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I South African Agriculture in the World Economy

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I South African Agriculture in the World Economy Agrekon, Vol 35, No 2 (December 1996) Swart Agreko11, Vol 35, No 2 (December 1996) Swart ISOUTH AFRICAN AGRICULTURE IN THE WORLD ECONOMY restrictions and distortions . so as to reduce the Apart from the well-known customs unions and free I uncertainty, imbalances and instability in world trade agreements (FTA's), such as the European Union, agricultural markets". NAFTA (North American Free Trade Agreement) and P.J.A. Swart Mercosur, important other developments in this field Agric11/t11ral Co1111sellor in Geneva, Switzerland l11is Jed to an agreement on agriculture and a nwnber of include EU enlargement and EU initiatives to explicit commitments by members regarding domestic restructure its relationship with Mediterranean countries support, market access and export subsidies in to allow for freer trade; and greater coherence in each of INTRODUCTION THE DOMESTIC REVOLUTION agriculture. the Asian continent, the Pacific Rim and the Americas. South African agriculture has in recent years not only The last approximately fifteen years have seen South In the agricultural field the relevant agreement and South Africa is also investigating the possible value of a witnessed a rapidly changing international trading African agricultural marketing policy move onto a commitments by members are a first step in a process free trade agreement with the EU and has recently environment, but it has also experienced a dramatic course which almost inevitably would bring it to the which is due, according to the so-called built-in agenda initialled its agreement to a SADC (Southern African change in the way the marketing of its products is doorstep of the elusive and unattainable free market. of the WTO, to be taken up again in further negotiations Development Community) Trade Protocol that foresees managed. Although the title of this paper could cover a South Africa has in the nineties followed an accelerating in 1999. the phasing out of customs duties between SADC wide range of topics, I will limit my remarks to the main process of liberalisation of its agricultural markets, members over an eight year period. l11ese latter two issues that I believe are shaping the nature and which has been more dramatic than is generally Alongside the results of the Uruguay Round a number of developments are discussed further below. trajectory of South Africa's agricultural trading realised. new issues relating to trade are being debated in relationship with tl1e rest of the world. Some of these international forums, such as the relationship between l11is trend toward regional blocs, in as much as it issues have a local character, whilst others are of an This process of deregulation has its roots in the calls in trade and the environment, labour standards, represents both further liberalisation between bloc international dimension and which have in the past - the early eighties by a previous Minister of Agriculture, investment, bribery and corrnption, competition policy members and therefore possible market shifts from a Soutl1 African perspective - been more or Jess Mr Greyling Wentzel, for more market-related and food security. Although no consensus has been detrimental to non-members, needs to be closely completely exogenous variables. With a new acceptance production in agriculture. l11ese initial steps were reached on these issues, some will move to the centre followed and appropriate policy steps taken in the event in the world community, South Africa has in the last two followed in the nineties by a growing debate on stage in ensuing deliberations in the WTO and may be that our interests are affected. years been in an excellent position to grasp new market statutory marketing in agriculture, which was enthused addressed at the WTO Ministerial Meeting in Singapore opportunities. This acceptance has also allowed South by the reports of the Kassier Committee and of the in December I 996. SOUTH AFRICAN AGRICULTURE AND THE EU Africa to participate in the international policy Agricultural Marketing Policy Evaluation Committee environment in which it operates to a greater extent tlian which were appointed by Minister Kraai Van Niekerk. After almost two years since the WTO's inception, it is l11e implications of a free trade agreement between the in the preceding years. While these documents and the draft White Paper on evident that there is good progress with the EU and SouU1 Africa have over the last nine months Agriculture and the draft Marketing of Agricultural implementation of the commitments negotiated under been rigorously analysed in Government circles in THE GLOBAL ECONOMY Products Bill have been widely and critically debated, the Uruguay Round agricultural reform programme. In collaboration with the business community and Jabour they represent milestones in the tone and direction of the first year the Agriculture Committee has principally representatives. l11e Department of Agriculture has The 1996 Trade and Development Report (UNCTAD, the liberalisation process. focused on tl1e implementation by members of their worked closely with the agricultural community in a 1996) concludes that growth in world output continued market access c01mnitments, e.g. tarification and Steering Cmmnittee chaired by the Deparlnlent in this in 1995, but at a reduced rate of 2,4% which is expected l11e deregulation cause within South Africa's minimum market access quotas, while the Co1mnittee's matter and to ensure close co-operation and consultation to slow even further in 1996. The growth rates in newly agriculture has been supported, inter alia, by a changed perspective is broadening to the other areas such as on 0U1er issues relating to agricultural trade. In general industrialised countries in Asia considerably outstripped domestic economic and political enviromnent, new export subsidies and domestic support, as compliance to the agriculture sector is in favour of an FIA if certain that of the developed world, with China continuing to be teclmologies and infrastructure, a shift in public commitments regarding these measures are notified by conditions can be met in the negotiations. one of the fastest growing economies, expanding at a sentiment, international developments, practical members to the WTO. rate exceeding I 0%. In Africa growtl1 at 3% was realities, and the lively free market debate itself. The EU is Soutl1 Africa's main agricultural export generally higher than in Latin America where growth, South African import duties of practically all market. While domestic agriculture remains a sensitive with the exception of Chile, has slowed to 1% . The l11e growing realisation in the sector that statutory agricultural products have been re-evaluated in U1e last sector for both the EU and Soutl1 Africa, the removal of share in world trade of developing Asian countries now marketing systems that had served agriculture relatively two years, and minimum market access quotas, where all import duties on agricultural products, as implied by surpasses that of the USA, the European Union (EU) or unchanged in principle since the mid thirties were no appropriate, have been opened since the begi1ming of a full FT A, would be unacceptable to both parties. Japan. Economic recovery in certain Central European longer sustainable in the nineties, Jed to an accelerated the year. Although a few industries have difficulties However, there is a WTO requirement that substantially countries is well under way with growth at 5%, while liberalisation of statutory marketing in the last three with minimum market access, Soutl1 Africa should all trade should be covered by an FIA and that no sector output continues to decline in other Central and Eastern years. In 1990 there were 21 agricultural marketing otherwise not find it too painful to meet its WTO should be excluded. l11is means that agricultural trade European countries. boards, the majority of which had a profound influence agricultural cmmnitments. will need to be included and, from a South African over the price; the export and import; and manner in export perspective, we would wish to see market access A general trend is that the economic recovery since 1993 which the products they controlled, were marketed. In view of the progra1m11ed next round of WTO for all our major products improved by an FIA. in the developed world has not been as rapid as during With the exception of most vegetables and subtropical negotiations on agricultural trade in 1999, I would Disappointingly, the EU has chosen to exclude from the the previous two cycles of expansion and is expected by frnit, important facets of the marketing of practically all rec01m11end that the agricultural sector and notably negotiations a number of agricultural products which are UNCTAD to slow to below 2% in 1996. Within this the other primary food and fibre agricultural products members of the AEASA should, in the next three years, important to South Africa. This and the fact that group the USA continues to outperfonn the Eurepean were managed in some or other fonn by producer- focus attention on international agricultural trade and Government support to the EU's agriculture by far Union and Japan. dominated control boards. Through the lnlport and work together with the Government to formulate sound exceeds that which is received by South African fanners Export Control Act (Act 45 of 1963) and the Marketing and coherent negotiating objectives. In the meantime will have to be addressed in the negotiations. From a development perspective UNCT AD singles out Act (Act 59 of 1968),
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