Research by Stellenbosch University and Mendel University in the Czech Republic reveals there is an urgent need for infrastructure investment and market diversification as non-tariff barriers throttle agricultural competitiveness.
By Maile Matsimela, Digital Editor at African Farming
Despite South Africa’s strong trade agreements with the European Union (EU) and its position as the bloc’s biggest trading partner in Africa, agri-food exports to the EU are declining because of growing trade barriers and related disputes, according to new research from Stellenbosch University and Mendel University in the Czech Republic.
The researchers, led by Dr Melissa van der Merwe from Stellenbosch University’s Department of Agricultural Economics, analysed 20 years of trade data to investigate how EU import practices may be harming South Africa’s agricultural competitiveness.
“Although exports increased between 1999 and 2019, growth slowed noticeably after the global financial crisis, a trend linked to the lingering effects of the recession and the rise of non-tariff barriers,” the researchers write in their study published in the journal Agrekon.
The study reveals trends across different European regions. “In the East, agri-food imports increased after countries joined the EU in the early 2000s and adopted liberalised trade and agricultural policies. But that initial momentum has tapered off, with annual growth falling from 6,5% to just 3,5% in the decade after the recession,” the researchers note.
Southern Europe shows even sharper declines. “A similar slowdown is evident in Southern Europe, where import growth dropped sharply – from 6,3% to 2,6% per year – suggesting that recovery in this region has been slower and more uneven,” they add.
Even traditionally stable markets are plateauing. “Meanwhile, the Central and Northern EU markets show more stable dynamics, but even here, growth has plateaued.”
According to the research, horticulture dominates South Africa’s agri-food exports to the EU, with horticultural exports rising from just over 58% of agri-food exports in 1999 to more than 65% by 2019. The top five agri-food exports to the EU are citrus, grapes, wine, apples and pears, and avocados.
Nearly half of total EU agri-food imports go to Central European countries, with Northern and Southern EU countries each accounting for about 20%. The smallest but growing share is imported by Eastern EU countries.
Trade Challenges Undermine Sector’s Long-term Competitiveness
The findings raise serious questions about existing trade frameworks. “This raises concerns that existing trade agreements, once viewed as a gateway to opportunity, are no longer sufficient to support the sector’s development or long-term competitiveness in the EU,” the researchers warn.
They note that “while South Africa remains a key supplier of agri-food products to the EU, it is increasingly competing in markets that are either saturated or growing more slowly”.
The research team recommends that South Africa prioritise agri-food products with rapidly growing demand, particularly horticultural products, and target fast-growing markets within the EU, such as emerging Eastern EU countries.
“Investment in critical infrastructure, such as container ports and electricity supply, is essential to lower transaction costs and reduce uncertainties, thereby enhancing competitiveness against subsidised EU producers,” the researchers advise.
They also call for policy intervention: “Policymakers should engage in dialogue with EU counterparts to revisit non-tariff measures, resolve disputes that limit market access, and explore ways to help local exporters adapt to stringent regulatory requirements.”
The study suggests diversification as a key strategy. “South Africa should also explore fast-growing markets outside the EU, such as BRICS countries, South Korea, Japan, Vietnam, and others, as potential trade partners,” the researchers recommend.
However, they emphasise that the EU remains crucial. “Despite the non-tariff measures, disputes, and other challenges, the EU is still South Africa’s most valuable trade partner. The substantial trade surplus and foreign direct investment generated through EU trade highlight the broader development benefits of strong agri-food exports.”
Dr van der Merwe and her colleagues hope their study will help the country’s agri-food industry and policymakers better understand their competitive position and identify strategic actions to enhance export performance in the EU market.
