US consumers may soon see South African avocados on their supermarket shelves as growers from the country look for new markets to sustain export growth momentum that’s set to taper in its home continent.
South African agricultural exports surged 68% to R104.43 billion ($7.3 billion) in the six years through 2015, boosted by demand from its neighbours, data from the International Trade Council show. Trade increased as companies including Shoprite Holdings, the continent’s largest food retailer, took local products abroad to stock their stores, Agricultural Business Chamber chief executive officer John Purchase said. The “massive growth” is set to slow as producers start to source goods domestically, which means new markets need to be found, he said.
“We can only really grow agriculture in South Africa if we grow our export market,” Purchase said in an October 6 interview in Bloomberg’s office in Johannesburg. “Where we see big growth areas is avocados, macadamia — macadamia is by far the biggest.” There’s “huge potential, especially avocados into the US, and macadamias into China is a massive market.”
More than half of South Africa’s primary and processed agricultural products go into the continent, and the chamber wants to diversify into markets including the Middle East and Far East. The nation is already the world’s eighth-biggest supplier of wine to other markets, with the beverage being the country’s largest agricultural export by value, according to United Nations data. It’s also the largest citrus exporter after Spain, and supplies neighbouring countries with grain and fruits.
The country may ship avocados to the US under the African Growth and Opportunity Act, with the fruits entering that market without duties. Agoa favours 39 countries on the continent by eliminating import levies on more than 7 000 products ranging from textiles to manufactured items.
South Africa exported $245.7 million of macadamia nuts globally last year, the International Trade Council data show. Of that, $30.7 million was to the US and $4.2 million was for China. Hong Kong was the biggest buyer at $84.5 million, while Vietnam, the Netherlands, Germany, and the UK ranked as other top purchasers.
Local citrus farmers started turning to new markets in Asia last year after their largest market, the European Union, temporarily halted imports over concern that a fungal disease called citrus black spot would spread to farms in Spain. With the UK set to leave the EU, the chamber is in talks with the UK High Commission about trade, said Purchase, whose organisation speaks for food producers, processors, and the banks and insurers that support them.
“Brexit does present us with a few opportunities,” he said. “Especially for citrus, because then CBS won’t be an issue. We do not want to stand last in that queue. We want to be pro-active and get our ducks in a row so we can start accessing there as soon as possible.”
South Africa’s rainfall last year was the lowest since records began in 1904, causing widespread damage to crops and livestock herds. The country, which is the continent’s largest corn producer, has become a net importer of the grain for first time since 2008.
While production of grains, oilseeds and meat was affected by the first two years of the drought, output of vegetables and fruit will be hurt if dryness persists for a third year, Purchase said.
This may affect shipments of apples, which have been “phenomenal” and have been a “real boon” for South Africa, he said.
© 2016 Bloomberg