Improving Agricultural Market Performance:
Creation and Development of Market Institutions
162
5.5.3 Effectiveness of Agricultural & Food Market Institutions
Since the late 1990s, South Africa’s trade and agriculture policies substantially liberalized, with
reforms that include multilateral reductions in tariffs and subsidies through the country’s
WTO) commitments, the signing of several free trade agreements with important trading
partners, and discussions and negotiations on future liberalization both in the context of
Africa-EU Partnership Agreements (EPAs) and of regional trade agreements such as the
Tripartite Area Free Trade Agreement (F-TPA), which entails integration of COMESA, the East
African Community, and SADC into a single trade area of 27 countries with an aggregate
population of more than 600 million. Agricultural liberalization also took place over the same
period, reducing direct Government intervention in agricultural markets via control boards,
import tariffs and quotas, and market price supports.
“Today, the sector is the most unregulated in the world but also one of the most structured and
the most reliable, offering investors the full gamut of tools with which to manage risk. Within the
international framework of renewal of agricultural investment, the country offers a favorable
platform for financial experimentation as the country’s land resources, as well as its role as
regional power, further stimulate investor interest in this market.”501
These developments have helped South Africa become one of the world’s leading exporters of
agro-food products such as wine, fresh fruit and sugar, both within Africa and to Europe, Asia,
and the Americas. South Africa’s agricultural export revenues reached almost 9% of the total
value of national exports in the early 2000s.502
According to Bradley Yazbek, Farmsecure Fruit Market Manager, Europe was the leading
destination for South Africa’s top quality fruit for many years, but increased demand in China,
Japan and other Asian countries meant that in 2012, Europe took only 42% of Farmsecure
Fruit’s total exports, with Asia accounting for 37% and the Middle East 21%.
The liberalization of trade and agriculture has had a marked effect on productivity: one 2010
study found that “trade liberalization has contributed significantly to augmenting South
Africa’s growth potential via its impact on TFP [total factor productivity]”. Agricultural
imports, however, have grown since liberalization, reaching 5-6% of total annual imports from
2000 to 2005503
South African agri-food producers have complained that European companies are dumping
food products on the South African market. For example, RCL Foods (formerly Rainbow
Chicken) claims it is the victim of dumping of European chicken legs and thighs (European
consumers prefer white breast meat so producers can earn more by exporting the dark meat
even at very low prices). RCL Foods reported a 11.9% loss in headline earnings for the year to
June 2016 and in January of this year retrenched over 1,000 workers at a plant in KwaZulu-
Natal.
501 Ducastel, A. & Anseeuw, W. (2011), Le « production grabbing » et la transnationalisation de l’agriculture (sud-) africaine.
Transcontinentales, No10/11, pp. 2-5.
502 Ibid
503 Ducastel, A. & Anseeuw, W. (2011), Le « production grabbing » et la transnationalisation de l’agriculture (sud-) africaine.
Transcontinentales, No10/11, pp. 2-5.