SA counts the costs of veggie import bans
Mbongeni Mguni | Monday May 13, 2024 06:00
South African agricultural economists estimate that the value of the country’s vegetable exports to Botswana dropped by 55% in 2022, the first year of the partial horticultural import ban imposed by Gaborone to boost local production.
The figures released recently are the first indication of the impact of the import ban effected in January 2022 by government.
And the numbers are provoking outrage in South Africa.
“From a South African perspective, producers are devastated to lose critical markets, regardless of the optimism that consumers in South Africa will now buy vegetables at a lower price due to competition,” writes Buhlebemvelo Dube, an economist intern at the National Agricultural Marketing Council.
“On the other hand, Botswana is likely to intensify its plans to capacitate producers to be more self-sufficient.
“However, the consumers will face the brunt of buying fresh produce at relatively higher prices due to less competition in the market.”
From January 2022, government slapped a ban on the importation of 16 horticultural products, including onions, butternut, tomatoes, watermelons, carrots, potatoes, cabbage, and ginger. The ban was initially set to end in January 2024, but last December, government announced an extension to December 2025. The number of vegetables affected is also due to increase to 32 from July this year.
Engagements between Gaborone and Pretoria continue, but thus far, government has said it will stick to its guns in promoting greater food self-sufficiency through higher domestic agricultural production.
Namibia, meanwhile, has also imposed import restrictions on certain South African vegetables, citing reasons similar to Botswana.
For South Africa, the Southern African Customs Union (SACU) is a key market for agricultural exports, representing logistical ease and lower transport costs all underpinned by historical ties as well as the preferential provisions of the SACU agreement.
Before the import bans by Botswana and Namibia, the SACU region was the second biggest market for South Africa’s fresh vegetables after the Netherlands.
Analysts have however pointed out that SACU, which is the world’s oldest customs union, is fraught with historical trade imbalances, with South Africa benefiting the most from the union positioning itself as a common bloc for trade with the world.
Part of the imbalance stems back to the apartheid era, where economists such as Roman Grynberg say authorities at the time included a secret clause where member states could not seek infant industry protection within the union unless capable of supplying 60% of the SACU market.
In terms of economies of scale, cost of labour, geography and other factors influencing the attractiveness of countries to investors, South Africa has been able to leverage SACU to drive its own industrialisation agenda, with the agreement also providing the regional giant with easy passage of its exports into the smaller members.
SACU’s Revenue Sharing Formula, set up in part to monetarily compensate the smaller members for the industrialisation imbalance, has been pending revision for several years, even though one of the agreed principles is “economic convergence” amongst member states.
The vegetable import restrictions are therefore seen as the smaller nation’s attempts to carve out self-sufficiency in one sector of their economies.
Dube says the restrictions harm consumers in countries such as Botswana, violate SACU and World Trade Organisation rules and discourage the vision of intra-African trade.
“The ban serves as a lesson that South African producers must expand external market opportunities and diversify fresh produce goods away from each other.
“Concentration on the traditional markets is not sustainable and will continue posing serious threats to the industry,” he said.
Botswana’s trade figures show that the country last year imported vegetables worth P176 million, a significant drop from the years before the import ban. According to Statistics Botswana figures, in the first quarter of 2021, vegetable imports averaged P45.8 million, while over the same period in 2023, the figure had dropped to P15 million.
Other figures also demonstrate the momentum underway in the country’s agricultural sector.
In February 2023, or one year after the ban took effect, the Ministry of Agriculture estimated that the total number of horticultural farmers in the country had increased by 300 to 1,600 while production had increased by 11,000 tonnes.
The country’s annual demand for different horticultural products is about 112,000 tonnes and local output as at February 2023 was about 67,612 tonnes meaning local farmers were supplying about 60% of consumers’ requirements.
United Nations and International Trade Centre figures show the sharp drop in Botswana’s vegetable imports from South Africa, with the value of fresh or chilled tomatoes dropping from about $3.3 million in 2021 to just $2,000 in 2022.
The escalating prices that characterised the implementation of the import ban have largely eased, as local supply chains have stabilised, easing the route to market, or “farm to fork”.
Government meanwhile, emboldened by the success of the Selebi Phikwe Citrus Project, has indicated that it has no plans to ease up on the goals behind the import ban.
“Government has a responsibility to make sure that Batswana have a share in the economy, securing all the jobs, incomes and food security that we can as a country, not looking at other countries to feed us,” Agriculture Minister, Fidelis Molao said previously.
“When COVID-19 came, there was a challenge when borders closed and we had to see how to bring the trucks through.
“There was a possibility that the people bringing that food had COVID and we saw all this.
“Our import bill for food is very high and in a year it can reach P11 billion which is riches that could be coming into the economy, into people’s pockets.
“People have been given land they should be tilling and getting that revenue, while reducing the import bill and reducing the revenues being taken outside the country to create jobs elsewhere.”
Within SACU, Botswana and Namibia are actively pushing for greater economic self-determination outside the shadow of South Africa. The horticultural sector is just one sector and officials have hinted at moves being made in other areas, particularly those involving broad industrialisation.
The economists at South Africa’s National Agricultural Marketing Council believe there is room for more dialogue in the shake-up.
“There is a need to improve communication, mutual cooperation and leverage the knowledge from South African farmers to improve their industry, without placing trade barriers.
“Mutual cooperation on information sharing and technology sharing will benefit the Botswana local industry immensely.
“South Africa, Botswana, Namibia, Lesotho, and Eswatini, must all contribute to the SACU expansion, and this may, from time to time, require trading national interests for regional economic growth,” Dube said.