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The South African agricultural industry is in a good place, which often gets overshadowed by broader policy discussions.
Last month, I highlighted the progress South Africa has made in boosting agricultural exports, which exceeded R130bn in 2017, supported by growth in exports of edible fruits, beverages, spirits, vegetables, grains and other agricultural products.
In fact, South Africa’s agricultural sector, has, over the years maintained a positive trade balance.
While not amongst the top exported products, the South African beef industry has made some inroads into new export markets over the recent past.
Similar to the overall sectoral picture, South Africa is typically a net exporter of beef (fresh/chilled and frozen) and has recorded a positive trade balance of R203m in the period between 2012 and 2016.
In terms of volumes, medium-term trends show a sharp increase in South African beef exports (fresh and frozen), from 14 634 tonnes in 2012 to 39 135 tonnes in 2016.
A closer look at the data shows that frozen beef exports increased from 2 921 tonnes in 2012 to 18 067 tonnes in 2016 – a five-fold increase. Meanwhile, fresh beef exports increased from 11 714 tonnes to 21 068 tonnes over the same period.
Major markets for fresh beef include regional ones such as Swaziland, Mozambique and Lesotho; as well as Middle East markets such as Jordan, Kuwait and the United Arab Emirates.
Meanwhile, frozen beef markets include Far East markets which are Vietnam and Hong Kong; regional markets that comprised Mozambique, Angola and Lesotho and the Middle East markets, specifically Kuwait.
Above all, Jordan, United Arab Emirates, Kuwait, Mozambique, Swaziland, Namibia, Lesotho, Mauritius and Angola are important export markets for the South African beef industry as they have been consistent over the past couple of years and also account for over 90% of its exports by value in 2016.
Potential markets
As the industry recovers from the 2015-16 drought, with plans of integrating more new black entrants in the spirit of inclusive growth and development, opening more export markets should form part of the national transformation agenda. More so as 90% of exports are concentrated to only nine countries, as previously noted.
The potential markets to be targeted would be those which resemble rising income and growing protein consumption (particularly beef imports).
I raise the issue of ‘income’ because beef is comparatively more expensive than other sources of protein such as chicken. Therefore, consumer income is an important factor to consider when assessing potential export markets for beef.
But the first step would be to scan the global beef trade to get a sense of the leading beef importers.
Key areas
To this end, Japan, South Korea, China, Vietnam, Taiwan and Philippines are amongst the leading global fresh (chilled) beef importers.
Moreover, the United States, Italy, the Netherlands, Germany, France, the United Kingdom, Mexico and Canada and other European countries are also among the key importers. But these markets are somewhat saturated and hence it would be difficult for South Africa to gain a notable market share.
Even on the African continent, where we would have had a distance advantage, there is little room for expansion, at least in the near term, partly because of lower income levels in many countries which affects the buying power and results in generally lower import volumes. The only countries that seem prominent when one looks at the trade data are Egypt and Algeria.
The key areas that seem to hold a potential for growth due to changing consumer preference, with high protein food gaining more traction due to rising incomes, are the Far East markets. Perhaps, this is the region that South Africa should engage, in order to grow its beef export footprint. I will explore this in detail in next week’s column.
Wandile Sihlobo is head of agribusiness research at the Agricultural Business Chamber (Agbiz). Twitter: @WandileSihlobo
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