South Africa’s agricultural sector has greater than doubled in worth and quantity phrases since 1994. This success has been linked to worldwide commerce. Exports now account for roughly half (in worth phrases) of the annual agricultural manufacturing.
Different drivers have been enhancements in productiveness by crop and animal genetics.
Exports are largely to the remainder of the African continent. In 2023 these accounted for 38% of South Africa’s agricultural exports. The EU is one other essential marketplace for South Africa’s agricultural sector, accounting for a 19% share in 2023.
Lately, Asia and the Far East, specifically China, have been recognized by the agriculture sector and policymakers as the important thing progress frontiers.
Asia and the Center East accounted for 1 / 4 of South Africa’s agricultural exports in 2023. However large pockets of alternative stay, by way of merchandise and nations.
China is the most important alternative, largely due to its inhabitants and financial measurement. China, the world’s second largest financial system after the US, should feed 1.4 billion folks. To do that, China is a large importer, leading to an agricultural commerce deficit with the remainder of the world of about US$117 billion. This means there is a hole for nations with good agricultural choices.
South Africa has lagged behind its rivals in gaining from this progress in Chinese language imports. It stands at quantity 32 within the checklist of nations that provide China with meals. South Africa’s agricultural exports to China accounted for a mere 0.4% of Chinese language imports in 2023.
China’s measurement warrants extra consideration than it sometimes receives from South African policymakers. The South African agricultural sector – I’m the chief economist of the Agricultural Enterprise Chamber of South Africa – has been calling for larger effort on growing South African exports to China.
Exhibit 1: China’s agricultural commerce
China’s prime agricultural imports embrace oilseeds, meat, grains, fruits and nuts, cotton, drinks and spirits, sugar, wool, and greens. South Africa is already an exporter to numerous nations on the earth of those merchandise and is producing surpluses for some. This implies there may be room to increase to China, particularly as South Africa’s agricultural manufacturing continues to extend and with extra quantity anticipated within the coming yrs.
It due to this fact is sensible for South Africa to focus extra on widening export markets to China. This implies arguing for a broad discount in import tariffs that China at the moment levies on a few of the agricultural merchandise from South Africa. Eradicating phytosanitary constraints in numerous merchandise can also be key.
There may be room for extra formidable export efforts. Three authorities departments should lead the dialog – Commerce, Business and Competitors; Agriculture; and Worldwide Relations and Cooperation.
What’s holding South Africa again
South Africa has robust political ties with China, bilaterally and thru the umbrella group generally known as Brics and the Forum for China-Africa Cooperation. However these boards are primarily political, not commerce blocs.
What South Africa does not have is preferential market entry to China’s meals markets.
This hobbles South African farmers who compete for the Chinese language market with Australian and Chilean producers. Australia and Chile have secured commerce agreements that give them aggressive benefit.
The dearth of an settlement that secures higher entry for South African producers signifies that they face substantial commerce limitations. The principle ones are:
What China buys
China’s key agricultural imports embrace soybeans, cotton, malt, beef, palm oil, wool, wine, fruits, nuts, pork and barley. South Africa is among the many prime ten world agricultural exporters in most fruits, and a major producer of wine.
South Africa’s present main exports to China are wool, citrus, nuts, sugar, wine, maize, soybeans, beef and grapes. Apart from wool, South Africa’s market share of those merchandise stays negligible.
South Africa expects an improve in numerous fruits and nuts manufacturing within the coming years from timber which have already been planted.
The wine trade additionally continues to see respectable volumes of manufacturing. The identical is true for the purple meat trade, which is on a path to develop and to increase its export markets.
The producers of all these merchandise may gain advantage from wider entry to China.
What’s to be achieved
South Africa stands as an anomaly among the many prime world agricultural exporters with restricted market entry to China for numerous merchandise.
Join free AllAfrica Newsletters
Get the most recent in African information delivered straight to your inbox
If China is to be an space of focus for export-led progress in agriculture, a brand new manner of partaking might be important to melt the present commerce limitations.
Firstly, a strategic strategy to the Chinese language agricultural markets must be adopted. This may entail devoted groups from each South African and Chinese language departments of agriculture that may take care of particulars of commerce limitations.
Secondly, South Africa ought to use the Brics platform – of which China can also be a member – to name for deepening of agricultural commerce among the many Brics members. This may assist add momentum to the bilateral engagements of South Africa and China.
Thirdly, South Africa ought to encourage international direct funding – specifically Chinese language traders – in agriculture for brand spanking new manufacturing in areas which have giant tracts of underutilised land. These embrace the Japanese Cape, KwaZulu-Natal and Limpopo provinces.
Having Chinese language nationals as companions in agricultural growth might assist enhance commerce and enterprise ties between the 2 nations.
Lastly, China supplies a very good base for the demand for higher-value agricultural merchandise, which South Africa intends to deal with in its growth agenda.
Wandile Sihlobo, Senior Fellow, Division of Agricultural Economics, Stellenbosch College
