Transcript Slide 1

By
Bonani Nyhodo, Elvis Nakana, Heidi Phahlane and Louise Kotzé
We acknowledge and appreciate comments made by tralac researchers!
Experience of what?
1.
Agricultural prosperity!
2.
Agricultural trade prosperity!
3.
Improved socio – economic situation!
Agricultural exports
25000000
Chile exports started to
increase!
15000000
10000000
5000000
0
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
US$ 000
20000000
Argentina
Australia
Chile
New Zealand
South Africa

Targeted support to agriculture

Create a structure of governance that support a clear vision

Choose specific products and support them heavily

Negotiate as many FTAs as possible – economic benefits

“if this be error, and upon me proved,

I never writ, nor no man ever loved” – Sonnet 116 (William
Shakespear)

“Let them not make me a stone and let them not spill me.
Otherwise kill me” – Prayer before birth (Louis Macneice)

Levitt and Durbner (2006) – freakonomics: the hidden side of
everything
 Incentives are the core of modern life
 The convectional wisdom is often wrong
 Knowing what to measure and how to measure it make a complicated
world much less so!
Krattiger (2010) – misconceptions and myths that every genetic
resource IP and worth millions of rands.
 Quoted - Aristotle arguing that “the soul never think without an image”
 Public good is a good is free of charge – wrong!
 Reality moves faster than ideology
▪ Then how about implementation?

Policy evolution – both countries

Overall trade profiles

Agricultural trade profile – Chile

Trade reconciliation

Trade chilling

The relative importance of the Chilean markets
 Population - 16.3 million (growth rate 1.2%)
 adopted policies to boost competitiveness
 Reduction of tariffs 6% (uniform approach)
 Government expenditure on agriculture - increased tremendously

Government support to agriculture is 4% of total farm receipt (PSE)

Govt - 75% of cost of new plantations in subsidised (forestry)
 However,
 Chile’s agricultural policy is regarded as liberal

Agricultural allocation increased by more than four folds over the
past 10 years.
Budget allocation
±60 percent of the total budget to agriculture
•
Irrigation programmes (on-farm investments),
•
Productivity and skills devt programmes (preferential credit)
•
Rural development exclusively aimed for the poor
± 40 percent is shared among programmes such as:
•
The soil recovery programme
•
Research & development
•
Extension & training
•
Animals & plant health and standards
•
Marketing and trade promotion

Poverty reduced by 26%

GDP growth rate averaged 5.6% - Agriculture 4%

Chile diversified from 122 markets (2003) to 194 markets (2007)

Agro-food exports have grown much faster than agro-food imports

Re-admission GATT/WTO

Liberalisation - taking developed countries commitments (UR)

was is it good or bad?

Deregulation of marketing board (single marketing channels)

Abolishment of tax concession favouring agricultural sector

Reduction of tariffs – agriculture less than 6% on average

Government support to agriculture remained at around 5% of
farm receipts (PSE)

Government expenditure on R&D has decreased (ARC
budget)

Share of agric allocation as % of total allocation remains less
than 1%

To double check trade flows – reconcile trade data between
partners

Compare RSA reported export to Chile against Chilean
recorded imports from RSA or vise versa!

Convectional wisdom argues that the two rarely reconcile!
1. Imports are always greater than export
2. Imports equaling exports (rare)
3. Imports less than export (explanation need)
Reasons
1. Exchange rate (R or $)
2. Time difference (in recording)
3. Method of evaluation (CIF or FOB)
HS
Description
Chile imports
RSA exports
Difference
All
All agricultural products
3.65
3.22
-0.42
090220
Green Tea
1.34
0.07
-1.28
200949
Pineapple Juice,
0.97
0.68
-0.29
200870
Peaches
0.27
0.17
-0.10
220870
Liqueurs And Cordials
0.24
0.92
0.68
210210
Yeasts, Active
0.22
0.00
-0.22
210690
Food Preparations Nesoi
0.20
0.00
-0.20
170490
Sugar Confection
0.13
0.21
0.09
130232
Mucilages/Thicknrs
0.06
0.03
-0.03
130219
Vegetable Saps and Extracts
0.03
0.03
0.00
3.50
2.11
-1.39
Total of top 9

Where supply and demand do not meet (RSA and Chile)
 RSA export to the world (Supply potential) – proxy by high export values
(US$500 000 or more)
 Chilean imports for the world (Demand potential) proxy by high import
values (US$500 000 or more)
 RSA export to Chile - less than US$1,000 regarded as no trade
 Chiles import from RSA - less than US$1,000 regarded as no trade
Results in the table to follow!
All values in USUS$ million
HS
Agricultural
Chile MFN tariff
products
5 year average
5 year average
5 year average
5 year average
Chile- World
Chile- SA
SA- World
SA- Chile
imports
imports
exports
exports
220421
Wine
6%
2.82
0.00
478.67
0.00
100590
Maize
6%
253.65
0.00
184.33
0.00
170199
Cane/Beet Sugar 6%
116.48
0.00
73.53
0.00
240120
Tobacco
6%
5.53
0.00
32.64
0.00
100190
Wheat
6%
154.26
0.00
32.11
0.00
100510
Maize seed
6%
16.30
0.00
29.35
0.00
030379
Fish, Nesoi
6%
2.04
0.00
28.46
0.00
230120
Flour Meal &
Pellets
6%
35.59
0.00
17.86
0.00
220300
Beer
6%
11.65
0.00
17.64
0.00
200969
Grape Juice
6%
4.43
0.00
14.15
0.00
151219
Sunflower
seed/oil
6%
3.87
0.00
12.50
0.00
060310
Cut Flowers
#N/A
2.14
0.00
12.37
0.00
520100
Cotton
6%
17.76
0.00
11.03
0.00
170191
Cane/Beet Sugar 6%
3.89
0.00
10.86
0.00
120220
Peanuts
6%
5.04
0.00
9.70
0.00
110812
Starch
6%
4.17
0.00
8.36
0.00
220830
Whiskies
6%
16.00
0.00
8.16
0.00
090240
Black Tea
6%
23.21
0.00
7.90
0.00

Chile is a major competitor of South Africa for the European and USA
market - agriculture.

Under AGOA and the TDCA South African products enjoy preferential
market access and Chile has been signing and negotiating FTAs
aggressively.
Chile is South Africa’s competitor for the EU and USA market.
Chile is increasing its prominence in these markets
HS
Description (CHILE)
220421
Wine
080610
Grapes
HS
Description (SOUTH
AFRICA)
% Share of total
agric exports
(2008)
220421
Wine
9%
080510
Oranges, Fresh
8%
% Share of total
agric exports
(2008)
10.04
8.44
030429
Fish Fillets
4.95
100590
Maize
8%
080810
Apples
4.82
080610
Grapes
6%
030419
Fish Fillets
4.75
080810
Apples, Fresh
4%
Rank
(CHILE)
Country
% Share of overall
imports in 2008
Rank (RSA) Country
1
World
100.00
EU 27
25.07
2
United States
22.37
3
Japan
10.86
4
5
Venezuela
Mexico
Share of Total
agric exports
World-
100
1
-EU 27-
39.37
2
Zimbabwe
7.38
3
United States
4.71
4
Mozambique
4.45
5
Zambia
3.65
5.30
4.75


Yes!
The relative importance of agricultural products of South Africa to
Chile.

The top ten Chilean imports from South Africa (see the table to
follow)

Account for 14.60% of Chilean imports (agric products) from RSA

The leading product is green tea imports (US$1.34 million)

Green Tea - ranks number as a source of Chile’s imports
 Therefore this presents an opportunity for South Africa to expand its
prominent - market
Share of RSA’s exports of
these products (%)
2008 (US$m)
HS
Description
090220
Green tea
36.77
1.34
200949
Pineapple juice
26.48
0.97
200870
Peaches
7.53
0.27
220870
Liqueurs and cordials
6.56
0.24
210210
Yeasts
6.17
0.22
210690
Food Preparations
5.54
0.20
170490
Sugar confection
3.43
0.13
130232
Mucilages/thicknrs
1.60
0.06
200791
Citrus fruit
1.03
0.04
130219
Vegetable saps and extracts
0.89
0.03
Total imports from RSA- 2008 (million US $)
Percentage of Total Imports
3.65
14.60%

Targeted support to selected agriculture products

Choose specific products and support them heavily

Negotiate as many FTAs as possible – economic benefits

Create a structure of governance that support a clear vision