WANDILE SIHLOBO: SA should diversify agricultural export markets to spread risk due to conflicts

In a world increasingly fractured by wars, mounting geopolitical tension and division on alignments to these tensions, the SA government and business must work on diversifying its export markets and spreading the risks arising should these tensions be prolonged.

While this applies to most exporting industries, it is particularly relevant for the strongly export-orientated agricultural sector. SA’s long-existing established markets in the EU, Africa and some Asian and American countries must be nurtured. This is a crucial step, as some countries may not outright block trade between countries in this fractured world, but could erect nontariff barriers.

The EU recently used nontariff barriers in this way by claiming that false codling moth, a citrus pest, was present in SA and requiring that citrus products be chilled before accessing the EU market. This despite SA already having treated the fruit to eliminate this risk.

Even within the Southern African Customs Union (Sacu), Namibia and Botswana are quick to block vegetables imports from SA to protect their industries. Disappointingly, such bans typically happen without clear, timely communication with the SA authorities.

With the geopolitical tension in the Middle East and SA’s lack of alignment with some of its major trading partners, it is also reasonable for some SA business owners to worry about the economic implications of geopolitics.

It is critical for the SA authorities, specifically the trade ministry, to continuously engage with major trading partners and affirm the country’s desire to maintain smooth trade, even as geopolitical tensions rise. SA should also send a firm message to Namibia and Botswana about the advantages of maintaining smooth trade within Sacu, and request that these countries ease their import restrictions accordingly.

If our neighbours wish to restrict imports in an attempt to revive their domestic vegetable industries, this should be communicated clearly to SA as an affected partner, with clear time frames. Such information would be valuable in allowing the SA industry and government to plant appropriately for export markets to other regions.

Useful step

More importantly, SA’s agriculture and trade ministries must intensify their efforts to widen the export markets to various regions of Asia and the Middle East. Countries such as India, China and Saudi Arabia should be on the top of the agenda for deepening trade and co-operation.

This should not be at the expense of existing trade partners, but an addition to it. The political relationship established through the Brics+ bloc is a useful first step, and SA should capitalise on it. These countries have large populations and considerable economic power. Notably, they collectively import more than $270bn of agricultural products a year, according to Trade Map data. SA’s participation in these countries remains limited and should increase in the coming years. 

The opening of SA beef exports to Saudi Arabia in the past week, and the resumption of beef exports to China at the end of last year, with exports of maize and soybeans to China in 2023, are the first steps in what should be a significant trade opportunity. The SA authorities should also work to open Chinese markets for SA fruit, wine and beef.

These industries are growing in SA, and their traditional export markets are tenuous in an increasingly fragmented world. The current export promotion drive is even more relevant considering the growth potential of the underutilised millions of hectares of state-owned land.

The logistical failures at SA’s ports, railway lines and roads should not deter the export drive and international marketing. Those responsible for logistics and roads must redouble their efforts to reverse the current slump, while the trade and agricultural authorities should do their best to open more export markets. 

• Sihlobo is chief economist at the Agricultural Business Chamber of SA and a senior fellow in Stellenbosch University’s department of agricultural economics.