Against a shaky agricultural trade backdrop with international players, South Africa’s agricultural sector recorded a trade surplus in the first quarter of 2023. However, agricultural exports fell.
Products that dominated the export list were grapes, maize, apples and pears, wine, wool, apricots and peaches, sugar, fruit juices, and soybeans, among other products. Some of these products, including citrus, are expected to remain among the top exportable products.
“Ultimately, South Africa recorded an agricultural trade surplus of US$1,20 billion in the first quarter of 2023, up 9% from last year’s corresponding period,” explained Wandile Sihlobo, chief economist at the Agricultural Business Chamber (Agbiz).
“The widening trade surplus is mainly a result of a notable decline in import value, not necessarily a growth in exports, as the figures above illustrate.”
Agricultural exports fell by 2% y/y in the first quarter of 2023 to US$2.9 billion.
Maize and soybeans harvests impress
While the start of the year was rough with excessive rains, improving weather conditions from the end of January supported agricultural activity, said Sihlobo.
“For example, the 2022/23 maize harvest could reach 16.4 million tonnes, 6% higher than the 2021/22 season’s harvest and the second-largest harvest on record. In addition, the soybeans harvest is estimated at a record 2.8 million tonnes.”
South Africa’s sugarcane crop will likely increase by 3% to 18.5 million tonnes in 2023/24. Other field crops and fruits also show prospects for decent harvest this season, which supports better employment prospects in the sector.
Concerns for citrus
“The one area that continues to worry us is citrus export out of the Western Cape, following the infrastructure damage in Citrusdal because of heavy rains in June 2023.
“The destruction of the bridge slowed the citrus exports from the region. The impact of this will likely show in the second and third-quarter export data,” Sihlobo said.
Also worth noting is that the impact of load shedding may continue to influence production conditions as all of South Africa’s fruits and vegetables are under irrigation, and roughly a third of field crops are produced under irrigation.
As South Africa transitions to a potentially drier El Niño season in the 2023/24 production season, the need for irrigation may intensify, which will require a reliable energy supply, Sihlobo said.
African trade dominates
From a destination point of view, the African continent remained the largest market for South Africa’s agricultural exports in the first quarter of this year, accounting for 39% in value terms.
The European Union was South Africa’s second-largest market, accounting for 23% of all agricultural exports. Asia and the Middle East combined accounted for 21%.
The Americas accounted for 8% of South Africa’s agricultural exports. The United Kingdom is one of the most important agricultural markets for South Africa and accounted for 7% of overall exports in the first quarter. The balance of 2% value constitutes other regions of the world.
How imports fared
“South Africa’s trade approach is not one-sided, perusing only exports. The country imports a significant amount of agricultural products.
“And thus, in the first quarter of 2023, South Africa’s agricultural imports amounted to US$1.7 billion, down 9% y/y (but up 4% quarter-on-quarter),” Sihlobo said.
The imported products are primarily wheat, rice, palm oil, sunflower, and poultry. Because of unfavourable climatic conditions, rice and palm oil cannot be sustainably produced in South Africa.
Sihlobo pointed out that the annual decline in the import bill is mainly because of the relatively lower agricultural commodity prices compared to a year ago.
“We believe rice, wheat, and palm oil will continue leading the annual agricultural import product list.”
Improve logistics, trade markets
From a policy perspective, from now on the focus should be on improving logistics efficiency and intensifying the promotion of South African agriculture, food, fibre, and beverages to export markets, Sihlobo reckons.
South Africa is an export-oriented sector, where roughly half of the produce, in value terms, is exported. Therefore, an industry and government approach to promoting South African products in export markets is key.
The agriculture and agribusiness role players have identified the countries where the government should prioritise this sector’s export expansion.
These are China, South Korea, Japan, the USA, Vietnam, Taiwan, India, Saudi Arabia, Mexico, the Philippines, and Bangladesh. These efforts, Sihlbo said should be well-sequenced and complement the ongoing attempts to boost domestic production through various interventions outlined in the Agriculture and Agro-processing Master Plan.
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