South Africa’s agricultural sector will be watching the outcomes of the upcoming BRICS and G7 summits closely. At the first summit, untapped BRICS markets could open up for Mzansi. On the other hand, Russia will undoubtedly be a major talking point when the G7 countries meet a few days later. Both groupings are important to South African agriculture and major decisions could have far-reaching consequences, economists say.
This year’s BRICS gathering will be hosted virtually by Chinese President Xi Jinping tomorrow (Thursday, 23 June 2022). During the online event, President Cyril Ramaphosa will join the presidents of China, Brazil, Russia and India to discuss issues concerning global politics, economies, food security and more.
South Africa’s main interest as far as agriculture is concerned, is how delegates will lobby new markets for Mzansi and increase exports to BRICS countries, economists say.
According to Wandile Sihlobo, chief economist at Agbiz, trade and market access will feature high on the agenda. He believes Mzansi’s agricultural sector should be looking to increase market access in the other BRICS countries in any case.
“The attractive markets within this grouping are China and India,” he points out. “This is because they account for sizeable agricultural import volumes, have growing populations, fast-growing economies and changing consumer tastes.”
Agriculture in South Africa is also growing, and export markets should be diversified and expanded to accommodate the fields’ output volumes, Sihlobo adds. “South African policymakers’ engagements with their BRICS counterparts should be to lower tariffs for certain agricultural products and address the non-tariff barriers.”
Sihlobo is adamant that, if supported by government policies, South Africa’s agricultural sector could enjoy a growth spurt in the next few years. However, the sector needs to also develop a BRICS strategy which must be complemented by robust bilateral engagements with each of the member countries.
Meanwhile growth in the agricultural sector is already evident, Sihlobo adds.
“To get a sense of how South Africa’s agricultural sector has expanded in the recent past decade, consider the sector’s production volume since 2010, which has grown by 19%. Notably, the Bureau for Food and Agricultural Policy’s long-term projections also present an optimistic picture of South Africa’s agricultural output growth going to 2030.”
Mzansi eyes Chinese market
Thabile Nkunjana, an agricultural economist at the National Agricultural Marketing Council, agrees that South Africa wants to enhance trade with BRICS members. According to Nkunjana, Mzansi has its eye on the Chinese market, particularly for increasing citrus produce and meat exports.
This is becoming more prevalent, owing to South Africa’s increasing agricultural production and the newly signed Agriculture and Agro-processing Master Plan, which is aimed at achieving this goal.
“Given that South Africa’s agriculture sector is export-oriented in nature, the BRICS market is critical in this perspective.”
When it comes to agriculture, Nkunjana adds, South Africa trades primarily with China and India among the member states. These two countries are desirable markets for South Africa, given their large and rising populations, as well as their economic prospects.
Among other commodities, South Africa exports fruit, beverages, spirits, vinegar, cereals, oilseeds, raw hide, fish and meat to China.
Major discussions at G7 Summit
Meanwhile, India and South Africa are scheduled to join the G7 Summit three days after the BRICS meeting. This follows an invitation from German Chancellor Olaf Scholz, who was just in South Africa.
The Russia-Ukraine crisis will undoubtedly be at the forefront of this year’s G7 Summit, and its members are likely to push for more isolation of Russia from the rest of the world, Nkunjana says.
“With regards to the G7, Germany, along with the UK, a leading trading partner for South Africa’s horticulture products, and France has a significant influence on the EU.
“Other G7 members include the United States, Canada, Japan and Italy and have implemented sanctions against Russia, a BRICS member with South Africa.”
In essence, both the BRICS and the G7 countries are critical to the agriculture industry and the economy of South Africa, Nkunjana says.
The upcoming summits could have far-reaching consequences and the leaders of affected industries in South Africa will be watching closely.
The pocket where risk for economic relations is modest, is between India and South Africa, Nkunjana believes, and South Africa’s ambitions for the Indian market for agricultural products should not be a major concern.
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