I remain optimistic that there will be minimal direct impact on South Africa. Whether the US imposes any other import tariffs that could directly affect the South African farming community remains to be seen.
Beyond the US, the trade fragmentation further solidifies my previously shared view that South Africa must work to diversify its agricultural export markets. In a fragmented world like today, an export-oriented sector should spend more time and resources on broadening export markets and diversifying the risk.
South Africa’s agriculture growth hinges on the country’s success in creating as many export markets as possible.
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