Wandile Sihlobo: Saudi visit could signal important developments for SA agriculture

A delegation from Saudi Arabia was
in SA this week, and seemingly had an interesting engagement with Minister of
Agriculture, Forestry, and Fisheries Senzeni
Zokwana.

The main purpose of the visit was
to discuss a Memorandum of Understanding (MoU) on technical cooperation in the
field of agriculture, fisheries and aquaculture, and also to identify potential
areas for investment (side note: The Ministry should be thankful we are not the
United States – President Trump is apparently not a fan of MoU’s; see here).

In terms of the MoU, South Africa
and Saudi Arabia agreed that the focus should be on trade, investment, capacity
building, research and development in the fields of agriculture, fisheries and aquaculture.

From a trade perspective, there is
really not much going between South Africa and Saudi Arabia at the moment. As
illustrated in Figure 1, Saudi Arabia
constitutes less than 2% of South Africa’s agricultural exports, although the
value of exports has been increasing in the recent past. Therefore, a focus on a
trade that would boost this figure is a
welcome development. 

graph 1

Given that South Africa is planning
to expand
the production
of these products in the near future, and the Saudis
are already buying a bit, perhaps this visit could be a beginning of what could
be an important market in the future.

Furthermore, South Africa has a
positive agricultural trade balance with Saudi Arabia – not surprising, as it is a desert
country (see Figure 2).

fig 2

Overall, my reading of this
particular visit is positive, in line with South Africa’s broad ambition of
export-led growth, in which agriculture is central.

But there was one important point
in the official
statement
from South Africa’s Ministry of Agriculture, Forestry and
Fisheries, which noted that “[t]he Saudi delegation expressed a desire to lease
land in South Africa to produce a wide range of agricultural commodities,
provided they can sign a lease of 99 years or more.”

There were no further details
offered, so I am not sure what to read into it at this point. Watch this space
for more structured commentary.

Wandile Sihlobo is chief economist of the Agricultural
Business Chamber of South Africa (Agbiz). Follow him on Twitter: @WandileSihlobo

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