South Africa’s agricultural growth path needs a focused trade policy strategy, says Agricultural Business Chamber chief economist Wandile Sihlobo.
South Africa’s agricultural exports for the first eight months of this year amounted to $8.9 billion, up 6% from the first eight months of last year, Agbiz said.
Sihlobo said the generally higher commodity prices had also contributed to this increase in export values.
The industry and government should work collaboratively on strengthening the current markets through continuous engagements at the political and business level while simultaneously exploring new and promising markets, he said.
“Ongoing conversations and collaboration between industry and logistics entities like Transnet are also crucial for the success of the export strategy. Logistics efficiency improvement is an integral part of the agriculture growth agenda that will ultimately deliver jobs and economic activity in rural South Africa,” Sihlobo said.
For nearly three decades, South Africa had excelled at opening various export markets, supporting the growth the sector has witnessed since 1994.
He said South Africa had successfully negotiated several freez trade agreements (FTAs) over the past few decades with critical regional and international markets. These include the Southern African Development Community FTA, SADC-EU Economic Partnership Agreement (EPA), Sacu/Mozambique-UK EPA, the African Continental Free Trade Area and the Sacu-Mercosur Preferential Trade Agreement.
Sihlobo said that all the agreements highlighted above were concluded over the past 16 years, which was a considerable feat given the technical and institutional demands that must be committed to negotiating and successfully implementing trade agreements.
“We should note, however, that the actual free trade agreements are in only two of South Africa’s biggest markets – Africa and Europe – which collectively account for two-thirds of the country’s total agricultural exports in value terms,” Sihlobo said.
“We have seen a rise in the use of non-tariff barriers in these critical markets, such as the regulation of citrus exports in the EU and the ban of vegetable imports from South Africa in Botswana and Namibia. This means the South African authorities and industry will need to collectively work towards strengthening our relations in these markets and restoring the export position the country has enjoyed for some time,” he said.
Despite all these challenges, Agbiz said the interventions made by Transnet, industry and the government had again yielded positive results on agricultural exports thus far.
South Africa would be best served by diversifying its export markets beyond Africa and Europe.
He said the Middle East, Far East (Asia), and North and South America currently accounted for roughly a third of South Africa’s agricultural exports.
“This was perhaps where most of the attention and pursuit of free trade agreements would be more beneficial. Some of South Africa’s fiercest competition amongst various products is from Chile, Peru, Australia, Argentina, New Zealand, and Uruguay. They have struck trade agreements with most markets in Asia, the Middle East, and the Americas. Meanwhile, South Africa has not and faces higher tariffs against the key competition and local producers have to overcome these tariffs primarily through farm-level technical efficiency,” Sihlobo said.
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