Here is Sihlobo…

Drought and biosecurity matters will weigh in on South Africa’s agricultural trade activity in 2019 with the country’s agricultural exports that could fall by 4% on a year-on-year (y/y) basis in 2019 to US$ 10.2 billion. This is  according to the latest estimates from the United States Department of Agriculture (USDA). At the same time, agricultural imports are set to soften by 3% y/y to US$6.8 billion.  According to Sihlobo this boils down to South Africa’s agricultural trade balance that could narrow by 13% y/y in 2019 to US$3.4 billion.

He says although the data for the full year is not yet available, the first three quarters of the year’s data supports the USDA’s view of a decline in trade activity. South Africa’s agricultural exports for the first three quarters of 2019 are down by 8% y/y, with imports having declined by 5% y/y over the same period. From an export perspective, lower sales of wine, grains, edible fruits and wool were amongst the key drivers of the decline. Meanwhile, the decrease in import values was mainly underpinned by relatively lower imports of palm oil, poultry products, fish, live cattle and pork products.

Sihlobo says it is worth zooming into the biosecurity and drought impacts on exports with the primary challenge this year being the foot-and-mouth disease, which still remains a threat following the recent outbreak in Limpopo. The first three quarters of the year were affected by the outbreak that occurred in Limpopo earlier this year, which resulted in a temporary ban of livestock products exports, which included wool. China, which imports on average 71% of South Africa’s wool, placed a temporary ban for months which weighed on the industry’s export activity, and thus, the subdued wool exports values in the first three quarters of this year. This ban has since been lifted, and South Africa’s wool exports figures could grow in 2020.

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