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South African agriculture faces risks and opportunities.

South African agriculture faces risks and opportunities.

The European Union – among a host of other countries – is seeking to implement urgent policy measures to combat the effects of climate change. The EU’s 2030 climate target plan aims to reduce greenhouse gas emissionsBy 55%, compared to 1990 levels.

The EU has created the “Farm to Fork strategy”. This new approach, which was launched in 2020, ensures that agriculture and fisheries contribute effectively to achieving this target. This strategy is the heart of a larger initiative called the European Green Deal. It’s aim is to reduce the environmental and carbon footprint in the way food is produced and consumed.

The strategy lists 27 actions. These include food production, processing, retailing and waste. They aren’t expected to be implemented until 2022, to give regulators and food system actors time to transition into the new policy regime.

It is built on four broad pillars.

  • Consumer demand. This framework focuses on nutrition labelling and creating a sustainable labels framework that covers nutrition and the environment. The labelling requirements will empower consumers to make informed choices about their health and sustainability.

  • Food production. This document sets out the basic principles of sustainable production. It includes the setting of targets to reduce pesticides and fertilizers and the revision of laws governing feed additives and animal welfare.

  • Industry behavior. This initiative seeks to establish concrete commitments from agribusinesses and other actors in the food system regarding sustainability and health. The EU will create a code of conduct for the development and marketing of business practices. This code will require agribusinesses to incorporate sustainability into their corporate strategy.

  • Trade policy. This policy seeks to get third-country commitments on pesticide use, animal welfare, and fighting microbial resistance.

The EU wants South Africa to follow new regulations in order to continue to have access to its lucrative market. This raises questions regarding the ability and potential of South Africa to adapt to these new regulations, as well the risks and possibilities that the regulations may present for future access.

What are the problems?

South African producers – as well as those in the rest of Southern African Customs Union and Mozambique – may face several challenges. These include:

Policy and regulatory uncertaintyIt may take regulators and food-system players some time to align their policy and regulations with the new requirements of the food industry. There can be a delay between 3 and 5 year for policy cycles and political process. This will likely lead to a transition period of policy and regulatory uncertainty.

Compliance is expensiveSouth African agribusinesses must comply with stringent EU regulatory standards over the years. There are also a growing number of private standards. These include traceability, allergen exposure, good farming practices, child labour, and other standards. There are many types of certification. Resource-poor farmers cannot afford to pay such high fees for new regulations and certification. Most smallholder farmers will be excluded from export markets if they don’t receive financial support.

But there are also many opportunities.

Potential growth points

South Africa has potential market share growth opportunities in the area of genetically modified (GM), foods. South Africa produces some GM crops. However, the EU has very strict restrictions on GM imports at the moment. It is, however, currently reviewing Its GM regulations. It has released a studyIt has been confirmed that new genomic technologies products can contribute to sustainable Agri-Food Systems in line with the European Green Deal and Farm to Fork Strategy.

South Africa could have new export opportunities if the policy is changed.

High-quality organically produced food is another area of opportunity. South Africa already has established commercially driven export value chains that conform to emerging regulations in this sector. These foods are still only available to niche markets within the EU. The Farm to Fork Strategy aims to make these foods mainstream. If farmers can produce more at a lower price, this could be a great opportunity for South Africa.

Projections offer another opportunity global food demand will increase by as much as 60% by 2050. Few EU member states have enough land available to produce enough to meet the demand. The assumption is that the EU will be increasingly dependent on food imports.

South Africa boasts at least 1.3 million hectaresAdditional cropland can be sustainedably brought into production.

Against this backdrop, South Africa can continue to expand its production to meet an increasingly significant portion of the EU’s food needs. This is especially true if local foods systems adapt to new standards and align with them.

But the country’s agricultural sector will also have to up its game when it comes to technological innovation. Technical change will include the adoption technologies that will reduce carbon footprint and increase yields in a more sustainable way.

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Part of this process will include expanding the adoption of genetically engineered crops with high yields, drought- and pest-tolerant genes. These crops will allow farmers to use less land to produce greater quantities of food. This will allow more land to be saved for preservation and increase the potential of carbon sequestration.

The risks

Increased inequalityStrategic and deliberate interventions are required to support regulatory compliance. Without these there is a real chance that resource-poor farmers will be left out of the new “sustainable agro-food system” due to their lack of financial and technical capacity to conform to new standards.

This will only increase inequality and widen the gap between formal and informal food systems. If regulations take longer to adopt than originally planned, the EU value-chain actors could lose their first mover advantage and sub-Saharan African importers may be forced out of markets.

Off-shoring of “bad production” to South Africa:Food producers who are unable to comply with the Farm to Fork strategy might be forced to relocate a portion of their value chain to South Africa. This would allow them to target exports to the Middle East, Far East and Asia, which have much stricter food standards. The types of technologies that will soon be implemented in South Africa could endanger the continent’s environmental sustainability if there is no pressure to do so.

Next steps

The following four factors will be key to the Farm to Fork strategy’s re-set of our food system

The EU and the private sector may need to provide significant technical and financial support to facilitate South Africa’s transition and align its regulatory environment with the focus on health and sustainability.

The long-term goal is for the harmonisation in standards and practices to lead to structural changes in the food system that do not favor farmers. This will require greater transparency in all aspects of South Africa’s food system.

This is an edited edition of an article. The EU Green Deal: how will it impact South African agricultural exports?Original publication by Econ 3×3


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