South African agriculture
South Africa has a dual agricultural economy, with both well-developed commercial farming and more subsistence-based production in the deep rural areas.Covering 1.2-million square kilometres of land, South Africa is one-eighth the size of the United States and has seven climatic regions, from Mediterranean to subtropical to semi-desert.
This biodiversity, together with a coastline 3 000 kilometres long and served by seven commercial ports, favours the cultivation of a highly diverse range of marine and agricultural products, from deciduous, citrus and subtropical fruit to grain, wool, cut flowers, livestock and game.
Agricultural activities range from intensive crop production and mixed farming in winter rainfall and high summer rainfall areas to cattle ranching in the bushveld and sheep farming in the arid regions. Maize is most widely grown, followed by wheat, oats, sugar cane and sunflowers.
- See page 2: South Africa's farming sectors
Today, South Africa is not only self-sufficient in virtually all major agricultural products, but is also a net food exporter. Farming remains vitally important to the economy and development of the southern African region. Since 1994, the government has been working to develop small-scale farming to boost job creation.
Exports
South Africa is the world's top exporter of avocados, tangerines and ostrich products, the second-biggest exporter of grapefruit, third-biggest exporter of
plums and pears, and fourth-biggest exporter of table grapes.
Farming contributes some 8% to the country's total exports. The largest export groups are wine, citrus, sugar, grapes, maize, fruit juice, wool, and deciduous fruit such as apples, pears, peaches and apricots.
Other important export products are avocados, dairy products, flowers, food preparations, hides and skins, meat, non-alcoholic beverages, pineapples, preserved fruit and nuts, sugar, and wines.
A number of high-growth niche markets are emerging, such as herbal beverages and luxury seafood.
Competitive advantages
South African agriculture and agribusiness have a number of competitive advantages, making the country both an important trading partner and a viable investment destination.
World-class infrastructure. South Africa has three deep-water ports, three international airports, a network of roads and railways, well-developed cold chain facilities, and a sophisticated financial sector.
Counter-seasonality to Europe. South Africa's counter-seasonality to Europe, the country's primary export market for horticultural and floricultural products, is a major competitive advantage. South Africa is the closest major southern hemisphere producer of horticultural and floricultural products to Europe, and has significantly shorter shipping times than its rivals.
Biodiversity. South Africa's diversity of climates - tropical, subtropical and desert - allows for a vast and varied array of agricultural products.
Marine resources. South Africa has almost 3 000 kilometres of coastline which is commercially used both for conventional harvesting and for mariculture and aquaculture.
Competitive input costs. While South Africa boasts infrastructure comparable to first world countries, its cost structure is decidedly third world. At around 1.7 US cents per kilowatt hour, it has one of the cheapest electricity costs in the world. Labour rates are also competitive.
Deregulation and market freedom
In the 10 years since the end of apartheid in 1994, South African agriculture has evolved from a highly regulated and protected industry to one free from all constraints, unsubsidised by government and capable of competing with the best in the world.
The Marketing of Agricultural Products Act of 1996 dramatically changed agricultural marketing in the country by closing agricultural marketing boards, phasing out certain import and export controls, eliminating subsidies, and introducing import tariffs to protect South African farming from unfair international competition.
While a fairly radical process to some old-style producers in South Africa, deregulation has ensured a leaner and stronger agricultural industry, with farmers and agribusiness able to position themselves as players in a globally competitive environment.
Phasing out controls and closing marketing boards led to a short-term shortage of essential services formerly provided by the boards and cooperatives, such as storage, grading, deliveries, value adding, information dissemination and research.
As a result, specialised marketing support institutions, such as the South African Futures Exchange (Safex) and the Agricultural Futures Market of the JSE, were established to provide much-needed price risk management mechanisms.
Trade agreements
South Africa's agriculture and agribusiness sector are benefiting from increased market access to its key trading partners, the EU and the US, as well as to sub-Saharan countries, through a number of trade agreements:
African Growth and Opportunity Act - extends to South Africa and other sub-Saharan US generalised system of preference (GSP) benefits for more than 1 800 items beyond the standard GSP list of 4 600 items. The Act remains in force until 30 September 2008.
- More information: Agoa website
EU-SA Wine and Spirits Agreement - improves access for South African wine and spirits to the European market, applying an annual duty-free tariff quota of 42 million litres.
SADC trade protocol - The Southern African Development Community (SADC) trade protocol, which came into effect in September 2000, provides for the phasing down of tariffs of 11 of the 14 SADC member countries. Participating countries are from the sub-Saharan region, excluding Angola, the Democratic Republic of Congo and Seychelles. This trade bloc has a combined population of around 135-million.
South Africa Customs Union - Under the present Sacu agreement, participating member countries South Africa, Botswana, Lesotho, Namibia and Swaziland have totally abolished internal tariff barriers.
SouthAfrica.info reporter, incorporating material from the Department of Trade and Industry
