A South African Export Opportunity Scan For Value-Added Agricultural Products

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Compiled by: Andre Jooste and David Spies for the (South African) National Department of Agriculture, Directorate: International Trade

South African and global trade is greatly affected by the growth and stability of world markets. Global food demand is altered by changes in world population, economic growth, and income. Other factors affecting trade are global supplies and prices, changes in exchange rates, government support of agriculture and trade policies.

Within the next 20 years, the world will gain another 1.4 billion people. Representing a 25-percent increase in global population, most of these people will live in the expanding urban centres of developing countries and will add greatly to the world's demand for food. Prospects are good that economic growth in developing countries will continue, raising the incomes and improving the diets of the 5 billion people currently living in those countries. Demand for meats, vegetables, fruits, dairy products, vegetable oils, processed foods, beverages and other goods will soar as consumers use their higher incomes to diversify their diets away from grains and other staple foods. Economic growth also means increasing urbanisation and, for many households, an end to growing their own food and a rise in the tendency to purchase food from supermarkets and convenience stores. These trends are already well underway, and urban retailers are tapping supplies from home-country producers, as well as from around the world - to the extent their governments will allow (USDA, 2004).

Meeting these increased food demands will be an enormous challenge and opportunity for the world's agricultural producers. Under current global trade rules, government policies often misdirect agricultural resources toward the production patterns of the past. Such policies are ill suited to satisfying evolving consumer demand in global food markets. In contrast, global agricultural policy reform offers economic gains in which billions of people could share.

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