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After decades of growth, the global economy is possibly cooling down to similar levels of the inter-war period between 1914 and 1945. Therefore, South Africa needs every international market opportunity it can get, said Agbiz’s head economist, Wandile Sihlobo, during the annual Agbiz media day held at the Grain Building in Pretoria on 1 December 2023.
Sihlobo said South Africa performed very well in the early 2000s by securing several substantial trade agreements, but he believed that the country’s economic growth would taper down as the entire world might recede to similar economic conditions the world faced during times of war. However, there might be opportunities if better trade was established within the BRICS (Brazil, Russia, India, China and South Africa) countries.
“The Bureau for Food and Agricultural Policies (BFAP) predicts a growth of 20% in South Africa’s food production. We need markets to land this produce and for that we need new markets. It does not make our established markets such as the European Union less important, but we will need the new markets as well.”
Sihlobo said it is important to understand that the sector has been able to produce and export record volumes during 2023. “That isn’t something to underestimate.”
Competitiveness is key
Agbiz CEO, Theo Boshoff, said competitiveness would be key to survival for the South African agricultural industry. In 2024, the sector will probably see consolidations, because only the fittest will survive. The coming year will also be marked by unpredictable risk and protectionism, as well as a rise in activism and lobbying within the agricultural sector.
Boshoff said from a geo-political point of view South Africa occupied a relatively good position. “We have managed to punch above our weight in terms of the political roles that South Africa plays at important groups such as the Group of 20, but that needs to translate into actual trade agreements.”
Next year will also be marked by a rise in protectionism and geopolitical risks, so good relationships will be important.
Read more about the recent Agbiz Grain symposium here.
Opening new markets
Wolfe Braude, fruit desk manager at Agbiz, said South Africa has been openly competing within the global free market since the 1990s and the country’s global competitiveness is currently one of the fruit sector’s biggest selling points globally. South Africa is the second-biggest citrus exporter, fourth-biggest grape exporter, sixth-biggest pear producer, eighth-biggest apple exporter, and ninth-biggest avocado exporter. “We do indeed punch above our weight.”
The United States’ African Growth Opportunity Act (AGOA) eligibility reviews will conclude in January next year. “This is done annually, and all countries involved are reviewed, so this is not unique to us,” Braude said, adding that this year’s odds seem to be favourable despite some negative comments regarding South Africa’s geopolitical positioning. “We will nevertheless possibly remain part of AGOA, and we need to keep in mind that from a trade point of view, this offers us a major benefit above countries that are excluded from AGOA.”
2024 election warning
Annelize Crosby, head of Agbiz’s Legal Intelligence division, said the agricultural industry must keep in mind that 2024 was an election year, so they should be ready for emotional lobbying surrounding transformation, migration, land reform, and labour issues. However, there are a few worrying pieces of legislation on the negotiation table for the coming year. This includes the National Water Amendment Bill, which will lead to changes to the National Water Act, 1998 (Act 36 of 1998), as well as the finalisation of the Aquaculture Development Bill, the Tobacco Products and Electronic Delivery Systems Control Bill, and changes to various pieces of legislation pertaining to migration.
Grain threats and opportunities for 2024
Agbiz Grain’s general manager, Wessel Lemmer, said three issues will have a substantial impact on the grain handling and storage sector in the coming year. The first is the South African Futures Exchange (Safex) inquiry into the use of the producer price index (PPI) as the basis of Johannesburg Stock Exchange (JSE) storage rates. BFAP is assisting Safex with this research. The introduction of additional inspection services is a second issue that will be addressed in 2024.
“We established the South African Grain Information Services (Sagis) to perform those duties. We are not happy with how the process has been handled,” Lemmer said, adding that Agbiz was contesting the implementation of these services. The last issue Lemmer noted as a challenge, would be the generic passport system for grain traceability and compliance. – Susan Marais, Plaas Media
