A panel discussion on Friday at Nampo, the largest agricultural exhibition in the Southern hemisphere, highlighted the potential of South African agricultural exports while looking at the challenges of tariffs.
Image: Yogashen Pillay
South Africa’s agricultural sector has significant opportunities to expand exports into Asia, the Middle East and broader African markets, but tariff barriers, protectionist policies and weak regional integration continue to limit growth prospects.
This emerged during a panel discussion at NAMPO Harvest Day in Bothaville, the largest agricultural exhibition in the Southern Hemisphere, where industry leaders and trade experts debated the future of South African agricultural exports amid rising global trade tensions.
The discussion featured Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa, alongside Donald MacKay, founder and chief executive of XA Global Trade Advisors.
Sihlobo said South Africa’s agricultural exports had grown strongly over the past two decades following the successful negotiation of several trade agreements between 2005 and 2013.
“There were a few trade agreements that we managed to secure around 2005, all the way going into 2013, and then we went on to a dry patch where we were not opening any new markets. We refer to this sector as export-oriented. It's exporting over half of what we are producing,” he said.
South Africa’s agriculture industry has become increasingly reliant on export markets as production volumes have expanded, particularly in horticulture, grains, wine and livestock products.
Sihlobo said future growth opportunities would increasingly depend on accessing fast-growing regions such as Asia and the Middle East, where population growth, urbanisation and rising incomes are driving food demand.
“I still think that we can retain what we have in Europe, Africa, and all of the other areas. But Asia, all of the demographic shifts, the incoming improvements that we are seeing there, as well as the Middle East,” he said.
While geopolitical instability has recently shifted global attention away from the Middle East, Sihlobo argued that the region would remain strategically important for food exports in the long term.
“But in times of peace and reconstruction, and after all of these wars, that's going to remain the region that actually still needs more food. Each of these major economies, the likes of Saudi Arabia, Qatar, and the likes, are spending over $20 billion (R333 billion) importing food each year.”
He noted that major Gulf economies such as Saudi Arabia and Qatar collectively spend more than $20 billion annually on food imports.
Sihlobo also highlighted the uneven nature of South Africa’s agricultural trade within Africa.
Although approximately 40% of South Africa’s agricultural exports are destined for the African continent, the overwhelming majority goes to neighbouring Southern African countries.
“$0.90 in every dollar is just from the southern Africa region. There is nothing that we are getting from West Africa, the market region, and East Africa that is that notable. The folks are using the non-tariff barriers. Some are telling us that our grain is genetically modified,” he said.
Sihlobo said non-tariff barriers remained a major obstacle to expanding agricultural exports deeper into the continent, with some African countries raising concerns over genetically modified grain imports.
“The reason for it is because we're trying to create jobs. We're not growing without an agricultural sector for the sake of the economy. And those foods and those meats that are going there, in some countries the demand remains constrained because the buying power is not exciting.”
MacKay said agriculture remained one of the most politically sensitive sectors globally because of its direct link to food security and employment.
“We have a 62% tariff on chicken. But we're shocked that the chicken producers don't want to export. Why would you export if you've got a 62% tariff locally, but when you step outside your borders, you suddenly don't have that,” he said.
“Poultry is an enormous agricultural sector, if not our biggest employer. But the problem you have is that it also means people have to pay more for chicken. There's a lot of poor people and they eat a lot of chicken.”
MacKay also expressed support for the African Continental Free Trade Area, but argued that South Africa needed to become more open to imports from other African countries if regional trade integration was to succeed.
“The reality is we treat the Continental Agreement like a market we can sell to. But we're terrified of African states sending anything into our market. If we're going to have leverage then we've got to focus on the basics: how do we create a high-quality group of human capital in the country,” he said.
Meanwhile, Sihlobo added that from a wheat perspective, roughly 50% that South Africa used locally, 50% is being imported.
“Some of the global market countries are heavily protected. So global, and then there are different studies that you can look at where these wheat prices could be higher where farmers are kept on the land for a very strategic region.”
BUSINESS REPORT