Farmers in the 21st Century are greatly influenced by international commodity markets, the exchange rates, and the flow of produce between countries. The domestic price of commodities in most countries is very close to import parity (the landed price of an imported product) as farmers compete with each other for markets.
A growth in exports will be crucial to this country meeting its job creation goals and balancing its trade deficit (when we import more than we export).
As long as the global economic system creates countries that are better able to produce products more efficiently (and cheaper) than others, the world trade system – and exporting – will continue unabated.
2. Local business environment
a) The following are included in the trade agreements to which South Africa is party:
- Southern African Customs Union (SACU)-European Free Trade Association (EFTA) FTA
- SACU-MERCOSUR Preferential Trade Agreement
- EU-SADC EPA, replaces the South Africa-European Union (EU) Trade Development and Co-operation Agreement (TDCA).
- Southern African Development Community (SADC) FTA
- USA Africa Growth and Opportunity Act (AGOA)
- A memorandum of understanding exists between South Africa and China.
- The Tripartite Free Trade Area (TFTA) was launched in 2015 to cover the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), and the Southern African Development Community (SADC). The deal will come into force once it has been ratified by two-thirds of the 26 member states.
b) Most South African agricultural exports go to Africa. The EU, Asia and the Middle East are other major markets.
- South Africa’s agricultural exports grew from R21 billion in 2001 to R104 billion in 2015.
- Currently, 45% of South Africa’s agricultural exports go to African countries, mainly cereals, dairy, fruits and vegetables, vegetable oils and beverages.
- In 2015, 27% of the country’s agricultural exports went to the EU, mainly edible fruit and wine.
- The Middle East market has grown too, from R1.2 billion in 2001 to R6.9 billion in 2015. The demand here has been for edible fruits, nuts and beef exports.
- Agricultural exports to Asia too have grown. Exports were valued at R3.6 billion in 2001 to R12.2 billion in 2015. These have been mainly cereals, frozen fish and sugar.
Notes taken from an article by Wandile Sihlobo (Agbiz), October 2016, which can be found at www.thegreenkeeper.co.za/agriculture-needs-action-to-sow-success/
“On the international front, the changing global environment and increasing standards on food safety excludes smaller farmers to play a critical role in international market access. Over and above this is the cost to access foreign markets. Stringent sanitary and phytosanitary, private standards, labelling and other technical requirements have gone beyond compliance capacity of many smallholders. Lack of market access could constrain growth and the targeted jobs that the sector intend to create” [Agricultural Policy Action Plan (APAP), p 116].
APAP recognises that exports orientated programmes should be integrated at early stage of production. Interventions should include:
The APAP document sets out several steps involved, identifying lead departments/agencies and those who are to support them.
Trade data is given on www.sars.gov.za (see the “Customs and Excise” menu option). Included are overviews on the country’s trade agreements. See also www.thedti.gov.za and the web pages of the Directorate International Trade at www.daff.gov.za.
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