Brics founders Brazil, India and China are three of the world’s top four largest food producers, while SA is the leading producer in Africa. Yet despite this dominance, agricultural trade between Brics nations remains modest. This area of co-operation is attracting increased attention within the bloc and SA farmers stand to benefit greatly.
Brics is already an agricultural powerhouse, accounting for roughly half of all global wheat and rice production. China, the second largest food exporter in Brics, exports $100bn worth of foodstuff each year, while Russian and Indian food exports exceed $50bn per annum.
The Brics members are also huge import markets, with China importing $140bn worth of foodstuff and Russia importing more than 300-million litres of wine each year. New members from the Middle East offer further opportunities and increased exports to these Brics states could help SA create jobs and lower inflation through increased agricultural production.
The largest food exporter in Brics is Brazil. While China’s land area is slightly larger than Brazil, and Russia is more than double its size, Brazil has better weather and soil conditions for large scale agriculture, with 70% of its land suitable for cultivating crops.
In contrast, almost 30% of China is desert and a similar proportion of the country receives seasonal snowfall. Meanwhile, only 7% of the world’s largest country, Russia, is arable land.
Brazil exported a record $166bn in agricultural products last year, a figure accounting for a whopping 50% of all Brazilian exports. By contrast, agricultural exports only account for 3% of China’s total exports and 10%-12% for India and Russia.
While Brazilian agriculture exports have historically gone to the US, China overtook the US as Brazil’s largest trade partner in 2009 and today Brazil exports almost nine times more beef to China than to the US.
Pivot
The Brazilian example suggests that a pivot to emerging markets can help increase overall food exports and SA would do well to emulate Brazil’s recent success in the sector. Farmers from Brazil now compete with the US for a share of the growing Chinese market, which has been the world’s largest market for food and beverage imports since 2011.
Though its export volumes pale in comparison to countries such as Brazil and China, the Brics bloc offers SA plenty of opportunities. Increasing exports could generate additional revenue for farmers, allowing them to increase production. This would create more jobs and improve food security. As such, increasing food exports could improve SA’s balance of trade while simultaneously reducing unemployment and inflation.
With the majority of SA’s agricultural exports heading to protectionist and low-growth European economies, Pretoria should capitalise on its Brics status, boosting food exports to lucrative and expanding markets in China, the Middle East and Russia. Diversifying the nation’s export markets could help grow the economy while protecting farmers against the regulatory burdens associated with trading with the EU.
There has already been progress. During the Brics summit held in Johannesburg last year, where discussions about global food security were high on the agenda, China agreed to lift restrictions on SA beef and avocados. Saudi Arabia also attended the summit and agreed to grant SA beef producers access to its R80bn red meat market.
As it turned out this was just the beginning of an inter-Brics market liberalisation process, and SA has reached further agreements in the lead-up to this year’s leaders’ summit in Russia, which starts next week.
Agriculture minister John Steenhuisen recently announced three key agreements with China, including a memorandum of understanding (MOU) on foot-and-mouth disease and protocols for exporting greasy wool and dairy products. The dairy protocol opens up China’s market to SA dairy for the first time, while the foot-and-mouth disease MOU sees only affected provinces face restrictions instead of a halt to all beef exports, which was previously the case.
Grain exchange
From an agricultural perspective, the most headline grabbing prediction for this year’s Brics leaders’ summit has been the suggestion that the Brics may form their own grain exchange to “dedollarise” the global wheat market and help stabilise grain prices. However, for SA farmers the Russian wine market may present the greatest opportunities.
The Association of Winegrowers & Winemakers of Russia has called on the Kremlin to levy import duties of 200% on all wine imports from Nato countries to boost local production and increase trade with friendly nations. With more than half of all Russian wine imports still coming from the EU, this presents an enormous opportunity for SA wine producers.
Russia imported more than 320-million litres of wine in 2023. That is more than SA’s total wine exports, which declined nearly 20% last year. Diversifying SA wine exports to fast-growing markets such as Russia and China could prove a boon to one of the country’s most labour-intensive industries.
Though Africa is already SA’s top market for agricultural exports, SA could do more to boost its exports to other emerging markets and Brics has proven a useful platform for negotiating such agreements. While the immediate benefits of increased trade are gradually being realised, over the long term the Brics bloc offers additional opportunities.
The development of climate resilient crop seeds and the increased production of fertiliser and farming equipment are other areas where Brics nations could work together to increase output and resilience. China has already developed saltwater rice strains to feed millions in its coastal areas and further co-operation with Brics could help ensure food security for billions of people.
From a purely SA perspective, increased trade with other Brics nations would boost incomes for farmers, leading to increased overall production, job creation and lower prices for local consumers. Increased food and wine exports would also generate revenue for the fiscus, funding much-needed infrastructure improvements in a virtuous cycle for farmers.
• Shubitz is an independent Brics analyst.
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