The Effect of Protectionism and Competition on South Africa’s Avocados: What Realistic Export Market Opportunities Can Be Explored?
Abstract
South Africa’s avocado industry largely relies on the European Union (EU) as its main export market. However, this presents a significant level of competition from other suppliers in the EU as well as protectionism, especially in terms of non-tariff barriers. We use a gravity flow framework to evaluate the effect of protectionism and competition as measured by the mean trade-weighted ad valorem equivalents on avocados originating from South Africa. Furthermore, the study finds feasible new export markets for South African avocados using the decision support model. The findings highlight that a unit increase in protectionism and competition towards avocados in South Africa’s key export markets is associated with a 36.3% decline in revenue as well as a 31% decrease in the quantity exported. Findings based on the decision support model suggest that the United States, Japan, and China offer realistic potential export opportunities to be explored by the avocado industry. It is recommended that South Africa, in partnership with authorities in the identified markets with realistic export opportunities, develop implementable market access protocols for the avocado industry, drawing much attention to sanitary and phytosanitary (SPS) market access concerns. There is also an urgent need for the Department of Agriculture (DoA), the Department of Trade, Industry, and Competition (DTIC), and industry stakeholders, among other relevant government departments, to explore the existing value chain round tables to review prioritized commodities to the identified markets.
Keywords: Decision Support Model (DSM); Gravity Model; International Trade; Ad Valorem Equivalents (AVEs)
This is an open access article under the