CAPE TOWN - South Africa and the Southern African Customs Union economic partnership agreement with the UK, one of the biggest wine export destinations, signed last year will now kick into gear post-Brexit.
The UK will exit the EU on January 31. The UK is currently the biggest foreign investor in South Africa, with one third of foreign investment into the country coming from the UK. The UK went from being South Africa’s eighth largest export market in 2017 to the fourth largest in 2018. The post-Brexit deal allows the export 70 million litres to the UK duty-free, while maintaining the current duty-free rate of up to 110million litres exported to the EU.
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According to Vinpro chairperson Anton Smuts, who spoke at the 15th Nedbank Vinpro Information Day on Friday, “the South African wine industry expects 2020 to be a difficult year, but we are hopeful that it will be able to build on some of the momentum gained in 2019 to overcome major challenges.
“There was a renewed energy in the industry in 2019 following a long downward cycle."
Two consecutive smaller crops due to drought led to upward wine price adjustments filtering down to the farm gate, and producers were reinvesting.
Challenges in 2020 included tough market conditions, policy uncertainty, threats of expropriation of land without compensation and unfavourable climatic conditions.
The drought had a significant impact on wine production, which fell by 90million litres annually in 2018 and 2019.
Lower availability resulted in higher wine prices, which filtered down to more sustainable net farm income levels.
In 2015 only 15percent of producers were profitable, compared to 28percent in 2019. However, some regions will still take time to recover, said Smuts.
Producers are also expected to continue the surge of new plantings last year, with some 4000 hectares expected to be planted in 2020. Most planted cultivars include Chenin Blanc, Sauvignon Blanc, Colombar, Chardonnay and Pinotage.
Agbiz chief executive Dr John Purchase said the government, business and labour role players planned to develop an agriculture and agro-agriculture “master plan” by the end of September 2020.
He said trade agreements would be imperative for agriculture sector growth going forward. Nearly half of South Africa’s agricultural exports (in value) were destined for Africa, followed by Europe and Asia.