THE BLOG

The South African Trade Statistics Provide Good News For Farmers

The trade statistics show that this positive trade balance was underpinned by notable growth in exports of edible fruits, beverages, spirits and vegetables.

18/09/2017 09:30 SAST | Updated 18/09/2017 09:30 SAST
Sphiwe Sibeko/ Reuters
A worker leaves after working at a farm in Eikenhof, south of Johannesburg, April 24, 2012.

Although the 2015-16 season was largely dominated by negative news associated with El Niño-induced drought, there was also some good news, thanks to trade. The South African agricultural sector recorded a positive trade balance of US$2.3 billion in 2016, despite experiencing the worst drought in more than a decade.

A closer look at the trade statistics shows that this positive trade balance was underpinned by notable growth in exports of edible fruits, beverages, spirits and vegetables, with the total agricultural export value amounting to US$8.6 billion, a 6 percent increase from 2015. Worth noting is that these products are mainly grown in the Western Cape province, which was not as severely affected by the 2016 drought as the rest of the country.

Imports also increased by 26 percent year-on-year, reaching US$6.3 billion. This was driven by a notable uptick in grain imports on the back of reduced domestic production as a result of the drought, particularly maize which saw South Africa importing a volume of 2.2 million tonnes in the 2016/17 marketing year. Trailing behind maize was wheat with imports of 2.1 million tons in the 2015/16 marketing year.

Africa remained South Africa's largest market, accounting for 44 percent of agricultural exports -– which is 9 percent below the five-year average share. The EU accounted for 26 percent of South Africa's agricultural exports in 2016, with Asia taking up 22 percent, the Americas and the rest of the world [ROW] accounted for 5 percent and 3 percent, respectively.

Driving the country's exports to Asia was an uptick in edible fruits, wool, beverages, nuts and meat exports, amongst other products.

Here is some detail of the export performance of the aforementioned regions:

  • After falling by 18 percent year-on-year in 2015, South Africa's agricultural exports to Africa recovered by 4 percent in 2016 –- reaching US$3.8 billion. This uptick was driven by sugar and sugar confectionery, milling products, as well as exports of edible vegetables and certain roots and tubers.
  • Moreover, South Africa's agricultural exports to Asia increased by 13 percent, from US$1.66 billion in 2015 to US$1.87 billion in 2016. Driving the country's exports to Asia was an uptick in edible fruits, wool, beverages, nuts and meat exports, amongst other products.
  • South Africa's agricultural exports to the European Union firmed by 5 percent, from US$2.1 billion in 2015 to US$2.2 billion in 2016. This was supported by an uptick in exports of edible fruits, beverages and spirits, wool and meat, amongst other products.
  • Lastly, South Africa's agricultural exports to the Americas increased by 5 percent in 2016, reaching US$429 million. Whilst there is a number of products driving this increase, the key ones were beverages and spirits, as well as edible fruits.
Given the recovery in agricultural production this year, the South African agricultural trade balance is likely to remain positive again in 2017.

Overall, this shows the resilience of the South African agricultural sector as well as strong global demand for the country's agricultural products. Making this possible are trade agreements which enable the country to export agricultural goods tariff free or at lower tariffs to some of the aforementioned regions.

Given the recovery in agricultural production this year, the South African agricultural trade balance is likely to remain positive again in 2017. With that said, some commodities such as white maize will continue to experience lower demand from the traditional [African] markets due to large supplies throughout Southern Africa.

Above all, a positive trade balance will not only be good for the agricultural sector but will essentially support the country's current account.