Saudi Arabia is a strategic market for RSA agriculture exports expansion

--:--
The Kingdom of Saudi Arabia was mentioned as one of the countries that are set to join the BRICS in January 2024. This is a major development, and one that offers another avenue for diversifying the geographic destinations of South Africa’s agricultural exports.

There is no doubt that South Africa’s agriculture stands to benefit enormously from close cooperation with Saudi Arabia. As chair of the 15th BRICS Summit, South Africa championed the need to deepen trade and investments amongst the BRICS countries, a point that other members overwhelmingly supported.

The agribusiness working group of the BRICS Business Council, in particular, raised the trade aspect and the need to resolve non-tariff barriers that would distort agricultural trade amongst BRICS countries.

Initially, South African agribusinesses had their eyes on China and India as countries with reasonably higher tariffs on some agricultural products and a range of non-tariff barriers. With the inclusion of Saudi Arabia in the BRICS, South Africa would now look at three significant markets to broaden agricultural exports. It is important for a country like South Africa to push for geographic diversification of trade especially in the light of intensifying geoeconomics tensions and the growing protectionism in traditional markets.

The original BRICS countries are already an important agricultural market. According to data from Trade Map, they collectively import about US$320 billion of agricultural products from the world market in 2022. About 74% of the Group's agricultural imports come from China, 12% from 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, intra-BRICS trade remains low because of tariffs and non-tariff barriers.

Saudi Arabia is a major agricultural importer. Over the past five years, Saudi Arabia imported, on average, $21bn of agricultural products.

The dominant suppliers of farm products to Saudi Arabia are Brazil, India, the U.S., the United Arab Emirates, Germany, France, Turkey and Egypt. The top imported agricultural products were meat and edible offal, rice, barley, milk and cream, cigars, cheese, live sheep and goats, sugar cane, maize, chocolate, citrus, palm oil, oilcake, bananas, tea, vegetables and fruit juices.
South Africa is a minor player in the Saudi Arabian agricultural market, accounting for less than 2% of all the imports. The essential exportable products to the Saudi kingdom were oranges, lemons, pears, grapes, mandarins, apples, plums, grapes and avocados. An additional product likely to join this list in the coming months will be beef as South Africa recently established market access for exports to Saudi Arabia.

Notably, South Africa is generally a net exporter of some of the products mentioned above that Saudi Arabia imports from the world, albeit mainly concentrated in European, African and Asian markets. Therefore, the possibility of close cooperation and deepening of agricultural trade through the BRICS+ forum from early 2024 will benefit South Africa.
Again, this is not to minimize South Africa's close relationship with the E.U., the U.S., the African continent and other regions. These current markets remain strategically crucial to South Africa's agriculture.

We discuss more in this week's podcast segment.

My writing on agricultural economic matters is available on my blog: https://wandilesihlobo.com/

Podcast production by: Lwandiso Gwarubana, Richard Humphries, and Sam Mkokeli
4 Sep 2023 English South Africa Investing · Food

Other recent episodes

SA farm jobs up 7% year-on-year

Wandile Sihlobo unpacks the latest agriculture trends and statistics in this podcast. After a notable jump in the third quarter of 2023 to 956,000, South Africa's primary agricultural employment fell by 4% quarter-on-quarter to 920,000 in the last quarter of 2023. Jobs declined mainly in the Eastern Cape, Western Cape,…
26 Feb 13 min

Excessive heat across SA summer crop regions is worrying

The excessive heat across South Africa currently is a significant concern for the farming sector. The 2023/24 summer crop season started on favourable footing. We received widespread rains, which was unusual in an El Niño season, which would typically start with drier weather conditions. According to data from the Crop…
19 Feb 12 min

Weak agricultural machinery sales

We start the year with reasonably weak agricultural machinery sales data. South Africa's tractor sales were down 26% y/y in January 2024, with 353 units sold. At the same time, the combine harvesters were down 50% y/y, with eight units sold. At face value, this could be viewed as a…
13 Feb 11 min

A promising summer grain outlook

South Africa could have yet another decent summer grains and oilseeds harvest in the 2023/24 production season. The data released this afternoon by the Crop Estimates Committee puts the preliminary area plantings for summer grains and oilseeds at 4,41 million hectares, up by 0,4% y/y (albeit down mildly from 4,48…
5 Feb 12 min

SA to export beef to Saudi Arabia

One positive bit of news I noticed this past week is about South Africa's beef industry, with an encouraging headline stating, "Saudi Arabia to start South African meat imports as ban ends". This means everything is now in order for Saudi Arabia to import beef from South Africa. The Kingdom…
30 Jan 12 min