Although we wrote about South Africa’s agricultural trade last month, the recently released data for December 2018 paint a clear picture of the full year’s agricultural trade performance that is worth highlighting. In 2018, South Africa’s agricultural exports grew by 7% y/y to US$10.6 billion, a record level in a dataset starting from 2001. This was underpinned by increased exports of oranges, grapes, wine, maize, apples, wool, lemons, mandarins and pears, amongst other products. Over the same period, imports increased marginally by 0.1% y/y to US$6.7 billion. The key imported products were rice, wheat, offal, palm oil, whiskey, live cattle and oilcakes for animal feed. Overall, this subsequently led to a 21% y/y increase in South Africa’s agricultural trade balance to a record US$3.9 billion.
From a destination point of view, the African continent and Europe continued to be the largest markets for South Africa’s agricultural exports, collectively absorbing 66% of total exports in 2018, measured in value terms. In more detail, Africa remained South Africa’s largest market, accounting for 39% of agricultural exports. The leading products to these markets were beverages, fruit, vegetables, wool, sugar and grains. Asia is also an important market for South Africa’s agricultural exports, demanding a 25% export share in 2018. Wool, fruit, grains, beverages, vegetables and meat were the leading products exported to this particular region. The Americas and the rest of the world accounted for 5% and 4% shares. Exports to these regions were also dominated by fruits, beverages, vegetables, tea, sugar and grains.
From a national policy perspective, in his 2019 State of the Nation Address, President Ramaphosa signalled that potential expansion in agricultural production would mainly be on export-oriented products. There is already a clear pathway for this initiative as South Africa is currently well-positioned in terms of export markets, and there is clarity about products that show a growing demand in the world market. With that said, South Africa’s agricultural trade prospects for 2019 are not as positive as for 2018, as unfavourable weather conditions in parts of the country could lead to lower production, particularly in grains. The current ban on the exports of beef is another factor that could lead to reduced exports in 2019. The subsectors that could still show solid export performance this year are horticulture and wine. Be that as it may, we still expect a positive trade balance for South Africa’s agriculture in 2019. –Wandile Sihlobo
Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his weekly update on agricultural commodity markets. Click here for the full report on agri markets for the major commodities.