COMMODITIES: Stresses SA agro sector eager for Russian relief

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JOHANNESBURG, (CAJ News) THE recent call for African countries to expand trade with Russia particularly in the area of agriculture has come as a reprieve for the sector in South Africa, which has suffered severe setbacks in recent months.

Coming at a time the sector is plagued by drought, recurring foot and mouth outbreak, the anticipated expansion in trade also boosts the South African government’s drive to expand its export base amid dwindling opportunities in existing markets.

The inaugural summit concluded in October ended with an announcement that urged all participants to increase cooperation in security, science, environmental protection, trade and economic matters.

South Africa, the continent’s most advanced economy, enjoys an agricultural trade surplus with Russia hence economist Wandile Sihlobo believes the call for increased agricultural trade between Africa and Russia sets a good basis for the Southern African country to explore the means of increasing its share within the Russian agricultural market.

He noted that in terms of reciprocity, Russia is already a notable supplier of wheat to South Africa and could increase its share if it were to compete comparatively with wheat suppliers such as Ukraine and Lithuania, amongst others.

In 2018, Russia was South Africa’s 16th largest agricultural market. South Africa’s agricultural sector already participates within Russia’s market, although ranked as the 29th country supplying agricultural products to Russia in 2018.

“Overall, the announcement of increased agricultural trade by the Russia-Africa Summit is positive for South Africa’s agricultural sector,” Sihlobo said.

The Agricultural Business Chamber – South Africa (Agbiz) economist said the growth that South Africa envisaged in this particular sector would be export-led.

“Therefore, any talks that encourage trade should be viewed positively,” he said.

South Africa mainly exports citrus, apples, pears, wine, grapes, apricots, cherries, peaches and fruit juices to Russia.

These are among the products that Russia generally imports from the world.

Russia is an important player in global agricultural markets, ranked as the 13th largest importer, valued at US$28,8 billion annually, on average, over the past five years, according to Agbiz.

The world’s largest country by size has a trade surplus with the African continent, as the latter feature down on the list of key agricultural exporters to Russia.

According to the Trade Map, in 2018, Russia had an agricultural trade surplus of $2,8 billion with the African continent.

The South African agricultural industry is enduring a difficult period.

Official statistics indicate that that South Africa’s agricultural trade surplus narrowed by 9 percent in the third quarter of this year compared to the corresponding period in 2018, recorded at $1,2 billion.

“If there is anything that has shaped agricultural performance it is the drought in the 2018/19 production season and also the bio-security matters,” Sihlobo stated.

The foot-and-mouth disease outbreak that occurred in Limpopo earlier this year resulted in a temporary ban of South Africa’s livestock products exports.

“Affected export commodities included wool, and thus the lower export values. The wool exports have since resumed, and we could see some normalisation in export values in 2020,” he said.

The drought that started in October 2018 and continued into early 2019 in some parts of South Africa led to a poor summer crop and horticulture harvest.

The main challenge throughout the year has been the lower output of major agricultural commodities such as maize, soybeans, sunflower seeds, amongst others, whose harvests declined by double-digit levels in the 2018/19 production year.

Meanwhile, statistics by Unigrain show that South African maize prices opened the week slightly higher at R2 678 a tonne and traded to a low of R2 676 with some gains that were seen after that.

– CAJ News

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