Saudi Arabia’s inclusion in Brics bodes well for SA’s agricultural exports

This past week, the Kingdom of Saudi Arabia was mentioned as of the countries that are set to join the Brics in January 2024.

This is a major development, and one that offers another avenue for diversifying the geographic destinations of SA’s agricultural exports.

There is no doubt that SA’s agriculture stands to benefit enormously from close co-operation with Saudi Arabia.

As chair of the 15th Brics Summit, SA championed the need to deepen trade and investments among the Brics countries, a point that other members overwhelmingly supported.

The agribusiness working group of the Brics Business Council, in particular, raised the trade aspect and the need to resolve non-tariff barriers that would distort agricultural trade among Brics countries.

Initially, South African agribusinesses had their eyes on China and India as countries with reasonably higher tariffs on some agricultural products and a range of non-tariff barriers.

With the inclusion of Saudi Arabia in the Brics, SA would now look at three significant markets to broaden agricultural exports. It is important for a country like SA to push for geographic diversification of trade especially in the light of intensifying geoeconomics tensions and the growing protectionism in traditional markets.

The original Brics countries are already an important agricultural market. According to data from Trade Map, they collectively import about US$320 billion of agricultural products from the world market in 2022.

About 74% of the Group's agricultural imports come from China, 12% from 12% from India, 8% from Russia, 4% from Brazil and 3% from SA.

The key agricultural products the Brics grouping imports are soybeans, palm oil, beef, maize, berries, wheat, cotton, poultry, pork, apricots and peaches, sorghum, rice, and sugar. These are products that are produced at scale by some Brics countries. Yet, intra-Brics trade remains low because of tariffs and non-tariff barriers.

Saudi Arabia is a major agricultural importer. Over the past five years, Saudi Arabia imported, on average, $21bn of agricultural products. The dominant suppliers of farm products to Saudi Arabia are Brazil, India, the US, the United Arab Emirates, Germany, France, Turkey and Egypt.

The top imported agricultural products were meat and edible offal, rice, barley, milk and cream, cigars, cheese, live sheep and goats, sugar cane, maize, chocolate, citrus, palm oil, oilcake, bananas, tea, vegetables and fruit juices.

SA is a minor player in the Saudi Arabian agricultural market, accounting for less than 2% of all the imports. The essential exportable

products to the Saudi kingdom were oranges, lemons, pears, grapes, mandarins, apples, plums, grapes and avocados. An additional product likely to join this list in the coming months will be beef as SA recently established market access for exports to Saudi Arabia.

Notably, SA is generally a net exporter of some of the products mentioned above that Saudi Arabia imports from the world, albeit mainly concentrated in European, African and Asian markets. Therefore, the possibility of close co-operation and deepening of agricultural trade through the BRICS+ forum from early 2024 will benefit SA.

Again, this is not to minimise SA's close relationship with the EU, the US, the African continent and other regions. These current markets remain strategically crucial to SA's agriculture.

For example, SA exported a record US$12.8 billion agricultural products in 2022. The African continent was the leading market, accounting for 37% of SA's agricultural exports in 2022. Asia was the second largest agricultural market, accounting for 27% of exports, followed by the EU, the third largest market, accounting for 19%. The Americas region was the fourth largest, accounting for 7%, and the remaining 10% went to the rest of the world. The UK was one of the leading markets within the 'rest of the world' category.

So, crucial markets such as these cannot be overshadowed by the BRICS+ possibilities. The enthusiasm around BRICS+ is not at the expense of these key markets but an addition. SA is driven to expand and diversify its agricultural export markets. This is a view or ambition of the South African government and the private sector. Therefore, the possibility of accessing new markets serves this national ambition. 

Wandile Sihlobo is the Chief Economist of the Agricultural Business Chamber of SA