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July 29, 2008

South Africa's animal feed imports rise

South Africa suffered a negative balance of agricultural trade for the first time last year because of rapidly increasing imports. The fastest-growing and largest import was vegetable proteins.

According to Professor Nick Vink, of the agricultural economics department at the University of Stellenbosch, these imports were boosted by the need for animal feed. While most animal carbohydrate requirements were supplied by domestic maize feed, the protein requirements were supplied by oil seeds. The growth of the middle class was fuelling the demand for animal products, particularly chicken and dairy, he said.

According to figures from the SA Revenue Service (Sars), imports of animal or vegetable fats and oils rose to R2.6 billion in May, 60 percent more than a year earlier. Exports grew to R296 million, rising 148 percent from a low R119 million. (1US$= 7.5SAR)

Imports for the economy as a whole totalled R282 billion in May, compared with exports of R248 billion. But last year agricultural exports added up to R29.2 billion, compared with imports of R29.4 billion, bringing the trade balance into negative territory at R172 million.

According to the department of agriculture, farm exports amounted to R4.6 billion in 1990, compared with imports of less than R2 billion.

In 1992 exports were R4.8 billion and imports R4.4 billion, for a trade balance of a mere R382 million. But in 2002 a trade balance of more than R10 billion in South Africa's favour was recorded, with exports amounting to R25.8 billion and imports to R15 billion.

What this adds up to is that South African agricultural exports do not now cover its agricultural imports - or, at least, they are at the tipping point of not being able to do so. Agriculture will no longer contribute foreign exchange to the economy if this trend continues. National food security could be jeopardised, especially, Vink points out, if high world prices continue leading to more expensive imports.

According to Sars, imports of oil seeds increased from R1.4 billion in 1996 to R2.3 billion in 2001, rising sharply to R3.6 billion in 2004 and reaching a record R6.6 billion last year.

While the value of imported animal products has been rising sharply, it has not advanced as rapidly as that of oil seeds. Yet it took over from rice as the second-largest imported product in 2003, reaching R1.174 billion, compared with animal products at R1.176 billion. By last year, rice imports amounted to R2.1 billion and animal products to R3.1 billion.

Johann Kirsten, a University of Pretoria professor of agriculture, argued that the dual nature of local agriculture, consisting of large commercial farms owned mainly by white farmers, and small subsistence farms located in the former homelands, remained a challenge for policy.

The commercial sector was capital intensive, with an estimated 25 percent of farmers producing 75 percent of output, Kirsten said.

About 46 000 farmers occupied 87 percent of agricultural land. Smallholder farming remained largely impoverished.

Vink argued that South Africa was feeling the pinch of a largely failed land reform programme. With rising global food prices, new black farmers would now have been able to reap the benefit.

"South Africa has lost a golden opportunity to transform agriculture. If the land reform programme had progressed to the extent that it should have, by now there would have been thousands of black farmers able to benefit. We have a land reform programme that is unable to attract the best black managers."

As a result, South Africa had not been able to grow new export industries. White farmers would not invest, Vink said, because the land reform programme created uncertainty. "There are too few good black farmers because they do not see the profit potential."

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