Deepening agricultural trade could bring challenges for SA

When considering the BRICS+ grouping from an agricultural perspective, the opportunities for increasing trade and investment from a South African perspective primarily lay in China, India, and the Kingdom of Saudi Arabia, according to Wandile Sihlobo, who chairs the Agribusiness Working Group of the BRICS Business Council (South Africa) and the global agribusiness grouping this year.

Sihlobo, who is also the chief economist at the Agricultural Business Chamber (Agbiz), said the country already had some form of agricultural trade with these countries, but still its ambition was to increase wine, fruit and beef exports, among other products, to these particular countries. “Admittedly, deepening agricultural trade would bring challenges as trade is not a one-way approach. Still, we believe that South African agricultural products are of high quality, and with the lowering of tariffs and non-tariff barriers, could remain competitive prices,” he said.

He said the responsibility now falls on the BRICS Agribusiness Working Group to resume its work and engage with relevant government departments domestically and other agribusiness working group chairpersons from the founding BRICS member countries to take the points mentioned above forward. From early next year, when other BRICS+ members officially join, the BRICS Business Council's Agribusiness Working Group would extend an invitation to them and update them on the work of the 15th Summit.

Overall, Sihlobo said they viewed this summit as broadly positive for agriculture, which also was robustly spotlighted in this conference at the plenary session of the Business Forum.

One of South Africa's agricultural strategic objectives was the expansion of export markets. It was with this ambition that organised agriculture, through the BRICS Business Council, went into the 2023 BRICS Summit. The Agribusiness Working Group had four broad focus areas for discussion with BRICS countries, which were a need to improve fertiliser availability and use among BRICS countries and the broader African continent, the sharing of best practices on agricultural sustainable development among BRICS countries, outlining the BRICS countries' view on the arbitrary pesticide maximum residue levels followed by some regions such the EU, and the general use of sanitary and phytosanitary (SPS) measures as barriers to trade, and deepening trade and investment amongst the BRICS countries and broader Africa.

The BRICS Business Forum’s annual general meeting adopted all these points, carried in the annual report, and presented them to the political principals for consideration. These points were said to have also found broad support at the political level, illustrating the alignment of ambition between BRICS countries' political leadership and business interests on these matters.

Sihlobo said while the conference was over and the work had been presented to the political principals, the technical work only started at this point. “This will be through the business councils of each BRICS member country, working directly with their governments to deliver on these broad points presented at the conference.”

From a South African perspective, he said the BRICS Business Council’s Agribusiness Working Group would engage with the Department of Trade, Industry and Competition and the Department of Agriculture, Land Reform and Rural Development to deliver on these broad ambitions, especially the one of trade and investments, as well as the SPS measures barriers in countries that South Africa wanted to deepen its trade with. The broad trade point mainly refers to lowering import tariffs in BRICS countries where South Africa wanted to increase exports, which ties in with the SPS matters.

“Ideally, this would not be a demanding task as South Africa's minister of Agriculture, Land Reform and Rural Development (Thokozile Didiza) chaired a meeting of BRICS Agricultural Ministers ahead of the 15th BRICS Summit and discussed similar matters as the ones presented by the Agribusiness Working Group of the BRICS Council,” Sihlobo said.

Notably, South Africa remained a chair of the global Agribusiness Working Group until the end of the year, with commanding authority to bring all countries to the table for reflections and implementation of the objectives the Group had adopted.

Sihlobo said the trade and SPS aspect was important because the BRICS countries collectively imported about US$320 billion of agricultural products from the world market last year, according to data from Trade Map.

About 74% of the Group's agricultural imports come from China, 12% from India, 8% from Russia, 4% from Brazil and 3% from South Africa.

“The key agricultural products the BRICS grouping imports are soybeans, palm oil, beef, maize, berries, wheat, cotton, poultry, pork, apricots and peaches, sorghum, rice, and sugar. These are products that are produced at scale by some BRICS countries. Yet the imports to other BRICS members typically originate from suppliers outside the grouping. This is understandable given that importers will search for competitively priced products and not necessarily from countries where they enjoy close co-operation. The lack of competitiveness has mainly been caused by higher import tariffs that BRICS countries face among each other compared with their competitors in this market, along with SPS matters. This is undoubtedly the case for South Africa regarding India and China,” Sihlobo said.

BUSINESS REPORT