Farmers in the 21st Century are greatly influenced by international commodity markets, the exchange rates, and the flow of produce between countries. The domestic price of commodities in most countries is very close to import parity (the landed price of an imported product) as farmers compete with each other for markets.
A growth in exports will be crucial to this country meeting its job creation goals and balancing its trade deficit (when we import more than we export).
As long as the global economic system creates countries that are better able to produce products more efficiently (and cheaper) than others, the world trade system – and exporting – will continue unabated.
2. Local business environment
a) The following are included in the trade agreements to which South Africa is party:
- Southern African Customs Union (SACU)-European Free Trade Association (EFTA) FTA
- SACU-MERCOSUR Preferential Trade Agreement
- EU-SADC EPA, replaces the South Africa-European Union (EU) Trade Development and Co-operation Agreement (TDCA).
- Southern African Development Community (SADC) FTA
- USA Africa Growth and Opportunity Act (AGOA)
- A memorandum of understanding exists between South Africa and China.
- SACU-India Preferential Trade Agreement (PTA) (not finalised)
|According to the UN, it is estimated that the African Continental Free Trade Area (AfCFTA) will boost intra Africa trade by 53% by eliminating import duties and non-tariff barriers. This agreement is potentially poised to create an African market of more than 1.2 billion people with an economy worth US$2.5 trillion. There is still a long way to go for the AfCFTA to become a reality: only six of the required 22 countries have ratified the agreement (Baker McKenzie, 2018).|
b) In 2017 South Africa’s agricultural exports surpassed $10-billion (about R134-billion) for the first time, boosted by growth in exports of edible fruits, beverages, spirits, vegetables, grains and other farm products. The $10.0-billion figure represented a 15% year-on-year increase from $8.7-billion.
Africa and Europe were the largest destinations for agricultural exports, collectively absorbing 67% of total exports last year in value terms. Asia was also an important market, taking 24%. The Americas and the rest of the world accounted for 5% and 4%, respectively.
In the same period, imports increased by 5% year on year, reaching $6.7-billion, particularly driven by wheat and rice.
Source: Wandile Sihlobo (Agbiz), July 2018, https://wandilesihlobo.com/2018/07/16/expect-western-cape-drought-to-knock-farm-exports
Trade data is given on www.sars.gov.za (see the “Customs and Excise” menu option). Included are overviews on the country’s trade agreements. See also www.thedti.gov.za and the web pages of the Directorate International Trade at www.daff.gov.za.
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