Agricultural exports remained robust in second quarter of year

SA's agricultural exports amounted to $3.4bn (R64.2bn) in the second quarter of this year, up by 0,1% year on year, according to data from Trade Map.

Despite challenges in key export markets such as the EU in the case of citrus, the products that dominated the export list this quarter were citrus, maize, apples and pears, wine, sugar, soybeans, wool, avocados, pineapples, fruit juices, nuts, and grapes.

Importantly, this good export performance was not only a function of price, but also improved volumes.

The prices of some agricultural products have declined notably from the 2022 levels.

The improvement in agricultural exports also partly demonstrates the results of continued collaboration between the industry and Transnet to improve the logistics at the ports.

However, more work is needed to improve the efficiencies.

The SA agricultural industry has established forums to continuously engage with Transnet and enhance communication about problems at the ports so that the response can be swift to drive the exports of high-value and perishable products.

From a regional perspective, Africa remained the largest market for SA’s agricultural exports, accounting for 36% of the exports in the second quarter of 2023.

Asia and the Middle East were the second-largest region, with a 30% share.

The EU was the third-largest region, accounting for 18% of the agricultural exports, with the Americas region at 6%.

The UK remained one of the largest single markets for SA’s agricultural exports, accounting for 7% of the exports in the second quarter. The remaining 3% was spread to other various regions of the world.

Regarding imports, SA’s agricultural imports fell by 6% year on year in the second quarter of this year to $1,8bn (R34bn), according to data from Trade Map.

The products that still dominate the import list are rice, wheat, palm oil, whiskies, and poultry.

The whiskies, wheat and poultry products were the main drivers of the decline in the value of imports in the first half of the year.

Overall, SA had an agricultural trade surplus of $1,6bn (R30.2bn) in the first half of 2023, up 9% year on year.

While SA’s agricultural exports in the first half of the year have been encouraging, we think export earnings will likely soften this year from the 2022 record.

The lower commodity prices and the stringent regulations of the citrus black spot disease in the EU market are among the factors likely to result in lower export earnings.

We expect the effects of these challenges to be more evident in the second half.

As we stated recently in one of our notes, the citrus challenges in the EU are not new.

In the 2022 export season, SA experienced another challenge in that market, where the EU proposed changes to its plant safety regulations for citrus.

These changes purported to protect the EU from a quarantine organism, the false codling moth, by introducing stringent new cold treatment requirements, particularly on citrus imports from Africa, mainly affecting SA, Zimbabwe and Eswatini.

But SA had already put in rigorous measures to control false codling moth.

As such, we viewed this as a measure to protect the EU’s citrus-growing countries like Spain.

The engagements on this issue between SA and the EU are ongoing, and the citrus black spot disease issue adds to this challenging environment.

The appropriate channel for resolving the matter is through the continuous engagement of the SA government with the EU authorities.

From an SA perspective, the EU is a crucial export market for the citrus industry.

Beyond these near-term challenges, SA is on an export market expansion mission for the agricultural sector.

This means there is a need to work hard to retain the existing markets in the EU, Africa, Asia, Middle East, and the Americas.

Notably, SA should expand market access to some of the key Brics+ countries, such as China, India, and Saudi Arabia.

Other strategic export markets for SA’s agricultural sector include South Korea, Japan, Vietnam, Taiwan, Mexico, the Philippines and Bangladesh.

This export market expansion ambition is shared by both the private sector and the SA government.

The department of trade, industry & competition and the department of agriculture, land reform & rural development should lead the way for export expansion in these agricultural strategic markets.

Wandile Sihlobo, an agricultural economist, is the author of a new book A Country of Two Agriculture: The Disparities, The Challenges, The Solutions (Tracey McDonald Publishers, 2023).