South Africa’s government and industry should have a renewed aggressive focus of diversifying its export markets amid uncertain times, Wandile Sihlobo, the chief economist of Agricultural Business Chamber (Agbiz), urged yesterday.
He said the country must broaden its export markets within China, India, Bangladesh, the Gulf Cooperation Council states and Japan. These were important markets that the country already had some marginal access to.
“The government and the industry should work on broadening access to all the major export-oriented products of South Africa: horticulture, beef and wine. We cannot afford to be concentrated in a few regions, however important and stable they are. The EU's example provides a glimpse of the risks of overexposure in one region for exports,” Sihlobo said.
Sihlobo said the EU had recently imposed protectionist measures on agriculture by changing its regulations on plant safety for citrus without notifying its trading partners within a reasonable time.
He said the new regulation purports to protect the EU from a quarantine organism, "False Codling Moth", by introducing stringent new cold treatment requirements, particularly on citrus imports from Africa, mainly impacting South Africa, Zimbabwe and the Kingdom of Eswatini who are the largest suppliers of citrus to the EU region.
Over the past five years South Africa has constantly been the leading supplier of citrus to the EU region, accounting for an average of 12 percent in value terms.
Sihlobo said broadening the markets was urgent because South Africa exported roughly half its agricultural products yearly in value terms. Therefore, any improvement in production in the coming years would have to have an export market.
“For the citrus industry specifically, new trees are already expanding, which will help increase the export volume by roughly 50 percent of the current exports by 2030. These volumes will need new markets, even if we resolve the trade glitches with the EU. The Department of Trade, Industry and Competition, along with the Department of Agriculture, Land Reform, and Rural Development, should make export diversification one of the top priorities,” he said.
A diplomatic solution between the South African authorities and the EU was urgent, Sihlobosaid, adding that such an engagement should focus on ensuring that the citrus on the way to the EU was exempted.
The agricultural organisation said South Africa's agricultural exports lacked sufficient diversification. Outside of the African continent, they were heavily concentrated in a few Asian countries and the European Union.
“Export diversification contributes to a country's economic resilience, especially in the face of disruptions in global supply chains or if one of the major markets imposes non-tariff barriers to protect its producers against the competition. More recently, we have seen how the Covid-19 pandemic and the Russia-Ukraine war destabilised the global supply chains, with many countries relocating these domestically. The pandemic and geopolitical frictions have also raised a sense of protectionism, especially in the EU,” said Agbiz.
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