This is a best prospect industry sector for this country. Includes a market overview and trade data.
Market: South Africa’s agricultural sector is one of the world’s most diverse, consisting of corporate and private intensive and extensive crop farming systems, including vegetable, fruit, nuts, and grain production. The well-developed commercial farming sector in South Africa is the backbone to the country’s agricultural economy and in 2020 showed the best growth rate of all economic sectors, coming in at 13.1 percent.
Climate: South African climate ranges from subtropical to Mediterranean, allowing for a multitude of farming opportunities. The country’s biodiversity ensures that products such as grains, fruit and wine are exported and preferred for its exceptional quality. There is a growing demand to improve subsistence farming or informal small-scale farming in South Africa.
The agricultural sector is in a precarious situation due to its backward and forward linkages with other sectors in the economy. It will suffer from the so-called contagious effect in that what happens to other sectors of the economy will have a bearing on the agricultural sector because of Covid-19.
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Data Source: Above figures are unofficial estimates obtained from industry sources.
Compared to the rest of Africa, South Africa has by far the most modern, productive, and diverse agricultural economy. South Africa has a well-developed agricultural sector, which will stand the country in good stead in the face of continuing uncertainty both economically and in terms of the weather. There are many factors impacting on the industry – including credit ratings downgrade, land reform concerns, volatile exchange rate, ongoing weather concerns and the latest Covid-19 pandemic.
There are approximately 32,000 commercial farmers in South Africa, of which between 5,000 and 7,000 produce approximately 80 percent of agricultural output.
Forecasts show that the country’s economic growth will remain under pressure, as consumers continue to tighten their belts because of a contracted economy and higher inflation over the last year. Investment in agriculture is widely recognized as a key precondition in achieving goals related to improving food security, creating jobs, creating wealth, and thereby reducing poverty. There are still notable headwinds moving into 2020 that may affect the farming sector. Weak global growth, domestic in-put costs, aftermath of Covid-19 and policy uncertainty could impact the economy negatively and lead to unintended consequences.
As the agricultural sector is largely export driven, it is hedged against the negative impact of a major credit downgrade, but farmers are susceptible to higher borrowing costs, depressed local demand and foreign animal and plant health import approvals.
Sub-Sector Best Prospects
The best prospects for U.S. suppliers, in South Africa and the region, are:
- Combine Harvesters
- Drone Technology
- Precision Agriculture Equipment and Technologies
- Soil Testing Equipment
- Spare Parts and Service Facilities
Despite the current economic downturn, farmers appear to be upbeat about current agriculture conditions. Sporadic rains and prevalent dry weather conditions are a concern and present opportunities for no till planting equipment. Companies and farmers have a strong interest in soil sampling equipment.
Digitalization: The integration of digital technology into agriculture presents a major opportunity for Sub-Saharan Africa. The emergence of the mobile phone as a popular communication tool, coupled with internet-based solutions, could significantly boost access to financing for agricultural inputs across the value chain. Digitalization, as well as the effective use of fertilizer and seeds, will become increasingly important in unlocking agriculture prospects in Africa. Trending technologies in agriculture include data management, machine learning, artificial intelligence, automation, and drone-based applications.
Production research and technology, in which South Africa needs to invest, is an area of opportunity for growth in agriculture and in alleviating the vulnerability of crops and livestock.
Barriers: There are very few barriers to bringing new equipment to the South African market. Equipment like planters, sprayers, and tilling equipment enter duty free, provided the exact same product is not manufactured in this market. Most of the precision agriculture equipment such as planters, self-propelled sprayers, and combine harvesters are imported from South America, Europe, and the United States; smaller implements are purchased locally. Known U.S. brands such as Massey Ferguson, John Deere, New Holland, AGCO, and Case IH are well-entrenched and well-known for their quality in this market.
South Africa is the platform for “regional expansion,” with excellent opportunities for U.S. business in neighboring countries such as Zambia, Zimbabwe, Angola, Mozambique, and Botswana. Second-hand tractors and equipment are also well-received in these regional markets.
Trade show: South Africa hosts NAMPO Harvest Day, the largest agricultural equipment show on the continent. This outdoor show takes place in May each year and provides an excellent opportunity for U.S. firms to exhibit their equipment and technology.
All import and export commercial transactions require commodities on custom declarations to be classified according to an appropriate tariff heading. The tariff classification code is directly linked to the rate of duty payable on that commodity. Classification operates as part of the international Harmonized Commodity and Coding System, under the World Customs Organization (WCO) Harmonized System Convention. Importation of all second-hand goods is subject to import control and an import permit is required.
South African Agricultural Machinery Association (SAAMA)
South African Department of Agriculture, Land Reform and Rural Development (DALRRD)
Exhibitions and Conferences
Show: NAMPO Harvest Day
Focus: Largest Agriculture Machinery and equipment show in the Southern Hemisphere.
Venue: Bothaville, Free State Province
South Africa is one of the most advanced and diverse economies in Africa. With a population of almost 60 million people, it is an attractive business destination due to its growing market and welcoming business environment. South Africa also serves as an entry point to other countries in southern Africa.
South Africa has a market-oriented agricultural economy that is highly diversified and includes the production of all the major grains (except rice), oilseeds, deciduous and subtropical fruits, sugar, citrus, wine, and most vegetables. Livestock production includes cattle, dairy, hogs, sheep, and a well-developed poultry and egg industry. Value-added activities in the sector include slaughtering, processing and preserving of meat; processing and preserving of fruit and vegetables; dairy products; grain mill products; crushing of oilseeds; prepared animal feeds; sugar refining and cocoa, chocolate, and sugar confectionery amongst other food products.
The agricultural sector contributed around 10 percent to South Africa’s total export earnings in FY2020 at a value of $10.2 billion. Citrus, wine, table grapes, corn and apples accounted for the largest exports by value. South Africa also exports wool, nuts, sugar, mohair, and pears to name just a few products.
South Africa imported $6.3 billion in agricultural and food products in FY2020, which is a decrease of 7 percent from FY2019, mainly due to the impact of the COVID-19 pandemic. The major products imported were rice ($497 million), wheat ($449 million), palm oil ($389 million), chicken cuts and offal ($205 million), cane sugar ($197 million), sunflower oil ($164 million), soybean meal ($130 million), and whiskies ($114 million).
In FY2020, the United States exported $282 million of agricultural products to South Africa, down 17 percent from the previous fiscal year. Major products exported by the United States to South Africa included, poultry meat, wheat, planting seeds, distilled spirits, animal feed and tree nuts. Other products imported by South Africa from the United States included dairy products and sorghum.
USDA’s Foreign Agricultural Service (FAS) in Pretoria prepares more than thirty market intelligence reports for different agricultural commodities in the Southern Africa region. FAS also prepares reports that highlight the opportunities and regulatory processes for United States agricultural exports to South Africa. The Exporter Guide for South Africa is a good starting point for United States agricultural and food companies that view South Africa as a potential market. Please feel free to contact the Foreign Agricultural Service in Pretoria for further information at the following address:
Foreign Agricultural Service
Tel: +27 12 431-4057;
Sub-sector Best Prospects
The grain industry (barley, maize, oats, sorghum, and wheat) is one of the largest agricultural industries in South Africa, contributing more than 30 percent to the total gross value of agricultural production. The industry comprises several key stakeholders including input suppliers, farmers, silo owners, traders, millers, bakers, research organizations, financiers, etc. The animal feed industry is an important client and role player in the grain supply chain. Around 6.0 million tons of grain and 1.6 million tons of oil cake (from imported and locally produced sunflower and soybeans) are used by the animal feed manufacturing industry in South Africa annually.
Corn is the largest locally produced field crop, and the most important source of carbohydrates in the SADC region for animal and human consumption. South Africa is the main corn producer in the SADC region, with an average production of around 15 million tons per annum over the past 5 years. Local consumption of corn amounts to more than 12 million tons per annum, and surplus corn is usually exported. Wheat is produced mainly in the winter-rainfall areas of the Western Cape and the eastern parts of the Free State with considerable annual fluctuations in production. Average wheat production has been about 1.8 million tons a year over the past 5 years with local demand exceeding 3.5 million tons per year. Thus, South Africa is dependent on wheat imports to meet the local demand.
Over the past 20 years, and especially after the deregulation of agricultural markets in 1997, there has been a decreasing trend in the area planted with wheat despite increasing local consumption. Declining profit margins saw local wheat farmers scaling down wheat production and switching to other crops like canola, corn, soybeans, and increased livestock production. Furthermore, the trend in wheat production has been sporadic over the past 20 years because of unpredictable weather conditions. Without an advance in technology or policy changes, the decreasing trend in hectares planted with wheat in South Africa will continue.
South Africa’s wheat consumption is the highest in sub-Saharan Africa and annual wheat consumption increased on average by about one percent per annum over the past 10 years. FAS/Pretoria expects this trend to continue in the 2021/22 MY with wheat consumption reaching 3.6 million tons or about 60 kg per capita. With wheat production of less than 2.0 million tons a year, South Africa’s wheat imports for the 2021/22 MY is expected to exceed 1.5 million tons.
Resources on Wheat
U.S. Wheat Associates has an office in Cape Town, South Africa.
South Africa consumes more than 4.5 billion liters of alcoholic beverages per annum and is also an important exporter of alcoholic beverages, especially wine. However, South Africa also imports a significant number of alcoholic beverages, especially whiskies. Recent trends indicate that consumers are turning to new and innovative distilled spirits, including a greater prominence in previously disadvantaged areas. South Africans’ tastes and preferences are becoming more sophisticated, and the average consumer is increasingly expecting a wider range of alcoholic products on retail shelves. As a result, an extensive range of new imported products has become available in the market. Openness to new products and an increasing middle class has helped to create a positive climate for the sale and promotion of United States distilled spirits. However, price sensitivity, rather than brand loyalty dictates consumer purchasing behavior.
The Distilled Spirits Council of the United States can help U.S. distillers with market information and advice on how to export to South Africa (http://www.discus.org/).
Other Sub-sector Best Prospects
Between 2000 and 2010, steady economic growth and increased average income in South Africa pushed large numbers of consumers towards protein-filled diets and convenience; as a result, meat consumption levels skyrocketed. The per capita meat consumption in that period increased on average by more than 4 percent per annum. Chicken meat consumption per capita grew by more than 7 percent per annum in the same period. As South Africans’ disposable income grew, their buying behavior reflected their strong fondness for meat. Since 2010, however, a slowdown in South Africa’s economic growth also impacted the growth in meat consumption. The per capita consumption growth rate of meat slowed down to about 1 percent per year. Currently, South Africa consumes about 4.0 million tons of poultry, beef, lamb, and pork meat per annum. In 2020, the South African consumer spent approximately R250 billion (US17 billion) on meat products, which represented 35 percent of total expenditure on food. Poultry meat represents more than 60 percent of total meat consumption in South Africa with a per capita consumption of 40kg per annum. As poultry meat is relatively inexpensive and ubiquitous, it is the most important protein source in the diet of the majority of South Africans. This is especially true in low-income households, who constitute most consumers.
Three fundamental characteristics distinguish South Africa’s chicken meat market from many other countries. The first characteristic is the predominant demand for bone-in (brown meat) chicken cuts compared to breast meat (white meat). Bone-in chicken cuts represent almost 60 percent of total chicken meat demand mostly sold as “individually quick frozen” pieces in the form of low-priced 2kg and 5kg mixed packs. Brining is the second characteristic. Almost all locally produced frozen chicken contains brine to preserve and enhance the quality of the meat. In 2016, the South African Department of Agriculture introduced a regulation to restrict the brined content to a maximum of 15 percent of the mass sold. Prior to 2016, brining levels of up to 43 percent were recorded, which resulted in higher water content per package of frozen chicken meat. The third characteristic is the relatively small demand for fresh (not frozen) chicken meat. Fresh chicken meat represents less than 10 percent of total consumption of chicken meat in South Africa. These characteristics reflect the predominance of a lower-income consumer base, as fresh chicken meat is usually sold at a premium over frozen and brined bone-in chicken pieces.
Broiler meat accounts for more than 95 percent of all poultry meat imports by South Africa, with the balance largely being turkey products. South Africa imported 490,475 tons of poultry meat in FY2020 at a value of $325 million. Chicken cuts and edible offal represented the largest category of poultry meat imports, namely 52 percent or 254,000 tons, at a value of $205 million (63 percent of the total value of poultry meat imports). The second largest category in volume is mechanically deboned meat with a share of 37 percent or 183,000 tons, at a value of $65 million (20 percent of the total value of poultry meat imports). These two poultry meat product segments represent 90 percent of total poultry meat imports in quantity by South Africa. Brazil is the leading trading partner for South Africa in terms of poultry meat, with 40 percent market share in value followed by the United States with 20 percent market share.
Chicken bone-in portions
United States bone-in broiler meat exports to South Africa have been hampered by an anti-dumping duty that was put in place in 2000. In 2012, the anti-dumping duty was extended for another 5 years and was set at R9.40 per kilogram. However, in June 2015, representatives from the United States and South African poultry industries agreed on a tariff rate quota of 65,000 tons of United States bone-in chicken meat to enter South Africa without the anti-dumping duty. Notably, these bone-in chicken meat imports are still subject to a most favored nation (MFN) duty, which increased from 37 to 62 percent in March 2020.
In January 2016, the U.S. and South African governments concluded negotiations of the final health certificates, and the first shipment of United States bone-in broiler meat landed in South Africa in March. Exports continued and as a result the United States exported about 20,000 tons of poultry meat to South Africa at a value of almost US$ 18 million in FY2016. In FY2017, the volume increased to 74,000 tons at a historical high value of US$73 million. Notwithstanding this improvement, South Africa again extended the anti-dumping duty in 2017 for an additional 5-year period. The positive trend in poultry exports continued in FY2018 with the United States exporting 95,000 tons of poultry products to South Africa at a record value of $83 million. In 2019, pursuant to the administrative guidelines, the South African Department of Agriculture raised the tariff rate quota to 68,590 tons for the 2019/20 quota year (April to March). In FY 2019, the United States exported 85,000 tons of poultry products to South Africa at a value of $76 million. Despite the COVID-19 pandemic the United States again exported 85,000 tons of poultry meat to South Africa in the FY2020. Most (95 percent) of United States poultry exports to South Africa consist of bone-in broiler meat.
Resources on Poultry
The U.S.A. Poultry and Egg Export Council can help U.S. poultry exporters with market information and advice on how to export to South Africa (https://www.usapeec.org/).
For more information, the U.S. Commercial Service Commercial Specialist for Agriculture in Johannesburg, South Africa, can be contacted via email at:
Phone: +27 11 290 3025
or visit our website: https://www.trade.gov/south-africa/