In its August 2019 economic strategy, Treasury outlined the laudable objective of increasing agricultural exports by R6 billion over the next ten years.
Finance Minister Tito Mboweni’s mid-term budget policy statement on Wednesday is an opportunity for Treasury to bring the national budget into alignment with the country’s growth priorities.
One of the core barriers to expanding agricultural exports are the severe budgetary and capacity constraints at the Department of Agriculture, Land Reform and Rural Development.
Of the R7,1 billion allocated to the Department in the 2019 budget, only R273 million was earmarked for Trade Promotion and Market Access. To compound matters, according to the latest Annual Report, the Department is currently operating with a vacancy rate of 19,5%.
With these budgetary and personnel constraints, it is not surprising that the processing of export protocols is taking anywhere from 12 to 17 years for one commodity to gain access to one market. Along with revenue and economic growth, these constraints are also stalling employment and skills development in the agricultural sector.
For example, South African blueberries does not have access to key eastern markets at a time when demand for blueberries are growing phenomenally in those countries.
Between 2013 and 2017, China's imports of blueberries increased by a Compound Annual Growth Rate of 71%. And our competitors have capitalised on this growth with amazing results.
Although blueberries were only introduced as a crop in Peru in 2007, they are now the second-largest exporter of blueberries to China after Chile.
Peru’s revenue from the exports of blueberries grew from $84,000 in 2012 to $ 381.1 million in 2018. Blueberry production in Peru grew by 206% annually on average between 2012 and 2018. This year their blueberry exports are expected to reach 110 000 tons, surpassing Chile as the world’s largest blueberry exporter by 2021.
At the current rate, South African blueberries will only gain access to the Chinese market in 2045. The practical consequence of not being in these markets is the lost opportunity to create an additional 14 000 new jobs by 2023.
It is not only the berry industry that faces this problem. Other fruits and other commodities are struggling with market access delays due incapacity at the Department.
Treasury’s economic strategy acknowledges the need to leverage public-private partnerships to address the constraints faced by government departments and agencies in the implementation of export requirements and in the provision of export documentation and licensing timeously.
The industry is ready to play ball and waiting for government to come to the party.
At his Medium Term Budget Policy Statement, Minister Mboweni has an opportunity to ensure that the national budget reflects South Africa’s economic priorities. In particular, this is a chance for him to back up his economic strategy with the necessary departmental resources to make R6 billion in agricultural export growth a realistic, attainable goal.
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