Agriculture had a lion’s share in ensuring that South Africa has a positive trade balance and the sector is expected to thrive in 2018.
In the South African agricultural business chamber Agbiz’s Agribusiness Outlook 2018, Sifiso Ntombela, Head of Trade and Investment Intelligence at the organisation, said that the primary and secondary agriculture sectors had generated R123.82 billion from January to October 2017. The sector had a positive trade balance of R38.6 billion.
Given the national trade balance surplus of R4.56 billion, it is clear that the agricultural sector played an important role, said Ntombela. This year’s export performance is greatly attributed to fruits, grains and sugar.
“It is important to have a healthy international demand for South African agricultural products as it keeps job opportunities, promotes growth and also reduces poverty.”
Ntombela added that much work is needed when it comes to trade agreements. “The demand side should, through the establishment of efficient, transparent and advantageous trade agreements, be managed better. Such agreements are necessary to attract much needed investments to the sectors,” he said.
He expects agricultural trade to perform relatively well in 2018, with imports and exports possibly exceed roughly R40 billion. “After expectations, the main drivers will be fruits, grains and dairy products, while imports and could mainly be dominated by food and cold drinks.”
South Africa’s exports to Africa and the European Union (EU) were lower this year, while exports to Asian countries grew steadily. “All exports gradually move to towards Asia.”
Nombela said the reasons why it moves from the EU to Asia, is One of the primary reasons for trade moving from the EU to Asia is the increase in sanitary, phytosanitary and other technical trade barriers.
There is a growing demand from consumers for healthy and high-value products in Asia. Therefore, there is a good opportunity for South African fruits, nuts and wine.
South Africa does have a disadvantage compared to other countries like Australia and Argentina, which have bilateral trade with Asian countries. “We are in a disadvantageous position, which makes our product relatively expensive. We need to pay more attention to these matters to ensure that our bilateral trade agreements with Asian countries are secured to make use of the benefits.”
Ntombela also added that South Africa makes use of limited points of entry to Asian markets, which means that some products have lost their value by the time they reach their final destination. According to him, it is important to get more entry points to the markets.