South Africa’s agricultural exports to the European Union are facing mounting challenges despite strong trade agreements, with researchers warning that growing trade barriers and related disputes are threatening the country’s competitiveness in this crucial market.
A comprehensive study by Stellenbosch University and Mendel University in the Czech Republic has revealed that while South Africa remains the EU’s largest trading partner in Africa, the volume of agri-food trade is declining, prompting calls for urgent strategic shifts to reverse this worrying trend.
Research reveals alarming trade trends
The study, published in the journal Agrekon, examined two decades of trade data from 1999 to 2019 using the Constant Market Share Model to analyse how EU import practices are impacting South Africa’s agricultural sector competitiveness.
The research identified four key agri-food categories: bulk commodities, processed intermediate goods, horticultural products, and consumer-ready goods. South Africa’s top five exports to the EU are citrus, grapes, wine, apples and pears, and avocados.
According to 2019 Eurostat data, horticulture leads South Africa’s agri-food exports to the EU, growing significantly from 58% of total agri-food exports in 1999 to over 65% by 2019. Consumer-ready goods, dominated by wine exports, account for the largest share of the EU’s total agri-food imports from South Africa.
Post-crisis growth slowdown raises concerns
The researchers highlighted a concerning trend: while South African agri-food exports to the EU grew steadily over the past two decades, growth has slowed markedly since the global financial crisis.
“Although exports increased between 1999 and 2019, growth slowed markedly after the global financial crisis, a trend linked to the lingering effects of the recession and the emergence of non-tariff trade barriers,” the study found.
The research revealed shifting demand patterns across different European regions. Eastern EU countries, which experienced rapid growth after joining the union in the early 2000s, saw annual import growth fall from 6.5% to just 3.5% in the decade following the recession.
Southern Europe showed an even sharper decline, with import growth falling from 6.3% to 2.6% annually, suggesting slower and more uneven recovery in this region. Meanwhile, central and northern EU markets demonstrated more stable dynamics, though even these regions have experienced flattened growth.
Strategic recommendations for recovery
The researchers emphasise that existing trade agreements, once viewed as gateways to opportunity, are no longer sufficient to support the sector’s development or maintain long-term competitiveness in the EU market.
To address these challenges, the study recommends that South Africa should:
Prioritise High-Demand Products: Focus on agri-food products with rapidly growing demand, particularly horticultural products, and target fast-growing markets within the EU, especially emerging eastern European countries.
Invest in Critical Infrastructure: Improve container ports and electricity supply to reduce transaction costs and uncertainties, thereby strengthening competitiveness against subsidised EU producers.
Address Non-Tariff Barriers: Policymakers should engage with EU counterparts to reconsider non-tariff trade barriers, resolve market access disputes, and help local exporters adapt to strict regulatory requirements.
Diversification beyond European markets
The researchers also advocate for market diversification, suggesting South Africa explore fast-growing markets outside the EU, including BRICS countries, South Korea, Japan, and Vietnam as potential trading partners.
“Once these promising markets are identified, policymakers can help redirect agri-food exports, especially those in high demand, to both growing EU and non-EU markets,” the study suggests.
EU remains crucial despite challenges
Despite the mounting challenges, the researchers stress that the EU remains South Africa’s most valuable trading partner. The significant trade surplus and foreign direct investment generated by EU trade highlight broader development benefits, including job creation, adoption of green and digital technologies, and improved market access.
“These benefits are all central to current trade and development debates,” the researchers noted.
The study authors hope their findings will help South Africa’s agri-food industry and policymakers better understand the country’s competitive position and identify strategic actions to improve export performance in the EU market.
About the Study: The research was conducted by Stellenbosch University and Mendel University in Brno, Czech Republic, and published in the journal Agrekon. The study analysed 20 years of trade data (1999-2019) using the Constant Market Share Model to examine changes in South Africa’s export performance in the context of trade liberalisation and recent slowdowns in global agri-food value chains.
