Wool ban lifts but chill persists
It's been a costly three months for SA's sheep and wool industry, which is sitting on R700m worth of wool exports.
China has lifted the ban on SA's animal products that it imposed after an outbreak of foot and mouth disease (FMD), but not all products have been cleared for export.
SA has been grappling with the outbreak since the beginning of this year, when the disease was found in Vhembe, Limpopo.
This led to the World Organisation for Animal Health (OIE) suspending SA's FMD-free status in January and China responding to this in February with a suspension of SA's wool and animal skin imports.
According to the department of agriculture, forestry & fisheries, the disease is caused by a highly contagious virus that affects cloven-hoofed animals such as cattle, sheep, goats, pigs and some wildlife.
The virus can infect entire populations of animals, leaving them with blister-like sores in their mouths, between their hooves and on their teats.
It rarely kills adult animals, but they struggle to eat and move around. This affects farm production, leading to decreased growth and milk production.
Humans are not affected by the disease.
On Monday livestock farmers were given some relief when AgriSA announced that China had lifted the ban.
However, the sheep industry is not out of the woods yet as the ban on greasy wool (unprocessed wool) is still in place, until it is declared safe by the OIE. Other wool and mohair products can be exported.
"The announcement that was made last week only applies to products declared or regarded as inactivated from the virus in terms of the OIE regulations. It is not a blanket approval of imports of greasy wool to China," said Deon Saayman, general manager for Cape Wools SA.
For wool to be considered safe for export it must be stored for a certain period at varying temperatures.
The wool that has been in storage over the past three months will only be exported after SA's veterinary services conclude talks with Chinese authorities on health certificates for the wool products bound for that country.
"As we speak up to now, nothing has been shipped to China because those technicalities are still being ironed out," said Saayman.
He said the impact on the wool industry in the past three months had been "huge", affecting the entire value chain from the farmers to buyers, insurers and bankers.
The ban has left 40,000 bales of wool worth R700m sitting with buyers, as they wait to be given the go-ahead to export.
SA's total annual revenue from wool exports is R5bn, with China taking up 74%. The rest of SA's wool exports are sold to the Czech Republic, Italy and India.
In SA, the Eastern Cape is the biggest wool producer, followed by the Free State, the Western Cape and the Northern Cape.
What makes South African wool unique is that it is shorter than the variant exported by other countries to China.
Saayman said the wool is taken through a long and complex value chain. "It will end up . on the shelf of a Gucci store or at an interior designer in the US," he said.
In a note on his website, Wandile Sihlobo, chief economist of the Agricultural Business Chamber of SA, called for the industry to diversify its export market to avoid a similar challenge in future.
But Saayman said this would not be easy.
"I think what people should also keep in mind is it's not easy to find alternative markets, as relationships with China have been established over a long period of time.
"It will take years to build up alternative markets and I don't think there's a market that can totally replace China."
As for the current crisis: "If the exports don't resume shortly, it's just going to get worse and worse. It's going to have a multiplier effect on the industry," said Saayman.