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After growing by more than a fifth in 2021, SA’s agriculture exports continued to grow in value terms by 4.2% in 2022, to total $12.90bn. The sector also accounted for more of SA’s total export earnings (10.4% in 2022 versus 10% in 2021) and the country remained a net exporter of agriculture goods, the trade balance increasing by 1.9% in 2022 to $5.57bn.

The top five export commodities were fruits (export value 0.7% higher in 2022 versus 2021), cereals (up 52.2%), beverages (up 2.9%), fruit, nut & vegetable preparations (up 3.9%), and other edible preparations (up 4.9%).

All in all, the sector made progress despite numerous challenges that included a depreciating rand (translating to lower dollar earnings), increased load-shedding hours (affecting irrigation and area of agricultural land planted), higher input costs (brought on by disruptions emanating from the Russia-Ukraine war), and port and logistical challenges (Cape Town, Durban and Gqeberha port delays and the floods in KwaZulu-Natal).

The sector’s resilience should therefore be augmented to ensure sustained success over the next few years.

As a result of increasing yields, a downstream sector that could be further explored is agro-processing. SA’s agricultural produce is being well received within priority markets such as the Netherlands, the UK, neighbouring Southern African Development Community (Sadc) members, as well as China and the US.

However, trade relationships with these states should also be explored from an agro-processing standpoint. The higher output thus places SA in a position to add more value to agricultural produce before export. Pursuing this angle is also supported by the country’s Agriculture & Agro-Processing Master Plan, which lists “developing localised food, import replacement and expanded agro-processing” as one of its key pillars.

The motivation behind expanding the country’s agro-processing sector could be linked to the fortunes of the SA wine industry over the past few years (relative to grape exports).

In value terms, between 2018 and 2022 SA’s grape exports increased at a 4.7% compound annual growth rate to $874.71m in 2022. During the same period, the wine industry’s value declined at a 2.4% compound annual rate, decreasing from $790.64m in 2018 to $700.86m in 2022.

These results suggest SA should focus on exporting more grapes than wine. However, in terms of value per tonne exported, grapes’ value per tonne increased at a compound annual growth rate of 0.6% between 2018 and 2022 ($1,800.12 per tonne in 2018 to $1,854.56 per tonne in 2022).

Wine value exported per tonne grew at a compound annual rate of 1.4% ($4,197.25 per tonne in 2018 to $4,494.47 per tonne in 2022).

In addition, the wine industry exported lower volumes (188,371 tonnes in 2018 to 155,920 tonnes in 2022), suggesting there could be a better appreciation of locally produced wine, which has resulted in export markets wanting to pay a higher price or ordering better quality wines.

This contrasts with the grape industry whose export volumes have increased by more than 85,000 tonnes (385,321 tonnes in 2018 to 471,653 tonnes in 2022), with the corresponding price adjusting slightly over the period. 

Based on these results it would be recommended that more effort be channelled towards increasing export volumes and sales of wine.

Not at the expense of grapes but based on the relative growth in earnings per tonne if grape export values are compared to wine export values. Between 2018 and 2022 the export value of wine per tonne was on average 2.5 times more than the grape export value per tonne.

Of course, it would not be wise to base our argument on one “success” story. A similar assessment was conducted for avocados versus avocado oil. Isolating our analysis to export value per tonne, avocado export value per tonne increased at a 7.6% compound average rate ($1,301.11 per exported tonne in 2018 to $1,875.64 per tonne in 2022), while avocado oil export value per tonne decreased at a 3.1% compound average rate ($3,247.05 per tonne in 2018 to $2,772.23 per tonne in 2022).

This assessment suggests the country should focus on exporting more avocados as opposed to avocado oil, whose value per tonne has decreased considerably during the period under review. However, more research revealed that the exported avocados are being used as an input for avocado oil production across most of the markets they are being exported to.

If this is the case, it again warrants the avocado industry expanding its avocado oil production and renegotiating with export markets to export avocado oil rather than avocados. Such a stance could deliver more value for SA due to avocado oil export value per tonne being close to twice the export value per tonne of fresh or dried avocados (on average between 2018 and 2022).

Based on growing yields over the past few years, a case can be made for further processing of SA’s agricultural produce for the export market. Export value per tonne for agro-processed goods is two to three times higher than non agro-processed goods, which implies higher export earnings for the industry. In addition, expanding the agro-processing sector could create more value locally through employment creation (mostly unskilled and semi-skilled jobs) and increasing the potential to replace agro-processed imports.

However, for the agro-processing industry to grow and thrive, factors such as load-shedding and transport and logistics infrastructure limitations (including port efficiency and congestion) need to be overcome. To progress this agenda, a critical starting point would be to conduct further research on local and global value chains and how SA can leverage its agricultural produce to become a leading agro-processing sector participant.

• Maposa is MD at strategic research and advisory consultancy Birguid.

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