A historical perspective of the link between economic recessions and agricultural trade performance: the case of South Africa's fruit and wine exports

Abstract

The recent global recession, caused by the financial crisis of 2008-2009, resulted in a significant drop in global merchandise trade. However, international trade in agricultural and food products seemed more resilient. This poses the question as to what extent recent and previous economic recessions have had an effect on the trade flows of these specific products. An understanding of this connection will assist the agricultural sector to pro-actively strategize for future economic downturns in their respective export markets. Hence this study uses South Africa's exports of fresh fruits and wine as a case study and applies an import demand model to analyse the relationship between export flows, several demand factors and economic shocks in its traditional export markets over the last 28 years. The results reveal that change in real per capita income is a much more significant determinant of import demand for South Africa's fruit and wine than the incidence of an economic recession. Contrary to general perceptions, economic downturns even positively affected the import demand for wine and apples.