Ahead of the much-anticipated visit by king Willem-Alexander and queen Máxima of the Netherlands to South Africa in October, agriculture will top the agenda as the two countries enjoy good exporting relations.
According to the Royal House, the king will be in South Africa from Wednesday 18 to Friday 20 October 2023 as per the invitation of President Cyril Ramaphosa. The visit comes with the country having entered a recession.
“In parallel with the state visit, minister of agriculture, nature and food quality Piet Adema will head an economic mission centring on future-oriented agriculture and horticulture, green hydrogen and circular waste management,” the Royal House statement said.
Largest EU market
Thabile Nkunjana, an agricultural economist from the National Agricultural Marketing Council (NAMC), said although the Netherlands is experiencing a minor recession, for South African fruit exports that could mean a lot and they will probably be hoping that the situation does not worsen.
“This is concerning for South Africa’s agricultural sector because the Netherlands is by far the largest single market for agricultural products sent to the EU region, followed by the United Kingdom.
“South Africa’s agricultural exports to the Netherlands can equal to at least 40% of total value in a typical year or quarter,” Nkunjana added.
The Netherlands is reported to be experiencing a minor recession in 2023. This follows a 0.3% drop in the economy in the first quarter of 2023 and a 0.4% drop in the second quarter.
According to Nkunjana, the recession comes after a decline in exports and household spending power as consumers struggle with high interest rates as the government attempts to control inflation. According to the Bureau of Economic Policy Analysis, the economy would contract by 0.7% in 2023.
The impact on SA exports
“South Africa exports a variety of agricultural products to this significant market, including citrus products such as oranges, lemons, and others, as well as avocados and many more.
“Many high-value crops that contribute significantly to South Africa’s foreign revenues are exported to the Netherlands,” he added.
Nkunjana said the Netherlands market is very critical for the South African producers who are reliant heavily on the market. They’ll be hopeful the situation improves, especially considering how the country’s exports have been treated in the EU.
Keeping a close watch
“It will be critical to keep a close eye on the issue, especially given that South Africa’s citrus exports have shown a positive trajectory in the EU market in July 2023, following a rough start due to recent export requirements to the EU market.
“The country’s overall Inflation is projected to stay high in the medium term, causing more households suffering economic difficulties to decrease their expenditure,” he said.
Nkunjana said food inflation is also still high, as of July 2023. Food inflation in the Netherlands was 11.5% higher, which was lower than the 13.0% reported a month earlier.
“The present Dutch recession is considered to be having little impact on employment, so there should be little cause for fear; otherwise, South African exporters will be praying that the situation does not worsen,” he said.
Asian and Middle East alternatives
Meanwhile, deciduous fruit farmer in Limpopo Dibesho Serage said the EU market remains a strategic market for South African producers and any economic impact in the area affects the local growers.
“It is only recently that we have developed the Asian and the Middle East markets, an overwhelming majority of our fruits goes to EU. We are turning over about R2 billion per annum just on deciduous fruit.
“So this goes to show that the EU and its countries are a very important market for us as the producers. So if a country is facing a recession it means their buying power has weakened and they are not able to pull as much fruit as they used to, and it will affect the farmers because the local market cannot absorb all of the fruit,” he said.
Serage said the Asian and Middle Eastern markets are going to open more, especially with the addition of other countries in the Brics bloc of states (Brazil, Russia, India, China and South Africa).
‘Next big thing’
“I am not too worried. Whether it be subtropical fruits, deciduous, wine, grapes, or citrus that might be affected by a few countries going into recession, the Asian market is becoming the next big thing for us as producers,” he added.
Serage said he believes the Brics Summit held recently in South Africa was going to unlock bigger opportunities for local producers who need to be on the lookout and grab those chances when they appear.
“I believe with the United Arab Emirates and Saudi Arabia coming into the Brics bloc, and China coming through with their buying power, things are going to look good for the better,” he said.
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