South Africa’s global agricultural exports last year amounted to about R237 billion, roughly half of which went to the rest of the African continent.
By Nico van Burick, senior journalist at African Farming and Landbouweekblad
About 90 cents of every dollar that South Africa earns from agricultural exports into Africa comes from trade with countries in Southern Africa, showing how strongly this region dominates South Africa’s export footprint.
These figures were shared by Wandile Sihlobo, chief economist at Agbiz, during a televised discussion on agricultural development and trade in Southern Africa, ahead of the Financial Times Africa Summit, held in London in October. He noted that South Africa’s agricultural trade is mainly focused on the Southern African Customs Union and the Southern African Development Community (SADC) free-trade area.
South Africa’s agricultural exports to Africa consist mainly of maize, processed foods, apples and pears, sugar, animal feed, bottled water, fruit juices and wine.
Sihlobo believes these regions will continue to dominate South Africa’s continental trade for some time, although growth potential is limited. While there is general agreement that South Africa should expand its trade into West, East and North Africa, such expansion faces several constraints.
Also read: Innovation and opportunity in African agriculture
According to Sihlobo, North Africa, being far closer to Europe, has strong, established supply-chain relationships with the European Union, making it a difficult market for South African exporters to penetrate.
Expanding trade into East and West Africa through the African Continental Free Trade Area (AfCFTA) may be more realistic, he said, but even this comes with significant obstacles. These include a range of non-tariff trade barriers; high levels of corruption, which increase the cost of doing business; and fragmented value chains as a result of poor connectivity and weak infrastructure, which raises transport costs.
“This narrow scope of expanding agricultural exports in the African continent typically leads to frustration among business leaders, who continue to see improvement in domestic production but are limited in avenues for sales,” Sihlobo says. “The major economies in the east and west of the continent, Nigeria and Kenya, remain tiny markets for South Africa’s agricultural exports, each accounting for a mere 2% a year.
“Still, Nigeria spends over $6 billion on agricultural imports a year. The key beneficiaries of the Nigerian agriculture market are Brazil, the US, China, Russia, Canada, New Zealand and Germany.”
Sihlobo believes South Africa’s growth opportunities within Africa are limited, and this is why exporters are increasingly focusing on the Middle East and Asia, where incomes are rising and populations are growing.
Also read: Homegrown innovation is the key to Africa’s agricultural future
Success Stories: Apples and Pears in African Markets
Despite the challenges, there are several success stories in agricultural exports to Africa. About half of all apples marketed by Tru-Cape Fruit Marketing are sold into African markets, including South Africa.
According to Tru-Cape – South Africa’s largest marketer of apples and pears – consumer preferences across Africa have shifted over the past 20 years. Two decades ago, Granny Smith, Top Red and Golden Delicious were the only cultivars that reached African markets, and red apples were sold mainly within South Africa.
Marketing director Conrad Fick recently noted that East African markets now sell all colour cultivars, whereas Golden Delicious remains the favourite in West Africa – although other varieties are steadily gaining popularity.
Only about 5% of apples exported to Africa are sold through formal retail outlets. The rest are sold by street vendors or at fresh-produce markets.
Over the years, Tru-Cape has supported these vendors by providing gazebos and umbrellas to protect their produce while also promoting the brand.
Also read: African Development Bank considers a R9bn facility to unlock R182bn finance for smallholder farmers
