impact of trade agreements on the agricultural sector
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Impact of trade agreements on the agricultural sector. Elaine Alexander Chairperson: Agri SA Commercial Policy Committee. Content. About Agri SA Some economic realities in SA agriculture Producer Support Estimates (PSE) SA Agricultural trade Trade Agreements - PowerPoint PPT PresentationTRANSCRIPT
Impact of trade agreements on the agricultural sector
Elaine AlexanderChairperson: Agri SA Commercial Policy
Committee
Content• About Agri SA
• Some economic realities in SA agriculture
• Producer Support Estimates (PSE)
• SA Agricultural trade
• Trade Agreements
• Costs and Trade Factors Impacting Agricultural Value Chains
Agri SA• Agri South Africa is a federal organisation
which promotes, on behalf of its members, the sustainability, profitability and stability of commercial agricultural through its involvement and input on national and international level
• Represent commercial and emerging farmers through:– 9 provincial unions– 24 commodity organisations
Economic Realisties in SA Agriculture
Number of farming units
Source: Stats SA, 2007
The cost squeeze for SA farmers, 2008 to 2012 (2005 = base year = 1)
Source: DAFF
Agriculture’s linkages with the rest of the economy
• Backward linkages – Purchases of goods such as fertilizers, chemicals
and implements
• Forward linkages – Supply of raw materials to industry and the food
supply chain in general
• Approximately 70 percent of agricultural output is used as intermediary products in other sectors
7
Agriculture’s linkages with the rest of the economy
• GDP multiplier for agriculture is 1.51. (Mullins ,2004) – Increase of one rand in agric production will result
in an R 1.51 increase in the GDP of the country.– On par with the GDP multiplier for the total
average economy of 1.58.• Labour multiplier of 24.17 outweighs all other
sectors (Mullins, 2004)
– Well above the same multiplier for the economy as a whole of 8.16.
8
Minimum Wages versus employment in agriculture, forestry and fisheries (2003-2013)
Producer Support Estimates(PSE)
The Producer Support Estimate (PSE)
is an indicator of the annual monetary
value of gross transfers from
consumers and taxpayers to support
agricultural producers, measured at
farm gate level, arising from policy
measures, regardless of their nature,
objectives or impacts on farm
production or income.
Producer Support Estimates as % of gross farm receipts, 2009-11 average
Producer Support Estimates, 2012
OECD Members Emerging Economies
Estimates of support to agriculture (PSE) in selected non-OECD and OECD countries (2011)
Source: OECD, Agricultural Policy Monitoring and Evaluation, 2012* 2010 Info
Producer Support Estimate by commodity, South Africa, OECD
Source: OECD
SA Agriculture trade
South African Agricultural exports and imports, 1990-2012
Source: DAFF
EXPORT AND IMPORT VALUE OF AGRICULTURAL PRODUCTS (F.O.B) (R’million)
EXPORTS 2005 2006 2007 2008 2009 2010 2011 2012
TOTAL S.A. PRODUCTS 327 125.4 393 046.7 463 237.9 635 315.0 513 864.1 590 053.6 693 945.3 720 011.4
TOTAL AGRICULTURAL PRODUCTS 26 141.2 26 977.5 30 666.8 46 943.7 47 459.4 46 400.2 50 813.2 52 578.9
TOTAL UNPROCESSED AGRICULTURAL PRODUCTS
11 073.3 10 460.4 12 530.1 20,992.6 990.6 17021.6 12809.2 16 341.8
TOTAL PROCESSED AGRICULTURAL PRODUCTS
15 067.9 16 517.1 18 136.7 25 951.1 46 468.8 29 378.6 38 004.0 36 237.1
AGRICULTURE AS % OF TOTAL EXPORTS
8.0 6.9 6.6 7.4 9.2 7.9 7.3 7.3
IMPORTS
TOTAL S.A. PRODUCTS 349 163.7 465 215.7 484 837.5 627 450.3 541 173.4 585 547.4 621 327.7 832 917.2
TOTAL AGRICULTURAL PRODUCTS 16 286.4 2 0 588.5 29 304.5 38 427.5 35 039.2 34 626.8 44 926.4 53 071.0
TOTAL UNPROCESSED AGRICULTURAL PRODUCTS
3 205.1 4 625.8 5 971.1 6 023.8 3 517.4
TOTAL PROCESSED AGRICULTURAL PRODUCTS
13 081.3 15 962.7 23 333.4 32 403.7 31 521.8
AGRICULTURE AS % OF TOTAL IMPORTS
4.7 4.4 6.0 6,1 6,5 5.9 7.2 6.4
Source: DAFF
Regional composition of South Africa’s export basket in 2012
South Africa’s Export Basket in 2012
Contribution by Agriculture to total South African trade, 1990-2011
Increase after deregulation and liberalisation
Agricultural trade slower than overall trade
Trade Agreements affecting SA agriculture
Various trade agreements• In place
– SACU– AGOA– SADC/EU Economic Partnership Agreement (EPA)– EU TDCA– EFTA
• Envisaged– SA-India– SADC-COMESA-EAC Tripartite FTA– BRICS
AGOA The United States imported:
• $285 million (2012) worth of South African agricultural products;• wine, macadamia nuts, citrus fruit and other consumer-oriented
food products South Africa’s imports of agricultural products from the
United States (2012):• $287 million - intermediate goods for further processing locally and
consumer-oriented food products. Aiming to increase trade with Southern Africa The US Department of Agriculture reports that 2012 US
exports to South Africa of dry peas, lentils and chickpeas rose to 9,340 MT, a massive increase of 170% over 2011.
EPA negotiations between the SADC EPA Group and the EU
• SA requested improved access to the EU on 21 agricultural products, of which the EU made an offer on 17 products
• The EU for its part also requested reciprocal access to the SACU market in a number of product groups.
• At the level of SACU, we have made progress in meeting the EU demands, and this is likely to be closely linked to one of the major outstanding areas in the negotiations, a specific agricultural safeguard clause.
• SADC EPA Group’s request for a special agricultural pre-dates the surge in poultry imports for the EU.
• Other areas which potentially affect the agro-food sector:– Rules of origin– Tripartite FTA and all-Africa FTA– Export taxes– The most favoured nation (MFN) clause.
Trade relations and agreements with South-
South Partners
Costs and Trade Factors Impacting Agricultural Value Chains
23-04-20 ELAINE ALEXANDER
Trade Factors
Global Economic CrisisShift in Economic PowerNew Political AlliancesGlobal Political UnrestGlobal TerrorismTradability of Agri !Failure of DOHA!
Increasing Regionalisation of Trade Food Security –access & nutrition Sustainability Changing Consumption Patterns Trans National Retail Corruption
Inputs, LabourEnergy, Regulation, Ports, Compliance,Freight, CreditExchange Research
?
VALUE CHAIN VALUE CHAIN
Trade factors• Tariffs & Non Tariff Measures, infrastructure, finance,
exchange rates, power factors of chain stakeholders (private standards)
• PROTECTIONISM - Complexity Rules – RED Tape• Barriers to trade 2007-08 47 new trade restrictions
2009 – 66 trade restrictions - 47 trade restricting measures.
• Employment - EU EPA, Indonesia licensing• Consumer – Sanitary barriers (Chemicals usage) non
science – EU • Phyto sanitary access processes – lengthy - China, non
science - Japan
Protectionism• Russia - EU Pig ban (cattle and sheep virus?)• Russia – MRL Residues 0.03% ? • Indonesia – Port of Jakarta closure• China – Irish Pork Ban, Belgium Chocolate Ban?• Thailand – SA Deciduous Fruit Ban!• Subsidies – US $ 100m grant to Agriculture 2012• Export subsidies – EU,US, Japan, South Korea• Developed nations subsidise !• Developing restrict !
*WTO/Free Trade agreements/Policy, etc.**Phytosanitary/Food Safety/MRL/Traceability/ SPS/TBT Policy Issues/PRA’s
**SPS & MarketAccess Working Group
**Industry WorkingGroups
Dept. of AgricDept. of Trade & Industry
Directorate: Plant Health,Quality and Food Safety
Directorate: Int. Trade & Business Dev.
NAMC
*Agric. Trade Forum
Commercial Agric.
Provinces Industry MRL work groups (x2) Industry Phytosanitary
work group
SA/EU PIPPriorities
Research Framework / Strategy
SPS foodsafety workgroup
SPS MRLworkgroup
Sub work groups
SA PIPSteering Comm.
Traceability Issues (EU 178/ SA GAP)
Grading Stds W groups
Trade/Market Access: Processes & Structures
More stringent SPS Rules?• EU – Ethephon MRL reduced 2010
– Reduced MRLs for pesticides – lost 30 to 40 actives etc.
• USA – FCM issues - irradiation• Brazil – ban on certain fertilizer etc. usage 2011• Indonesia – health certificate, closure of Port • Vietnam/ Cambodia / Kazakhstan – Pest Risk
Analysis required 2011• Russia – Food safety• China – Special steri markets – HK 33E Alexander
ELAINE ALEXANDER
Regional Fresh Produce SPS Notifications: Regional Fresh Produce SPS Notifications: 01/01/12 – 30/09/12 01/01/12 – 30/09/12
TOTAL = 316F/S = 44.3%
P/H = 6%
TOTAL = 271F/S = 15.5% P/H = 32.5%
TOTAL = 124F/S = 18.5%
P/H = 4%
TOTAL = 47F/S = 14.9%P/H = 17%
TOTAL = 55 F/S = 20%P/H = 20%
TOTAL = 12F/S = 8.3%
P/H = 16.7%
TOTAL = 25
F/S = 20%P/H = 4%
TOTAL = 60 F/S = 33.3%P/H = 3.3%
TOTAL = 40 F/S = 10%
P/H = 12.5%
GLOBAL TOTAL = 950Food Safety = 26.6% Plant Health = 14.8%
23-04-20
What can be done?• Take the lead• Invest in building NTM capacity -
– Integrated communication and response systems – Sound Domestic institutions – policy etc.
• IPAP 2 Quality and Safety Standards (Food Control Body)
– Use available support mechanisms to develop best practice production and market systems (Green box and Amber box support)
• Build partnerships – pvt. and public e.g. Australia HAL, Chile – Prochile
• Develop expert capacity • Multilateral tool box – WTO, FTA’s, CODEX FVO
