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April 27, 2009

South African agricultural exports rebound

by Wouter Kriel

The South African agricultural sector has managed a turn-around to become a nett exporter again, despite a 9% drop predicted in global trade this year. The sector posted a deficit last year.

Dr Ferdi Meyer, an analyst at the Bureau for Food and Agricultural Policy (BFAP) at the University of Pretoria, attributed this to the cyclical nature of agriculture. "Drought and good years will always play a role in how this sector performs," said Dr Meyer. "We became a nett importer because of unexpected demand from our burgeoning middle class, but since the economic downturn local demand has contracted, while there’s still a good crop on the land with exportable surpluses."

Prof AndrĂ© Jooste, senior manager at the National Agricultural Marketing Council (NAMC), said fluctuations in the exchange rate played a significant role in changing our status from an importer to an exporter. He said a lot of noise was made over South Africa’s nett import status for agricultural products, but an analysis of what caused this shows products such as rice, oil cake, palm oil and whiskey were the major processed imported articles, along with wheat, tobacco and coffee.

"Except for wheat, we don’t produce these products, so it’s not a true reflection of the state of our agricultural sector," he said.

The latest NAMC figures show an increase of 99,05% in wheat imports from 2007 to 2008, with a 46% annual increase in imports for 1998 to 2007. Wheat imports cost South Africa R1,82 billion in 2007, said Prof Jooste.

Jannie de Villiers, executive director of the National Chamber of Millers, said South Africa’s food security is not in a good position.

"We rely on countries such as Argentina to supplement our wheat production, but they recently stopped exporting to us on very short notice," he explained. He said South African farmers decide whether to plant wheat based on economics and government should revise its policies regarding wheat tariffs to make wheat more attractive to local producers.

Further, the lack of genetically modified wheat is prohibiting the wheat crop from improving in the same way as maize, which achieved a 25% crop yield improvement over the past four years.
"We need government to invest in research to improve our local wheat industry as much as possible," said De Villiers.

Stemmed tobacco imports increased by 51,45% over the same period, and coffee showed an increase of 121,2% for the period 2006 to 2008. From 2007 to 2008, rice imports increased by 80,75% and soya oil cake imports by 75,78%. From 2006 to 2008, palm oil imports increased by 207% and whiskey imports increased by 37,7%.

This contributed to a processed-product trade deficit of R7,1 billion, an increase of 3% for the period 2007 to 2008. South African processed exports increased by R6,4 billion, or 38% from 2007 to 2008. Imports of processed products increased by R7,8 billion or 35% over the same period.

Farming UK

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