What's Happening?
Research conducted by Stellenbosch University and Mendel University in the Czech Republic highlights the need for South Africa to invest in infrastructure and diversify markets due to declining agri-food exports to the European Union (EU). Despite strong trade agreements, South Africa's agricultural competitiveness is being hindered by non-tariff barriers and related disputes. The study, led by Dr. Melissa van der Merwe, analyzed 20 years of trade data, revealing that while exports increased from 1999 to 2019, growth slowed after the global financial crisis. The research indicates that horticulture dominates South Africa's agri-food exports to the EU, with citrus, grapes, wine, apples, pears, and avocados being the top exports. The study suggests that South Africa should prioritize products with growing demand and target fast-growing markets within the EU, particularly in Eastern Europe.
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Why It's Important?
The decline in agri-food exports to the EU poses significant challenges for South Africa's agricultural sector, which relies heavily on these exports for economic stability. The research underscores the importance of revisiting trade agreements and addressing non-tariff barriers to enhance competitiveness. The EU remains South Africa's most valuable trade partner, contributing to a substantial trade surplus and foreign direct investment. However, the sector faces increased competition in saturated or slowly growing markets. The study recommends diversification into fast-growing markets outside the EU, such as BRICS countries, South Korea, Japan, and Vietnam, to mitigate risks and enhance export performance.
What's Next?
The research team advises South Africa to invest in critical infrastructure, such as container ports and electricity supply, to lower transaction costs and reduce uncertainties. Policymakers are encouraged to engage in dialogue with EU counterparts to revisit non-tariff measures and resolve disputes limiting market access. Exploring new trade partners outside the EU is also recommended to diversify export strategies and reduce dependency on the EU market.
Beyond the Headlines
The study highlights the broader implications of trade challenges, including the need for policy intervention to support the sector's long-term competitiveness. The research suggests that existing trade agreements may no longer be sufficient to sustain the sector's development, prompting a reevaluation of strategies to adapt to stringent regulatory requirements and market dynamics.
