Trade storms open door for Africa’s soya

Since 2018, the United States (US) and China have imposed waves of tariffs on each other on a variety of goods, including US agricultural exports.

China, the world’s largest soya bean importer, imposed retaliatory tariffs on US soya, slashing imports from US$12.3 billion in 2017 to just US$3.1 billion in 2018.

In January this year, the US announced tariffs of up to 10% on products imported from China, effective from February.

China responded with equal force. The world has since witnessed the trade war escalate to unprecedented levels, with tariffs now ranging between 145% on US goods to China, and 245% on Chinese exports to the US.

This trade tension between the world’s two largest economies has spilled over to the rest of the world in varying degrees.

Soya beans, once a predictable staple of global trade, have become a flashpoint in this trade war.

Primarily because soya beans are not just a commodity, they are a strategic crop that underpins food security and industrial agriculture.

The disruptive effects of the trade war have increased China’s need to diversify sourcing to insulate its market from geopolitical shocks.

This agricultural battleground presents Namibia and the Southern African Development Community (SADC) a unique opportunity to deepen economic cooperation and trade with China and the Association of Southeast Asian Nations (Asean), who are among the largest global importers of soya beans.

China’s soya bean imports are driven by limited arable land, high population domestic consumption, economic growth, dietary preferences and protein-rich livestock feed.

Once the largest buyer of US soya bean, accounting for 60% of exports, China has since pivoted towards Brazil and Argentina. Brazil has capitalised on the rift to become China’s top soya supplier, surging production by over 34% in a decade.

By 2023, global soya bean trade was valued at US$92.9 billion, marking a 2.83% decline from 2022.

The sector experienced average annual growth of 7.6% over the last five years, indicative of growing global importance.

Leading exporters were Brazil (US$53.1 billion), the US (US$27.2 billion) and Paraguay (US$3.26 billion).

In 2023, top importers were China (US$56.6 billion), Argentina (US$5.41 billion) and Japan (US$2.14 billion).

ASEAN

The 11-member Asean, comprising Indonesia, Philippines, Thailand, Malaysia, Vietnam, Singapore, Brunei, Myanmar, Cambodia, Laos and most recently Timor Leste, is the third-largest regional bloc by population, with a 690-million consumer market by 2025.

The Asean Economic Community (AEC), with a combined gross domestic product of US$2.4 trillion, is the third fastest-growing Asian economy, after China and India, with notably few significant barriers to trade.

Asean is a growing market for soya bean and soya bean meal, having imported 9.08 million tonnes of soybeans and 20.89 million tonnes of soya bean meal in 2023/24, largely from the US and Brazil. Similarly, most Asean countries lack the agro-climatic conditions to produce soya competitively at scale.

Soya bean meal is vital for southeast Asia’s booming aquaculture industry. This fast-growing region is poised to become a significant trading partner for African agricultural exports, including soya beans.

AFRICA’S OPPORTUNITY

China is Africa’s largest bilateral trade partner (US$282 billion in 2023).

The ongoing trade war has created a timely opportunity for Namibia and the Southern Africa Development Community(SADC) to contribute to global soya bean supply chains, as China seeks to diversify in favour of reliable and politically neutral suppliers.

The African soya bean trade was valued at US$4.26 billion, with leading exporters South Africa (US$431 million), Togo (US$393 million) and Nigeria (US$201 million).

Top importers were Egypt (US$1.08 billion), Algeria (US$770 million) and Tunisia (US$318 million).

SADC soya bean production rose substantially from 985 319 tonnes in 2011 to 1 947 751 tonnes in 2020, with South Africa, Zambia and Malawi leading production. Despite this growth, African producers supply less than 1% of the world’s soya beans.

The SADC has a competitive advantage in relation to other suppliers to China. The region has countries (Malawi and Zambia) that produce non-genetically modified organism (GMO) soya bean, which is sought after by Chinese processors and consumers in niche health and food safety segments.

In addition to the strong political and economic Sino-Africa relations, the SADC also has comparative advantages, such as available arable land and proximity to Asian markets, offering shorter shipping routes, cost efficiencies and reduced carbon footprints.

Although China is predicted to remain an import-dependent country for soya beans in the long term, its source preferences are changing. With Chinese imports estimated to be 22 million tonnes annually (US$18 billion), this is Africa’s opportunity.

Global demand for agricultural commodities is driven by four factors – food, feed, fuel and finance. Soya beans serve as inputs for all four factors, used in everything from tofu and soya milk to livestock feed and biodiesel.

The geopolitical reordering of agri-commodity trade has accelerated regionalisation, with countries reassessing trade dependencies and forming new bilateral deals.

By partnering with China, Namibia and the SADC can transform its soya bean sector into a pillar of economic resilience and global trade competitiveness.

– Daisry Obal is a public policy adviser.

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