In the second half of this year, South Africa's agricultural exports lifted by 5 percent year-on-year, reaching $3.4 billion (R58bn). The top exportable products were citrus, maize, apples and pears, wine, grapes, figs, dates and avocados, nuts, fruit juices, wheat, wool and sugar, among others.
Makube said FNB had already seen a healthy performance in the agriculture machinery sector, with the cumulative tractor and combine sales for the seven months to July rising by 20 percent and 50 percent, respectively, relative to the same period in 2021.
“The further spin-off from the excellent exports is the positive contribution to the country’s balance of payment as well as overall gross domestic output growth,” Makube said.
FNB AgriBusiness said the latest trade data for the second quarter of 2022 showed another stellar performance from the agriculture sector with this 5 percent quarter-on-quarter jump in export earnings.
“An indeed impressive performance despite the earlier trade related challenges from the Foot-and-Mouth Disease-induced halt in wool exports to global logistical issues that curtailed citrus volumes. The stellar export earnings and, subsequently, an agriculture trade surplus was underpinned by robust export demand coupled with strong commodity prices. Maize seems to have made a structural break in export trends with volumes way above the historical levels,” Makube said.
Agricultural Business Chamber (Agbiz) chief economist Wandile Sihlobo said Agbiz expected some of these products to have continued to dominate the export list in the third quarter.
“The significant factors underpinning this robust export value are the sizeable agricultural output in the 2021/22 production season and general solid global demand, even at higher commodity prices for maize.
“Maize, apples and pears, grapes, and sunflower oil saw a significant uptick from the first quarter of 2021 and thus overshadowed the decline in the citrus exports during the period under review. There are still ample agricultural and beverage exports ongoing, which should support the activity in the third and last quarter of the year,” Sihlobo said.
The chief economist said from a destination point of view, Africa remained the largest agricultural exports market for South Africa in the first quarter of this year, accounting for 35 percent in value terms.
Asia was the second largest region accounting for 28 percent of the exports, with the EU holding the third position with a 21 percent share in the total exports in value terms.
The UK was one of the most important agricultural markets for South Africa and accounted for 7 percent of overall exports in the second quarter. The balance of 9 percent value constituted the Americas and other regions of the world.
Sihlobo said trade was at the core of South Africa's agricultural progress, and the expansion on the ground must be followed by improvements in market access to various markets and logistical efficiency for the agricultural sector to remain sustainable.
The recent challenges regarding the market access of wool into China had now been resolved, but the losses from when the ban was in place were clear in the trade data.
“Wool exports fell by 42 percent in the second quarter of 2022 compared with the corresponding period in 2021. For citrus, which continues to experience market access challenges in the EU after changes in plant regulations, the impact could show more pointedly in the third quarter of the year. Still, a lot will depend on the engagements between the South African and EU authorities on the new plant safety regulations, which involve stringent new cold treatment requirements.”
The EU argues that these were introduced to protect them from a quarantine organism, such as, "false codling moth", Sihlobo said that ironically, South Africa has rigorous measures to control this organism. In the second quarter of this year, citrus was still the top exportable agricultural product by value in South Africa, despite being down by 22 percent from the second quarter of 2021.
He said the loss of the Black Sea market since the start of the Ukraine war might have also contributed to the slowing of citrus exports.
“Before the war, Russia accounted, on average, for 7 percent of South Africa's citrus exports in value terms. And it accounted for 12 percent of South Africa's apples and pears exports.”
BUSINESS REPORT