Despite the major logistical disruptions created by the pandemic, SA’s agricultural exports hit $10.2bn in 2020, a 3% increase from the previous year and the second-largest level on record.
At the same time, agricultural imports fell 8% year on year, leading to a 26% year-on-year increase in the agricultural trade surplus, which widened to $4.3bn.
SA’s exports were underpinned by large domestic agricultural output thanks to favourable weather, says Wandile Sihlobo, chief economist at the Agricultural Business Chamber of SA.
The weaker rand also made SA agricultural products more globally competitive, while the government’s decision to leave the food and agricultural sectors fully operational during the various lockdowns was equally supportive.
An increase in consumer demand helped too, according to Tru-Cape Fruit Marketing, SA’s largest exporter of apples and pears. Its 2020 revenue was 17.5% higher than in 2019 and a record in Tru-Cape’s 20-year history.
"Following Covid-19, the move to eating more apples and pears as part of a healthier lifestyle has been evident and the lockdown has meant people are eating and cooking at home more than before," says MD Roelf Pienaar. "Also, apples, in particular, have a longer shelf life than many other fruits and vegetables, so fewer trips to the store are required."
On the other hand, the pandemic, which struck SA in March 2020 during the peak picking and packing season, exacerbated the usual weather-related challenges at the ports and created other supply chain interruptions and logistical challenges as border posts were closed for long periods.
But Pienaar says the industry responded "with speed and agility", though many businesses had to restructure to enable them to operate remotely.
Sihlobo gives credit to the joint efforts of the government, the private sector and various research institutions for keeping SA’s food value chains open, and praises the co-operation between private sector organisations and logistics companies which ensured a constant flow of products to export markets.
Despite all the pandemic-related challenges, Tru-Cape still achieved overall volume growth and enlarged its footprint in Africa, the recipient of more than 50% of all its fruit.
"If you keep in mind that at one stage earlier in 2020 we were down on our African sales compared to the previous year, it is a good achievement to have grown our overall African footprint by year-end," says Pienaar.
Tru-Cape also achieved solid growth in Europe, Russia and the UK. In fact, its UK volume was up almost 17% on 2019.
This year looks set to be another solid year for SA’s agricultural sector.
Favourable weather has led to an increase in summer crop area plantings, which has raised the prospect of an even larger maize harvest than in 2019/2020. Sihlobo expects this to enable more exports, given strong demand coupled with low stock levels.
In addition, SA wine grapes production is also set to be larger than in 2020 and there is "general optimism" about the 2021 harvest in the horticulture subsector as well as in other field crops, including sugar.
Last year, SA’s top 10 export products by value were citrus, grapes, wine, apples and pears, maize, nuts, sugar, wool and fruit juices.
Africa and Europe continue to be the largest markets for SA agricultural exports, absorbing 38% and 27% of the total last year by value, respectively. (The top products to these markets were beverages, fruit, grains, sugar and vegetables.)
Asia is not far behind, absorbing 25% of SA’s agricultural exports (mainly fruit, wool, grains, sugar and meat) last year even though SA lacks preferential market access to this region.
Sihlobo warns that SA’s chief competitors in the region, Australia and Chile, have secured trade agreements that have afforded them a significant competitive advantage and that they could threaten SA’s market share and future growth.
"With India and China headlining the growth potential in Asia and the Far East, this region is significant enough to warrant more attention," he says. "SA should continue to engage these countries for greater market access [for SA’s] agricultural products."
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