The negative impact of the novel coronavirus outbreak in China on the global agriculture sector, including that of South Africa, is multifaceted, according to Joseph Kau, agricultural economist at the Agricultural Research Council.
Kau said the outbreak came at a time when South Africa, through the BRICS platform, was entering new markets in China for agricultural, particularly horticulture, products.
At the same time, however, the outbreak could result in a decline in the demand for agricultural exports, especially fruit. In terms of value, wool was South Africa’s most important agricultural commodity export to China.
A decrease in China’s demand for South African agricultural exports would negatively affect the country’s capacity to generate foreign revenue.
“The associated negative consequences include possible job losses in the fruit industry, and the depreciation in the value of the rand. The longer the virus persists, the longer South Africa will face business uncertainty and the current efforts to penetrate Chinese markets might slow down. This will undoubtedly have negative consequences on growth in the agriculture sector,” Kau told Farmer’s Weekly.
The top 10 most important agricultural commodities South Africa imported from China included groundnuts, animal offal, animal feed, sugar products, peptones, apple juice, kidney beans and tomato paste, Kau said.
He added that it could become increasingly difficult for China to supply certain agricultural products if the disease spread and spiralled out of control.
To avoid such risks, it was therefore essential that local markets were expanded and the consumption of South African agricultural products be promoted.
Kau added that the agro-processing capacity in the country needed to be expanded as a matter of urgency.
Furthermore, it was vital that the sector diversified international export destinations to avoid over-reliance on one specific market.
Such diversification needed to include countries elsewhere on the African continent.
This could be facilitated through the African Continental Free Trade Area (AfCFTA) initiative.
“AfCFTA is a free trade area, which includes 28 countries. It was created in 2018,” Kau explained.