JOHANNESBURG – The National Treasury’s downgraded growth forecast in the Medium-term Budget Policy statement, coming on the heels of South Africa’s quarterly labour force survey, paints a bleak picture.
Statistics South Africa reported that our unemployment rate – at 29.1 percent – is now at the highest level since the global economic downturn in 2008.
Whatever way you look at it, these figures don’t bode well for the National Treasury’s economic strategy, which aims to create one million jobs and grow the economy by 2 to 3 percent over the next decade.
Yet there is some light amid the economic doom and gloom. Agricultural jobs increased this quarter by 38 000. This is no doubt why Treasury’s Economic Strategy paper outlines the importance of the agriculture sector in promoting labour-intensive growth. As the Treasury’s paper states: “A growing agricultural sector can help address our challenges of unemployment and low growth, countering rural poverty.”
The citrus industry takes its role as a job creator very seriously. South Africa is now the second-largest global exporter of citrus fruit, bringing R20 billion into the country and supporting 120 000 jobs. Importantly, rural areas are seeing real benefits to investments made in supporting developing growers. If the citrus industry were to expand its exports by just 25 percent, it alone would be able provide the R6bn increase in exports that the Treasury seeks.
It is, therefore, most encouraging to see that improving export competitiveness – especially improved market access – is being highlighted as a key economic intervention by the government. It is our hope that this commitment will extend to all markets where South African products can offer strong competition to other countries, as we in the citrus industry do.
Unfortunately, South African farmers have some difficult hurdles to overcome in expanding our access to those markets. Not all countries play fair, and – in some cases – have imposed technical barriers to keep our high quality, competitive exports out.
The EU, for example, has placed extensive and unfair Citrus Black Spot restrictions on our citrus growers. Scientific evidence has shown that these restrictions are unnecessary, because no EU fruits are at risk of infection from it. Nevertheless, the citrus industry has gone above and beyond its obligations to comply with these regulations at a cost of nearly R2bn. We are working closely with the Department of Trade and Industry to resolve this matter, which may require intervention from the World Trade Organisation if all other options are exhausted.
Besides unresolved issues in markets we have access to, we are also working hard to gain access to new markets. There is, for example, a need to gain expanded access into Asia (such as the Philippines and Vietnam). Access conditions in certain other markets such as China, the US and India could be optimised, resulting in greater volumes.
In addition to maximising trade opportunities, we also need to find a way of minimising threats. A serious hindrance to trade at this time is the state of our ports, which are beset by poor productivity, ageing infrastructure, substandard management and labour issues. Every year citrus exports are subjected to congestion at the ports which adds to costs and impacts quality. In this regard, we are heartened by the proactive approach that Minister Pravin Gordhan is taking to resolve these issues.
It is also hugely positive that there is an increasing number of emerging black citrus growers who are building strong and sustainable businesses. However, to scale their businesses to the next level, many need assistance to access capital, markets and technical know-how. The Citrus Grower Association is engaged in a number of transformation projects which could be accelerated should the government and industry work closer together.
So, while there are no doubt opportunities and threats, we in the citrus industry are cautiously optimistic about the future of the industry, and its contribution to job creation and transformation. If we can resolve issues in markets we have access to, expand to new markets, fix the problems at our ports and work together with the government on increasing support for emergent black growers, we will be able to help Minister Mboweni meet his export and job creation targets.
There is much to be positive about. We just need to find the political and bureaucratic will to make the most of opportunities that already exist.
Justin Chadwick is the chief executive of the Citrus Growers’ Association of Southern Africa.