South Africa supplies 99% of Zimbabwe's fruit imports and 68% of its vegetable imports
Dollar shortage, not promotion of local industry, behind Zimbabwe ban decision
Yesterday’s ban on the issuing of import licenses for fresh produce into Zimbabwe, which that government calls a “waste” of foreign currency, is not expected to have a significant impact on South African trade. The announcement comes after some South African exporters have, for weeks now, had trouble in receiving payment for delivered consignments, a situation which, a market agent says, has become acute during the last two weeks. The Zimbabwean government’s move has come as a surprise to economic commentators in South Africa.
Ninety-nine percent of Zimbabwe's fruit imports come from South Africa. Last year fruit – primarily apples, grapes and peaches - worth about R146 million (9.2 million euro) was exported to Zimbabwe, representing 0.3% of South Africa’s total fruit exports. In 2016 South Africa exported vegetables (particularly potatoes, dried beans and onions) with a value of R76 million (4.8 million euro) to Zimbabwe, representing 5% of total vegetable exports.
The Zimbabwean government has re-instated an amendment to the Control of Goods (Import and Export) Regulations, under which the requirements for import licenses for a wide range of disparate products, from radioactive materials to secondhand undergarments, have been amended.
It is not clear from the document, called Statutory Instrument 122 of 2017, which FreshPlaza has seen, whether import licenses for all fresh produce items are revoked, as only potatoes, tomatoes and onions are explicitly mentioned. The Zimbabwean Herald newspaper, regarded as being close to the government, claims that no more import permits for horticultural products would be allowed. Zimbabwean government officials, however, insist that this is not a ban but merely a new requirement for import licenses.
Wandile Sihlobo, agricultural economist at Agbiz, confirms that a shortage of US Dollars lies behind the decision. He refers to Gresham’s law, which states “bad money drives out good”, referring to the Zimbabwean bond notes introduced last year to ease cash shortages but not readily accepted by Zimbabwe’s international trading partners.
The Zimbabwean government has also put forward the promotion of local production, in particular rice production, as a driving force behind their decision, an explanation regarded with scepticism by the South African industry. In June maize (corn) imports from South Africa was ceased because of sufficient local supply.
Zimbabwe does export bananas to South Africa, particularly when prices are high enough to make it viable (more than R120 (7.61 euro) per 18kg), but volumes don’t compete with supply from South Africa and Mozambique. A market agent told FreshPlaza that there is banana expansion underway in Zimbabwe. “That will be a very good thing. Zimbabwe’s soil is of the most fertile there is.”
Roelf Pienaar, managing director of Tru-Cape Fruit Marketing, the largest exporter of South African apples and pears, feels that the reported news that Zimbabwe had banned fruit exports would certainly impact South African growers. “Sadly, banning South African fruit exports into Zimbabwe will hurt Zimbabweans themselves.” He adds that a shortage of US dollars with which to trade is an issue for other African economies too and that he hopes that rather than force Zimbabweans to pay more for locally grown produce, the government would find another way to protect its currency and reopen trade between themselves and South Africa.
By this morning the impact of yesterday’s announcement wasn’t yet felt on the fresh produce markets of Johannesburg and Pretoria, where large volumes of fresh produce are bought by traders from other southern African countries. Some estimate that as much as half of all supply at Johannesburg and Pretoria eventually makes its way to neighbouring countries. However, volumes going to Zimbabwe are lower than those going to Mozambique, Swaziland and Lesotho and therefore the ban’s effect on South Africa is expected to be minimal.
A large network of small-scale traders are dependent on supplies coming in from South Africa. A number of market agents expressed the view that there would be ways and means of getting around the ban.
Publication date: 10/18/2017
Author: Carolize Jansen
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