Export expansion is crucial for the long-term growth of SA agriculture

Recent developments within the Southern African Customs Union (SACU) region and announcements out of the US have once again reminded us that trade matters remain important. For South Africa’s agricultural sector, opening new export markets is one of the most important issues organised agriculture and various stakeholders continue to raise at various industry engagements.

The government recognises the importance of trade for the growth of the sector. Export expansion has also remained a central point of discussion for the ministers in the economic cluster. But recognition alone will not help. South Africa must build its capabilities and increase human capital in its trade portfolios. The more than 100 missions and embassies the country has abroad should also be equipped with staff who focus on maximising economic opportunities for the country. These efforts should be at the heart of the country’s economic diplomacy strategy.

Without a clear focus on expanding external growth opportunities, South African businesses may be constrained and lag some competitors in export markets where the country does not yet have free trade agreements.

Trade is important not just for agriculture but for other export-oriented sectors of the economy. For us in agriculture, trade is profoundly important. Already, about half of the agricultural products South Africa produces go to export markets. As the country works to expand agricultural production through various programmes such as the Agriculture and Agroprocessing Master Plan, and the government’s intention to release state-owned land to beneficiaries with title deeds, export opportunities will become even more urgent. We cannot increase agricultural production without matching this with efforts to open new markets. Failure to progress in opening markets will jeopardise the success of new-entrant farmers. The local market is somewhat saturated with a range of agricultural products, and we must create new markets.

Recent developments highlighting an increasingly unsettled global trade environment make the task of a focused economic diplomacy strategy even more urgent. Within the southern Africa region, neighbouring countries such as Mozambique and Botswana have signalled that they want to limit imports of some agricultural products from South Africa to boost local production. This is not a new and isolated development, as Namibia, Botswana and, recently, Mozambique have signalled an intention to limit the imports of vegetables and fruits from South Africa. Ordinarily, when there are plant or animal disease outbreaks, the suspension of imports would be an appropriate response. But these restrictions typically protect local farmers and undermine the spirit of the SACU and the African Continental Free Trade Area.

The US has yet again reminded the world that the policy the current administration started with – reorientating global trade – remains its focus. The US raised import tariffs against various countries, and for South Africa from 10% to 12.5%. While an increase in tariffs is never desirable for exporting countries, the 12.5% level remains far lower than the 30% tariffs that South African exporting businesses had to contend with before the US Supreme Court ruled them illegal. What also makes this moment more tolerable is that South Africa’s competitors face the same tariff levels, making the playing field even. This means that South African agricultural exports may still compete relatively well within the US market and are likely to maintain their existing market share. Still, lower tariffs and a more predictable trade framework would be the preferred path ahead.

Essentially, these developments remind us yet again that South Africa must move beyond rhetoric and focus on measurable action when it comes to trade. Within the SACU region, a comprehensive review of the existing framework is essential. South Africa’s ultimate goals should be to have the flexibility to sign bilateral trade agreements and not always be tied up in SACU issues. Equally, having human capital across South Africa’s missions that drives economic diplomacy and supports South African businesses seeking expansion into new markets, is vital. The long-term growth areas remain in the greater Asia region and the Middle East. At the same time, we must work to retain existing export markets across the greater African continent, the EU, the Americas, the UK and other parts of the world. Exports are key to the long-term growth of South Africa’s agriculture. DM