Before Dawn 21 Januarie Wandile

As per usual on a Tuesday, Wandile Sihlobo, Chief Economist at the Agricultural Business Chamber of South Africa, Agbiz, provides a weekly insert on South African agricultural markets. He says there are many existing questions about the future of trade relations between the United States of America (USA) and China following the signing of a much anticipated phase one trade agreement the past week. In his opinion there remain unanswered question from this agreement which has certainly brought a sense of relief. Sihlobo says the agreement states during the two-year period from January 1 this year, to December 31 next year, China shall ensure that agricultural goods of “no less than US$12.5 billion above the corresponding 2017 baseline amount is purchased and imported into China from the US in the calendar year 2020. It also states no less than US$19.5 billion, above the corresponding 2017 baseline amount is purchased and imported into China from the US in 2021.”



He adds the US-China trade friction caused trade diversion from 2018 to 2019 wit Brazil that benefited the most. This country saw its agricultural exports to China growing by 35% from 2017 to 2018 to US$31 billion.



Together with that the US/China trade agreement means very little for South Africa’s agricultural value chains as the country has minimal exposure to the Chinese agricultural market. South Africa remains a small player in China’s agricultural market, although its share of exports has grown over the past 18 years. The value of South Africa’s agricultural exports increased 26 folds between 2001 and 2018 to US$676 million, says Sihlobo.