SA losing competitiveness as food imports grow - AgBiz
13 Feb 2018 - by Staff reporter
South Africa is increasingly becoming a net importer of critical food products and losing competitiveness on strategic tariff lines according to trade economist and AgBiz International Trade and Investment head, Sifiso Ntombela.
He pointed out that this growing reliance on imported food was increasing the country’s vulnerability exposure to foreign markets, which could cause volatility in food prices as import costs were closely linked with the exchange rate and other trade factors.
“Looking at the performance of tariff lines covering agricultural products in the tariff book, South Africa is now a net importer on 60% of all agricultural tariff lines – up from the 49% observed in 2010,” said Ntombela.
“This suggests that the agricultural sector has been slowly losing competitiveness in many industries and concerted efforts are needed to address factors that enhance import growth and production conditions,” he added.
Ntombela stated that when combined with the stagnating exports of beverages and vegetables, the growing import of wheat, sugar, fish and meat products could weaken the sector’s ability to sustain positive growth and job creation.
This puts pressure on domestic products to compete with relatively low-cost imported products and, along with the effects of the persistent drought conditions in several parts of the country on export-strong industries like fruits and wine, could spell disaster for the economy.
The meat industry has already experienced a negative trade balance averaging 426 000 tons over the last seven years and Ntombela said that a similar picture was evident in the grains, sugar, fats and fish products subsectors.
“From a policy perspective, this analysis suggests that imports are not only outpacing the export growth rate but are also expanding and replacing local production even in industries that were relatively competitive,” he added.