The agricultural sector in South Africa has gained traction in recent years, with increasing emphasis on expanding international presence, particularly in the export market, including BRICS countries, in which South Africa and China are members of intergovernmental organizations that want to increase their influence in the global economy. The rising demand for forage has brought renewed attention to the export of Lucerne hay to China, prompting an empirical study on South Africa’s competitive advantage and market demand analysis for Lucerne hay in the Chinese market. This study aims to explore potential opportunities in the global market that South Africa could capitalize on.
To evaluate the competitiveness of Lucerne hay exports from South Africa, the study measured the revealed comparative advantage and competitive advantage employing the Balassa and Vollrath indices. To analyze the demand for South African Lucerne hay imports in China from 2019 to 2023, the study applied an Almost Ideal Demand System (AIDS) to examine the demand parameters and elasticities.
South Africa exhibited a comparative advantage and a comparative disadvantage in the export of Lucerne hay. The AIDS model revealed that South Africa’s market share in China is not influenced by its own or competitors’ Lucerne hay export prices. Furthermore, China considers the USA and Australian Lucerne hay to be complementary, with demand increasing despite the rise in price and with own and cross-price elasticities for South African Lucerne hay remaining unresponsive. However, additional Chinese expenditure on Lucerne hay imports would benefit South African Lucerne hay suppliers. Thus, given the existing market conditions, South African Lucerne hay exports cannot be enhanced through price changes but through an increase in export supply as Chinese imports are expected to shift from dependence on the USA.
The findings provide valuable insights for South African policymakers to enhance decision-making regarding promoting Lucerne hay exports to the Chinese market. While adding to the scientific literature and expanding empirical knowledge, it also serves as a reference point for analyzing trade competitiveness and demand for new and nontraditional agricultural markets within the BRICS. The study provides a policy entry point for South African policymakers to support export-oriented initiatives that align with South Africa’s National Development Plan (NDP) goals while capitalizing on the BRICS relationship. From China’s perspective, the research sheds light on the interconnections between its Lucerne hay market and other emerging export markets, with a particular focus on South Africa. This approach yields significant policy implications and contributes to the existing body of knowledge in this field.
Numerous studies have explored China’s demand for various commodities and South Africa’s export and marketing strategies, but this research offers a unique contribution. The trade of Lucerne hay between South Africa and China has seldom been subjected to empirical analysis. Moreover, this study introduces a novel estimate of import demand elasticities for Lucerne hay.
1. Introduction
South Africa has recently witnessed a significant change in agricultural sector development, focusing on transforming the sector locally and extending its arms to capture international/export market attention (Ramakgasha et al., 2024). As a member of the BRICS nations, alongside Brazil, Russia, India and China, South Africa has experienced substantial economic growth. The country’s membership in this trading block has been crucial in fostering its economic development.
According to RSA (2023), South Africa’s exports to other BRICS countries since 2016 have grown substantially, averaging 7.1% per year. The country’s exports to these nations amounted to US$17.6bn in 2022. Within the BRICS trade framework, China dominated South Africa’s primary trading partner, accounting for 67.4%. India followed with 26.8%, while Brazil and Russia represented 4.1% and 1.6%, respectively. According to UN-COMTRADE (2024), Lucerne hay exports generated approximately US$54.4m for the economy in 2023. DALRRD (2023) showed that the gross value of Lucerne hay production in South Africa reached R 5 771m in 2022.
Lucerne hay (Medicago sativa L.) is commonly acknowledged as superior-quality fodder with diverse applications in the animal feed sector. This versatile crop can be used in various forms, including fresh-cut forage, compressed hay bales, ensiled hay, or pasture for different farm animals, primarily used as feedstuff for high-production animals such as dairy cattle. It is particularly suitable for ruminants (such as cattle, ovine and caprine species) and equines, which are non-ruminants (Mueller et al., 2008). The export market for South African Lucerne hay has seen a growing trend recently. On average, the country exports 160,000–240,000 tons annually, mainly to neighboring countries like Namibia and Botswana, as well as the Middle East. Annually, South African Lucerne hay exceeding 60,000 tonnes is brought into the Kingdom of Saudi Arabia and the United Arab Emirates (UAE; van Niekerk, 2024).
In 2018, China and South Africa established trade agreements that opened a new market for Lucerne hay exports. Only 800 tonnes were initially exported to China, but this figure has since grown substantially, reaching over 68,000 tonnes by 2022. This growth has also been precipitated by a fast-growing Chinese dairy industry, which created a secondary demand for forage and the USA-China trade war (NAMC, 2018; UN-COMTRADE, 2024).
China has become a major importer of agricultural products, with Lucerne hay playing a vital role in animal feed (Gale et al., 2016). This is attributed mainly to the nation’s scarce arable land, constituting only 11.6% of its total land area (World Bank, 2024; Dhoubhadel and Ridley, 2024). Consequently, domestic fodder production in China falls short of meeting the overall demand for animal feed. This makes China reliant on imports from significant world exporters such as the USA, Australia and South Africa to cater to the country’s ever-increasing feed requirements (Dhoubhadel and Ridley, 2024).
Although Japan continues to be the top consumer of Lucerne hay globally, importing over 2 million tons annually, with the UAE in second place, China has steadily increased its position as a major importer. China’s share of worldwide Lucerne hay imports has risen from 17% in 2018 to 20% in 2023. This increase is attributed to China’s escalating need for premium forage to sustain its livestock industry. This trend reflects broader agricultural import patterns as China seeks to enhance food security and improve livestock nutrition. The increasing demand for protein-rich feeds, such as Lucerne hay, is essential for improving meat and dairy production in the country (Stødkilde et al., 2019). Lucerne hay is recognized for its superior protein content compared to other feeds such as soyabean meal, making it a preferred choice for livestock, especially in dairy production (Damborg et al., 2020).
As South Africa endeavors to expand its Lucerne hay export markets, China emerges as a crucial target. This study evaluates the competitiveness and demand for South Africa’s Lucerne hay in the Chinese market. Despite South Africa’s holding a modest 3% share of China’s total Lucerne imports, several factors justify this study. Firstly, from South Africa’s perspective, China has become a significant destination for its Lucerne hay, absorbing between 44% in 2022 and 17% in 2023 of its total Lucerne hay export volumes (van Niekerk, 2024).
Secondly, the trade imbalance between the two countries is noteworthy. As of June 2024, South Africa’s exports to China reached US$1.2bn, while its imports from China amounted to ZAR1.79bn, creating a trade deficit of US$0.59bn for South Africa. Over five years, China’s exports to South Africa experienced a growth rate of 8.99%, rising from US$15.3bn in 2017 to US$23.5bn in 2022. Conversely, South Africa’s exports to China saw a more modest increase of 4%, from US$17.8bn to US$23.4bn during the same timeframe (OEC, 2024). This imbalance continued into 2023, with the UN-COMTRADE database revealing that China’s exports to South Africa reached US$23.65bn, whilst South Africa’s exports to China totaled US$12.48bn.
Moreover, the recent fluctuations in the supply and demand of dairy products have caused global ripple effects, affecting South Africa’s Lucerne hay demand and competitiveness in China. The USDA (2024) reported that China’s demand for imported forages, primarily Lucerne/alfalfa hay, has been impacted by weak market demand for dairy products and declining fresh milk prices. While consumption of dairy products remains stable, milk oversupply has become challenging due to excessive investment in dairy farming in recent years. The weakening of the Chinese Yuan and farmers’ efforts to reduce costs by substituting forage with other feed ingredients in daily rations also act as a compounding factor. Considering this context, this study specifically aims to evaluate the competitiveness of Lucerne hay exports from South Africa and to analyze the Chinese demand for Lucerne hay. The study seeks to gain a deeper understanding of the factors influencing the Chinese Lucerne hay market and to identify potential opportunities for South Africa.
2. Literature review
The expansion of global trade and the emergence of China as a competitive economy on the global stage have sent shockwaves across the board, prompting some economies, such as the USA and the European Union (EU), to resort to protectionist policies to safeguard and challenge Chinese influence in the global market. China is, however, a major importer, mainly of agricultural inputs such as Lucerne (Gale et al., 2016; Fajgelbaum et al., 2024; Alessandria et al., 2025).
While South Africa has maintained a robust trade relationship with China, it also holds a competitive advantage in Lucerne production. Recently, literature documenting South Africa’s competitive growth in agricultural products, particularly in developed and emerging markets such as the EU, Australia, the Middle East, China, Brazil and Argentina, has been growing (Redda, 2023). This is supported by the Global Competitiveness Index, where South Africa ranks as the 60th competitive economy overall among 141 economies, specifically holding the 3rd position in price performance, 31st in international investment and 53rd in international trade (IMD, 2025). Lucerne produced in South Africa has shown a growing trend and has contributed significantly to export earnings in the recent past; however, given the limited arable land and growing demand for feeds, the evaluation of South Africa’s competitive advantage in the context of a growing international market opportunity in China has been scant (van Niekerk, 2024).
Studies by Sihlobo (2016), Ndou and Obi (2013), Bahta and Willemse (2016) and Dlikilili (2018) have attempted to assess the competitiveness of South Africa’s agricultural products; however, these studies were limited to maize, soybean, wine/grapes and citrus sub-sectors. Behar and Edwards (2004), Esterhuizen (2006), Bahta (2021) and Bahta and Mbai (2023) on the other hand, evaluated South Africa’s and Namibia’s export competitiveness with a focus on manufactured, agribusiness and agrifood products. To gain access and grow lucerne export in China, assessment of current market competitiveness and nature of demand is therefore paramount (van Niekerk, 2024).
Empirically, the relative export advantage index (REA)/Balassa Index for revealed comparative advantage (RCA) (Balassa, 1965) and the Vollrath Index (Vollrath, 1991) have been widely used in international trade literature for niche products as crucial metrics for assessing export competitiveness (Abu HaTable and Romstad, 2014; Sihlobo, 2016; Ramadhani and Santoso, 2019; Kea et al., 2020), as they are grounded in conventional trade theory, which presumes that trade patterns between countries reflect their trade differences in relative cost and non-price factors.
Similarly, to capture the elasticity of demand for South African lucerne in China, the Almost Ideal Demand System (AIDS) by Deaton and Muellbauer (1980) has been favored in assessing the demand for similar disaggregated commodities. Abu HaTable and Romstad (2014), Forgenie et al. (2023) and Destiarni et al. (2024) have demonstrated that while modelling the demand for Egyptian cotton in China and rice, meat and seafood importation in Indonesia, the model efficiently measures price/expenditure and income elasticities while adhering to principles of demand theory, unlike other models.
While contributing to scientific literature and advancing empirical knowledge, it also provides a reference point for analysing trade competitiveness and demand for emerging and non-traditional agricultural markets within the BRICS, encouraging further study on niche products in South-South trade. Practically, the study also pinpoints priority areas for strategic export expansion for South African lucerne producers and suppliers in an attempt to gain a competitive advantage against strong competitors such as the USA and Australia, along with the associated geopolitical risks. Furthermore, the study offers a policy entry point for South African policymakers to support export-oriented initiatives that align with South Africa’s National Development Plan (NDP) goals while leveraging the BRICS partnership.
3. Measuring the competitiveness of South Africa’s Lucerne exports
3.1 Data and data sources
This study used yearly data from UN-COMTRADE from 2019 to 2023 to analyze Balassa, which revealed comparative advantage (RCA) and Vollrath indices.
In estimating an Almost Ideal Demand System (AIDS), this study used the volume and quantity of China Lucerne hay imports from South Africa, the USA, Australia, Spain and the rest of the world (ROW) obtained from the UN-COMTRADE online database using the Harmonized System (HS) 1214 code. The data extracted is from the monthly data from 2019 to 2023. The rest of the world’s (ROW) data is a total of trade information from Lithuania, Sudan, Bulgaria, Canada, Italy, Kazakhstan and the UK, all of which exported Lucerne hay to China during the study period. The data set lacked comprehensive Lucerne hay import prices for all exporting nations, so unit values were used as an alternative measure. These unit values, analogous to average Cost Insurance and Freight (CIF) prices, were computed by extracting information from import values and volumes for individual supply sources. The expenditure is determined by the product of China’s import quantity from each supplier and its respective price, which equates to the import values.
The concept of comparative advantage has been extensively used in economic research to examine how nations specialize in products where they hold a competitive edge. However, Greenaway and Milner (1993) highlight the difficulties in accurately quantifying this concept due to the limited availability of comprehensive factor cost data. As a result, researchers have devised various indirect approaches to estimate countries’ comparative advantages. This research uses two widely acknowledged indirect indices to evaluate export competitiveness: the RCA index developed by Balassa and the measures of revealed competitiveness proposed by Vollrath. These methodologies are employed to assess the competitiveness of South Africa’s Lucerne production sector.
3.2 Balassa’s index of revealed comparative advantage
Broadly, the RCA index is regarded as the predominant instrument in empirical trade analysis, notwithstanding several considerable limitations, such as its tendency to introduce distortion, the asymmetric value conundrum and issues related to logarithmic transformation (De Benedictis and Tamberi, 2004). Balassa’s index gauges a country’s RCA for a particular product by comparing its proportion of the nation’s aggregate exports against the product’s share in worldwide exports. As per Balassa (1965;1977), the formula for deriving the Balassa RCA index is expressed as [equation (1)]:
where:
RCA = revealed comparative advantage index;
N = export in US$;
Nij = exports of the sector “i” of country “j”;
= country “j” total exports;
= sector “i” world exports; and
= the total “world” export.
A revealed comparative advantage (RCA) value greater than 1 indicates that South Africa’s global export share of Lucerne hay is smaller than its national export share of the same commodity, suggesting a competitive edge in Lucerne hay production. Conversely, when the RCA is less than 1, South Africa experiences a comparative disadvantage, as the worldwide export share of Lucerne hay surpasses its national export share. This RCA methodology has been used in various studies examining sectors, commodities and national economies (Bahta, 2021; Matkovski et al., 2019; and others). The validity of this method has been questioned due to the distortions it produces (Zaghini, 2005). Additionally, Balassa’s RCA index is incapable of yielding an ordinal or cardinal assessment of a country’s revealed comparative advantage (Yeats, 1985).
3.3 Vollrath’s indexes revealed a competitive advantage
Vollrath (1991) explored various indices and analyzed trends in international agricultural competitiveness using the Revealed Comparative Advantage (RCA) framework. The study proposed that RCA could be assessed in relation to international competitiveness across four primary domains within RCA theory, encompassing the relative trade advantage (RTAad) and revealed competitiveness index. The Vollrath index, according to Havrila and Gunawardana (2003), is presented as:
= relative trade advantage of a specific country “p” for a particular commodity “q”;
= revealed competitiveness index of a country “p” for commodity “q”;
= relative export advantage of country “p” for commodity “q”, whilst indicates the relative import advantage of the country “p” for commodity “q”;
= exports of commodity “q” from a country “p”, and encompasses the exports of all commodities from a country “p”, excluding commodity “q”;
= exports of commodity “q” from all countries except country “p”, and denotes the exports of all commodities, excluding “q”, from all countries except “p”;
= imports of commodity “q” by country “p”, while represents the imports of all commodities, excluding “q”, by country “p”. Mq,r refers to the imports of commodity “q” by all countries except “p”, and denotes the imports of all commodities, excluding “q”, by all countries except “p”;
X and M = exports and imports, respectively; and
The symbol “n” = all commodities except the one in question, “r” denotes all countries except the one being analyzed and “Ln” signifies the natural logarithm.
An overview of Balassa’s RCA index calculation and Vollrath’s revealed competitive advantage indices for South African Lucerne hay is provided in Table 1. The analysis using Balassa’s RCA indicates that South Africa exhibited a comparative advantage in 2021–2022 whilst facing a comparative disadvantage in 2019, 2022 and 2023. Regarding Vollrath’s revealed competitive advantage, the positive values of RXA and RC indices suggest a revealed competitive advantage in Lucerne hay. However, it is worth noting that these indices display slight variations, as evidenced.
Balassa’s RCA index and Vollrath’s measures of revealed competitiveness
| Year | RCA | RXA | RMA | RC |
|---|---|---|---|---|
| 2019 | 0,612 | 10,45 | −17,691 | 28,142 |
| 2020 | 0,45 | 8,67 | −17,673 | 26,343 |
| 2021 | 1,084 | 8,754 | −17,568 | 26,322 |
| 2022 | 1,37 | 8,674 | −17,862 | 26,536 |
| 2023 | 0,499 | 8,782 | −17,653 | 26,436 |
The analysis of Balassa’s RCA index and Vollrath’s indices of revealed competitive advantage indicates that South Africa has seen growth in its Lucerne hay exports on the international stage. Nevertheless, to enhance its global market competitiveness, South Africa must expand its Lucerne hay export volume, emphasizing product diversity and improved quality. Given its status as a high-quality Lucerne hay producer, South Africa could potentially bolster its competitive edge by implementing an effective marketing strategy.
3.4 Empirical model demand and estimation method
The analysis of consumer demand has shifted toward more comprehensive, system-wide approaches (Yu et al., 2004). The AIDS, introduced by Deaton and Muellbauer (1980), has become the most utilized demand system (Taljaard et al., 2004; Abu HaTable and Romstad, 2014; Khan et al., 2023). Eales and Unnevehr (1994) highlight several reasons for AIDS’s widespread adoption, including its ability to provide an arbitrary first-order approximation to any demand system and a second-order local approximation to any cost function (Hong and Duc, 2009). Barnett and Kanyama (2013) note that AIDS’s functional forms are locally flexible, thus avoiding predetermined restrictions on potential elasticities at a particular point.
The AIDS demand function aligns with demand theory principles, is comparatively straightforward to estimate in relation to other models such as the linear expenditure system or homothetic Cobb-Douglas, and it adheres to the axioms of choice (Pangaribowo and Tsegai, 2011). Moreover, AIDS offers advantages over alternative locally flexible functional forms, as it is consistent with consumer aggregation and can be interpreted using economic models of consumer behavior when analyzed with macroeconomic or household survey data (Seale et al., 1992).
The system also addresses the constraints posed by the consumer allocation problem by allowing for the assessment of general restrictions. Homogeneity and symmetry restrictions, being dependent solely on the estimated parameters, can be readily examined and/or implemented (Tafere et al., 2011).
The AIDS model has been extensively employed in numerous research studies to examine foreign demand (Bahloul and Ahmed (2021); Muhammad et al., 2012). There has been an increasing focus on estimating demand functions for agricultural products in China (Zheng and Henneberry, 2010; Abu HaTable and Romstad, 2014; Khan et al., 2023). Consequently, the AIDS model is deemed a suitable framework for conducting empirical analyses of China’s demand for Lucerne imports, calculating demand parameters and evaluating theoretical constraints. The AIDS model is expressed as follows:
where represent exporter i budget/expenditure share from a total Lucerne import by China. represents a price per ton given by the (CIF price per ton) of the Lucerne paid by China imported from source j. X represents the total expenditure or total Lucerne import value by China. The coefficients , are the estimated parameters from the budget/expenditure share equation, e error term and P* is the Stone’s Price Index, which is obtained as the sum of lagged share-weighted log prices (Henningsen, 2017). It can be described as:
Certain constraints are implemented to maintain the AIDS model’s theoretical consistency. These include the demand’s adding-up, homogeneity and symmetry, which serve as essential restrictions:
The iterative seemingly unrelated regression (SUR) approach by Zellner (1962) is considered an appropriate technique for estimating the parameters of the LA/AIDS demand system, as it addresses the endogeneity of budget/expenditures. The computation of elasticities adheres to the Green and Alston (1991) context, which proposes that the elasticity formula assumes a different form when Stone’s Price index is defined using lagged budget shares. The expenditure elasticity and uncompensated (Marshallian) price (own and cross-price) elasticities were subsequently calculated:
4. Results
4.1 Demand analysis of South African Lucerne hay in China – overview of South African Lucerne exports to China
As presented in Figure 1, the volume of South African Lucerne hay exports to China experienced a modest start from early 2019 to mid-2021, when the volume and trade value were below 4000 tons and US$2m. A significant export increase was registered from September 2021 to mid-2022, when trade volumes peaked at 18,700 tons in November 2021, with a trade value of US$7m. However, the trade volumes dropped below 4000 tons (US$1.5m) again in mid-2022 before increasing again to 9,000 tons in November 2022, where trade value reached a maximum of US$4.9m. The reason for the drop was a decreasing demand in the Chinese market due to a decline in economic growth. The variation suggests increased export or import demand from China in the last quarter of each year. However, unlike other periods, the export volumes at the end of 2023 reached a maximum of 3,410 tons with a trade value of US$1.2m [1].
The graph illustrates two datasets over a timeline spanning from March 2019 to December 2023. The x-axis represents the months, while the left y-axis shows net weight exported in kilograms, ranging from zero to two million kilograms. The right y-axis displays trade value in US dollars, ranging from zero to eighty million dollars. The data is presented with orange vertical bars indicating net weight exported, and a blue line representing trade value. The graph reveals fluctuations in both metrics, with peaks and valleys occurring in various months, especially notable during September 2021 and March 2022. The plot allows for a clear comparison of both datasets across the specified time frame.Volume and the value of South African Lucerne exports to China from 2019 to 2023
Source: Authors’ compilations based on data from UN-COMTRADE
The graph illustrates two datasets over a timeline spanning from March 2019 to December 2023. The x-axis represents the months, while the left y-axis shows net weight exported in kilograms, ranging from zero to two million kilograms. The right y-axis displays trade value in US dollars, ranging from zero to eighty million dollars. The data is presented with orange vertical bars indicating net weight exported, and a blue line representing trade value. The graph reveals fluctuations in both metrics, with peaks and valleys occurring in various months, especially notable during September 2021 and March 2022. The plot allows for a clear comparison of both datasets across the specified time frame.Volume and the value of South African Lucerne exports to China from 2019 to 2023
Source: Authors’ compilations based on data from UN-COMTRADE
As illustrated in Figure 2, South African Lucerne hay has maintained a modest presence in the Chinese market, occupying approximately 3% of the market share from 2019 to 2023. The chart reveals that the USA dominates the imported Lucerne hay market, supplying over 70% of the total imports during this period. Australia and Spain follow, contributing 12% and 11% respectively. The remaining 4% of Lucerne hay imports to China are sourced from other significant suppliers, including Canada, Sudan and Italy.
The pie chart illustrates the distribution of contributions across different countries. The United States has the largest share with 70 percent, followed by Australia at 12 percent and Spain at 11 percent. South Africa accounts for 3 percent, while Canada, Sudan, Italy, and the Rest of the World each contribute 1 percent. The chart provides a clear breakdown of proportions, highlighting the dominance of the United States compared with other regions.Major suppliers of Lucerne hay to the Chinese market
Source: Authors’ compilations based on data from UN-COMTRADE
The pie chart illustrates the distribution of contributions across different countries. The United States has the largest share with 70 percent, followed by Australia at 12 percent and Spain at 11 percent. South Africa accounts for 3 percent, while Canada, Sudan, Italy, and the Rest of the World each contribute 1 percent. The chart provides a clear breakdown of proportions, highlighting the dominance of the United States compared with other regions.Major suppliers of Lucerne hay to the Chinese market
Source: Authors’ compilations based on data from UN-COMTRADE
In the same period, there was a global spike in prices. China imported Lucerne hay at a higher average price per kilogram than South Africa and other exporters. Figure 3 shows that between January 2019 and November 2020, the USA and South African export prices to China constantly trended to US$0.36 per kg. Price per kilogram started to increase in May 2021, with South African prices reaching US$0.55 per kg in December 2022, with USA Lucerne prices above US$0.61 per kg in February 2023, before falling to US$0.41 per kg in November 2023.
The line graph tracks import prices in United States dollars per kilogram between January 2019 and November 2023. The United States shows the steepest rise, peaking above 0.6 around mid-2022 before declining in 2023. Spain, South Africa, and Australia follow a similar upward pattern, though at slightly lower price levels, stabilising around 0.4 to 0.5 in 2022 before dropping in 2023. The Rest of the World maintains lower and more volatile prices, fluctuating between 0.3 and 0.5. Overall, the data highlights a general rise in import prices until 2022, followed by a decline across all regions.China Lucerne hay import prices
Source: Authors’ compilations based on data from UN-COMTRADE
The line graph tracks import prices in United States dollars per kilogram between January 2019 and November 2023. The United States shows the steepest rise, peaking above 0.6 around mid-2022 before declining in 2023. Spain, South Africa, and Australia follow a similar upward pattern, though at slightly lower price levels, stabilising around 0.4 to 0.5 in 2022 before dropping in 2023. The Rest of the World maintains lower and more volatile prices, fluctuating between 0.3 and 0.5. Overall, the data highlights a general rise in import prices until 2022, followed by a decline across all regions.China Lucerne hay import prices
Source: Authors’ compilations based on data from UN-COMTRADE
4.2 Results of the almost ideal demand system model
The estimated parameters and t-values of China’s Lucerne demand function from various countries, including South Africa, the USA, Australia, Spain and other global sources, are displayed in Table 2. These figures were derived using the Almost Ideal Demand System (AIDS) model, using the Iterated Linear Least Squares Estimator (IL) and lagged Stone Index (SL). The AIDS model reveals the proportions of Lucerne hay imported by China from different nations, China’s expenditure patterns, and the degree to which export prices influence the exporting countries.
Parameter estimates of China’s Lucerne import demand
| Exporter estimate | Coef | St. Err | t | Pr (>|t|) |
|---|---|---|---|---|
| α South Africa | −0.044 | 0.269 | −0.162 | 0.872 |
| αUSA | 1.930 | 0.507 | 3.810 | 0.000*** |
| αAUST | 1.087 | 0.505 | 2.152 | 0.033* |
| α Spain | −1.912 | 0.357 | −5.357 | 0.000*** |
| αROW | −0.061 | 0.140 | −0.437 | 0.663 |
| β South Africa | 0.003 | 0.015 | 0.218 | 0.827 |
| βUSA | −0.069 | 0.028 | −2.512 | 0.013* |
| βAUST | −0.048 | 0.027 | −1.778 | 0.077 |
| β Spain | 0.108 | 0.019 | 5.609 | 0.000*** |
| βROW | 0.006 | 0.008 | 0.786 | 0.433 |
| γ (South Africa-South Africa) | −0.072 | 0.074 | −0.976 | 0.330 |
| γ (South Africa-USA) | 0.106 | 0.085 | 1.254 | 0.211 |
| γ (South Africa-AUST) | −0.049 | 0.050 | −0.981 | 0.328 |
| γ (South Africa-Spain) | −0.010 | 0.056 | −0.184 | 0.854 |
| γ (South Africa-ROW) | 0.025 | 0.043 | 0.585 | 0.560 |
| γ (USA-South Africa) | 0.106 | 0.085 | 1.254 | 0.211 |
| γ (USA-USA) | 0.562 | 0.139 | 4.029 | 0.000*** |
| γ (USA-AUST) | −0.537 | 0.075 | −7.138 | 0.000*** |
| γ (USA-Spain) | −0.041 | 0.092 | −0.442 | 0.659 |
| γ (USA-ROW) | −0.090 | 0.073 | −1.226 | 0.222 |
| γ (AUST-South Africa) | −0.049 | 0.050 | −0.981 | 0.328 |
| γ (AUST-USA) | −0.537 | 0.075 | −7.138 | 0.000*** |
| γ (AUST-AUST) | 0.471 | 0.089 | 5.314 | 0.000*** |
| γ (AUST-Spain) | 0.117 | 0.074 | 1.585 | 0.115 |
| γ (AUST-ROW) | −0.002 | 0.076 | −0.025 | 0.980 |
| γ (Spain-South Africa) | −0.010 | 0.056 | −0.184 | 0.854 |
| γ (Spain-USA) | −0.041 | 0.092 | −0.442 | 0.659 |
| γ (Spain-AUST) | 0.117 | 0.074 | 1.585 | 0.115 |
| γ (Spain-Spain) | −0.100 | 0.096 | −1.039 | 0.300 |
| γ (Spain-ROW) | 0.034 | 0.053 | 0.653 | 0.515 |
| γ (ROW-South Africa) | 0.025 | 0.043 | 0.585 | 0.560 |
| γ (ROW-USA) | −0.090 | 0.073 | −1.226 | 0.222 |
| γ (ROW-AUST) | −0.002 | 0.076 | −0.025 | 0.980 |
| γ (ROW-Spain) | 0.034 | 0.053 | 0.653 | 0.515 |
| γ (ROW-ROW) | 0.032 | 0.040 | 0.791 | 0.430 |
| R squared | Expenditures | Quantities | ||
| South Africa | 0.084 | 0.084 | ||
| USA | 0.591 | 0.942 | ||
| AUST | 0.529 | 0.430 | ||
| Spain | 0.425 | 0.733 | ||
| ROW | 0.100 | 0.371 | ||
Significant codes: 0 “***” 0.001 “**” 0.01 “*” 0.05 “.” 0.1“ ”1
As presented in Table 2, is the intercept of i budget/expenditure share equation, indicates the price parameter sourced from i and represents the parameter estimate for expenditure. represents the change in the market share of i for a unit change in export price, while represents the change in a share of i for a unit change in China’s imported Lucerne hay expenditure. The R square (R2) value for each AIDS model is 8.4% for South Africa, 59.1% for the USA, 53% for Australia, 43% for Spain and 10% for ROW. This shows that the variables account for the variability in China’s import share within South Africa’s Lucerne hay export market, whilst external factors explain the remaining variance. The statistical analysis indicates that the expenditure and quantity shares are poorly explained, implying that South Africa and the Rest of the World (ROW) have a considerably smaller and more volatile influence on China’s Lucerne hay imports compared to the USA and Australia for which the models provide a high degree of explanatory power regarding their fluctuations.
The price parameters in South Africa’s demand reveal that the parameters are not statistically significant compared to those for USA and Australian demand functions. South African Lucerne hay export to China is observed to be negatively influenced by its export prices and those of Australia and Spain, and it is positively influenced by export prices of USA Lucerne hay and that from ROW. The analysis suggests that for every 1% rise in South Africa’s export prices to Australia and Spain, South Africa’s market shares would decline by 0.07, 0.05 and 0.01%, respectively. Conversely, a 1% increase in USA and ROW prices would lead to a 0.11% and 0.03% growth in South Africa’s market shares. However, it should be noted that these findings lacked robust statistical significance.
The China Lucerne hay import market is observed to be influenced by USA and Australian exports. The price parameters for the demand in the USA were revealed to be significantly influenced by its export prices and those of Australia. Similarly, price parameters for Australian demand were revealed to be substantially influenced by its export prices and those of the USA. As shown in Table 2, the USA’s market shares are projected to rise by 0.56% for every 1% increase in its export prices. Conversely, these shares would decline by 0.54% for each 1% rise in Australian Lucerne hay export prices. In contrast, Australia’s market shares are expected to grow by 0.47% for every 1% increase in its Lucerne export prices. However, Australia’s market share would experience a 0.54% reduction for each 1% increase in USA Lucerne export prices.
Conversely, the expenditure patterns indicate that China’s spending on Lucerne hay imports positively affects South Africa’s market position. A 100% increase in Chinese expenditure could potentially boost South Africa’s Lucerne exports to China by 3%, although this estimate lacked statistical significance. In contrast, the expenditure estimates for the USA, Australia and Spain were statistically significant. Specifically, a 100% increase in China’s Lucerne import spending would result in a reduction of 7% and 5% in Lucerne exports to China from the USA and Australia, respectively. Conversely, this change in expenditure would lead to a 10.8% increase in Lucerne exports from Spain to China. Furthermore, the majority of parameters exhibit low t-values, suggesting a broader distribution around their mean. Generally, the expenditure parameters indicate that China prefers importing Lucerne from the USA and Australia rather than from South Africa and other exporting nations.
4.3 Elasticities of Lucerne demand
4.3.1 Expenditure elasticities.
As shown in Table 3 shows that expenditure elasticities (income) are all positive and statistically significant, with values ranging from 0.55 to 2.33. The findings indicate that a 1% rise in China’s overall expenditure on Lucerne imports would lead to a 1.12% increase in the demand for Lucerne hay from South Africa. Since the coefficient of elasticity is more significant than a unit and positive, it shows that South African Lucerne hay is a luxury good for Chinese importers.
Estimates of expenditure, own-price and cross-price elasticities of demand for Lucerne hay import in China from South Africa, USA, Australia, Spain and ROW.
| Elasticities | Estimate | Std. Err | t | Pr(>|t|) |
|---|---|---|---|---|
| Expenditure elasticities | ||||
| Expend share (wi)_SouthAfr | 1.108 | 0.495 | 2.238 | 0.026* |
| Expend share (wi)_USA | 0.908 | 0.037 | 24.719 | 0.000*** |
| Expend share (wi)_AUST | 0.550 | 0.253 | 2.177 | 0.031* |
| Expend share (wi)_Spain | 2.329 | 0.237 | 9.829 | 0.000*** |
| Expend share (wi)_ROW | 1.185 | 0.235 | 5.048 | 0.000*** |
| Hicksian (compensated) price elasticities | ||||
| E (wi)_South Afr- South afr | −3.431 | 2.535 | −1.353 | 0.177 |
| E (wi)_South Afr- USA | 4.235 | 2.979 | 1.422 | 0.157 |
| Ε (wi)_South Afr- AUST | −1.655 | 1.736 | −0.954 | 0.341 |
| Ε (wi)_South Afr- Spain | −0.054 | 1.789 | −0.030 | 0.976 |
| Ε (wi)_South Afr- ROW | 0.905 | 1.491 | 0.607 | 0.545 |
| Ε (wi)_USA- South afr | 0.166 | 0.116 | 1.422 | 0.157 |
| Ε (wi)_USA- USA | 0.616 | 0.198 | 3.118 | 0.002** |
| Ε (wi)_USA- AUST | −0.528 | 0.101 | −5.213 | 0.000*** |
| Ε (wi)_USA- Spain | −0.156 | 0.122 | −1.287 | 0.199 |
| Ε (wi)_USA- ROW | −0.097 | 0.100 | −0.969 | 0.334 |
| Ε (wi)_AUST- South afr | −0.454 | 0.476 | −0.954 | 0.341 |
| Ε (wi)_AUST- USA | −3.705 | 0.710 | −5.219 | 0.000*** |
| Ε (wi)_AUST- AUST | 3.914 | 0.871 | 4.494 | 0.000*** |
| Ε (wi)_AUST- Spain | 0.280 | 0.536 | 0.523 | 0.602 |
| Ε (wi)_AUST- ROW | −0.035 | 0.714 | −0.049 | 0.961 |
| Ε (wi)_Spain- South afr | −0.020 | 0.644 | −0.030 | 0.976 |
| Ε (wi)_Spain- USA | −1.442 | 1.119 | −1.288 | 0.199 |
| Ε (wi)_Spain- AUST | 0.368 | 0.703 | 0.523 | 0.601 |
| Ε (wi)_Spain- Spain | 0.496 | 0.960 | 0.516 | 0.606 |
| Ε (wi)_Spain- ROW | 0.598 | 0.626 | 0.956 | 0.340 |
| Ε (wi)_ROW- South afr | 0.827 | 1.363 | 0.607 | 0.545 |
| Ε (wi)_ROW- USA | −2.276 | 2.347 | −0.970 | 0.333 |
| Ε (wi)_ROW- AUST | −0.116 | 2.381 | −0.049 | 0.961 |
| Ε (wi)_ROW- Spain | 1.518 | 1.590 | 0.955 | 0.341 |
| Ε (wi)_ROW- ROW | 0.048 | 1.258 | 0.038 | 0.970 |
| Marshallian (uncompensated) price elasticities | ||||
| ɛ (wi)_South Afr- South afr | −3.463 | 2.532 | −1.367 | 0.173 |
| ɛ (wi)_South Afr- USA | 3.404 | 3.091 | 1.101 | 0.272 |
| ɛ (wi)_South Afr- AUST | −1.774 | 1.748 | −1.015 | 0.311 |
| ɛ (wi)_South Afr- Spain | −0.144 | 1.784 | −0.081 | 0.936 |
| ɛ (wi)_South Afr- ROW | 0.869 | 1.486 | 0.585 | 0.559 |
| ɛ (wi)_USA- South afr | 0.139 | 0.116 | 1.195 | 0.234 |
| ɛ (wi)_USA- USA | −0.065 | 0.209 | −0.311 | 0.757 |
| ɛ (wi)_USA- AUST | −0.625 | 0.102 | −6.113 | 0.000*** |
| ɛ (wi)_USA- Spain | −0.230 | 0.121 | −1.910 | 0.058 |
| ɛ (wi)_USA- ROW | −0.126 | 0.100 | −1.265 | 0.207 |
| ɛ (wi)_AUST- South afr | −0.470 | 0.476 | −0.987 | 0.325 |
| ɛ (wi)_AUST- USA | −4.118 | 0.740 | −5.565 | 0.000*** |
| ɛ (wi)_AUST- AUST | 3.855 | 0.881 | 4.378 | 0.000*** |
| ɛ (wi)_AUST- Spain | 0.235 | 0.532 | 0.443 | 0.659 |
| ɛ (wi)_AUST- ROW | −0.053 | 0.711 | −0.074 | 0.941 |
| ɛ (wi)_Spain- South afr | −0.088 | 0.644 | −0.136 | 0.892 |
| ɛ (wi)_Spain- USA | −3.189 | 1.176 | −2.713 | 0.007** |
| ɛ (wi)_Spain- AUST | 0.119 | 0.711 | 0.167 | 0.867 |
| ɛ (wi)_Spain- Spain | 0.306 | 0.956 | 0.320 | 0.749 |
| ɛ (wi)_Spain- ROW | 0.523 | 0.623 | 0.840 | 0.402 |
| ɛ (wi)_ROW- South afr | 0.792 | 1.362 | 0.582 | 0.561 |
| ɛ (wi)_ROW- USA | −3.165 | 2.386 | −1.326 | 0.186 |
| ɛ (wi)_ROW- AUST | −0.243 | 2.380 | −0.102 | 0.919 |
| ɛ (wi)_ROW- Spain | 1.421 | 1.590 | 0.894 | 0.372 |
| ɛ (wi)_ROW- ROW | 0.010 | 1.258 | 0.008 | 0.994 |
Significant codes: 0 “***” 0.001 “**” 0.01 “*” 0.05 “.” 0.1 “ ”1
The coefficient of elasticity for the USA and Australia were observed to be 0.908 and 0.55; this entails that a 1% increase in the general expenditure on Lucerne hay imported by China will lead to a 0.91% increase in the USA’s Lucerne hay demand. As the coefficient of elasticity is close to 1 or a unit, it suggests that USA Lucerne is a normal good and more of a necessity for Chinese importers, as income elasticity of demand responds proportionally to expenditure changes. Similarly, for Australian Lucerne, it was observed that a 1% increase in the general expenditure on Lucerne imports by China would lead to a 0.55% increase in demand for Australian Lucerne. Since the coefficient of elasticity is less than a unit and positive, it represents an inelastic income/expenditure elasticity of demand for Lucerne hay, indicating the Chinese market is less responsive to expenditure increase for Australian Lucerne hay.
The expenditure/income elasticity coefficient for Spain Lucerne hay was observed to be 2.329 and positive, whereby a 1% increase in expenditure will lead to a 2.33% increase in the demand for Spanish Lucerne hay. The high coefficient of elasticity reflects a highly/significant responsive change in demand, connoting Spanish Lucerne hay as a luxury among Chinese importers. The coefficient of elasticity for Lucerne hay from ROW was also observed to be 1.185, implying that a 1% increase in expenditure will result in a 1.185% increase in Lucerne hay demand from the rest of the world among Chinese importers.
4.3.2 Own-price elasticities.
The price elasticity of demand quantifies how the demand for a product changes in response to alterations in its price, assuming other variables remain unchanged (Mankiw, 2010). As stipulated by the law of demand, the demand curve demonstrates an inverse relationship between price and quantity demanded, resulting in a downward-sloping graph.
Table 3 illustrates that the uncompensated (Marshallian) own price elasticity (ɛ (wi)_SouthAfr-South Afr) for Chinese imports of South African Lucerne was -3.463. This suggests that when the price of South African Lucerne hay rises by 1%, the demand for Chinese imports decreases by 3.43%. The compensated (Hicksian) own price elasticity estimate yielded comparable results at −3.431. This is ideal for demand; however, the outcome was observed to lack sufficient statistical predictive power (p = 0.173). The coefficient of compensated (Hicksian) own price elasticity for USA Lucerne import in China was observed to be 0.616 (p < 0.002), which indicates that a 1% increase in the price of USA Lucerne will result in a 0.616% increase in Chinese import demand. This finding, however, is contrary to demand theory for its price elasticity, which can be attached to a perceived higher quality of USA Lucerne, which increases demand despite the price increase, which can also be pinned to its high market share of more than 70%. Similarly, the own price elasticity for Australian Lucerne was observed to be 3.914, significant (p < 0.001), which indicates that a 1% increase in the price of Australian Lucerne hay will result in a 3.914% increase in Chinese import demand. This result is also contrary to demand theory as the coefficient is positive and highly elastic. This outcome can be associated with Lucerne hay quality.
4.3.3 Cross-price elasticities.
The cross-price elasticity of demand measures the degree of responsiveness of demand for a good to a change (increase or decrease) in the price of another good, assuming all other factors remain constant. A positive or negative coefficient of elasticity will reflect the goods as substitutes or complements. In this context, substitutability or complementarity falls to a country comparison of the change in Lucerne hay import prices in China. The coefficient of cross-price elasticity for South African Lucerne hay against the USA shows a cross-price elasticity of 4.235 in the compensated model and 3.404 for the Marshallian/uncompensated model, suggesting that South African and USA Lucerne hay are strong substitutes where a 1% increase in the price of the USA Lucerne would result in a 4.235% increase in the demand for South African Lucerne hay in China.
However, these elasticity coefficients lack strong statistical predictive power (p = 0.157). For the USA against and an Australian Lucerne hay, the coefficient of compensated cross-price elasticity was observed to be −0.528 (p < 0.001), which reflects that USA and Australian Lucerne hay are complements. This implies that a 1% rise in Australian Lucerne prices would lead to a 0.528% decline in the demand for American Lucerne hay imports in China’s market. Furthermore, this suggests that China tends to import Lucerne hay from both the USA and Australia in tandem, with a price increase in one variety causing a reduction in demand for both types. Similarly, the coefficient of cross-price elasticity for Australian and USA Lucerne hay was −3.705 (p < 0.001), reflecting the complementarity character. However, Australia’s coefficient of cross-price elasticity compared to USA Lucerne hay is highly elastic. At the same time, that of the USA is inelastic, reflecting a high responsiveness of Australian Lucerne hay import demand relative to that from the USA.
Likewise, for the USA against Spain Lucerne, the compensated cross-price elasticity coefficient was -0.230 with marginal significance (p < 0.058). This reflects that the USA and Spain Lucerne are considered to be complements. A 1% increase in the price of USA Lucerne hay would lead to a 0.23% decrease in Spain’s Lucerne hay demand imported from China, implying complementarity. Similarly, the coefficient of cross-price elasticity for Spain and the USA Lucerne hay was −3.189 (p < 0.007), reflecting a complementary character and a highly elastic demand. At the same time, the USA is inelastic, entailing a high responsiveness of Spain’s Lucerne import demand relative to that from the USA, thus cementing the market power of the USA’s Lucerne import in China.
5. Discussions
The estimated demand equations for South African Lucerne hay imports in China show that a change in its price (Lucerne hay import price in China) and South African Lucerne hay price relative to those of Australia, Spain, the USA and ROW have no significant influence. This reflects that marginal changes in South African export prices/expenditures cannot significantly alter China’s demand for Lucerne hay. This could be attributed to the small proportionate market share that South Africa has in Lucerne hay imports in China, which, for the last five years, has been dominated by the USA (70%) and Australia. Nevertheless, the current trade tensions and China’s demonstrated efforts to reduce its reliance on American Lucerne hay through increased domestic production and identifying alternative import sources present an opportunity for South African exploitation (Qingbin and Yang, 2020; Sabala and Devadoss, 2019).
The expenditure or income elasticity coefficient for Chinese import of South African Lucerne hay was found to exceed a unit, indicating a positive and elastic. This suggests that despite China’s small share of South African Lucerne imports, a proportionate change or increase in import expenditures will result in an increased demand for South African Lucerne hay. This is concordant with the theory that expenditure elasticity values for imports are generally positive, suggesting that as import expenditure rises, so does the volume of imports (Cheng et al., 2015).
While the elasticity suggests a robust demand response, it is essential to consider that China’s relatively small share of South African Lucerne hay imports may alter the overall impact of expenditure changes on the market dynamics. Consequently, given China’s planned shift in animal feed production and import policies, coupled with the ongoing expansion of its dairy sector, South African Lucerne hay producers have a promising market opportunity. This is further supported by the inelastic expenditure elasticity of demand for the USA and Australian Lucerne hay in China, where an increase in overall Lucerne hay import expenditure by China will result in a less than proportional increase in demand for Lucerne hay (Dong et al., 2015). According to USDA (2024), the proportion of American Lucerne hay exports to China has decreased from 57% of total exports in 2022 to 40% in 2023, with China’s change in international market strategies being one of several contributing factors. This proportion might also change, considering the trending trade tariffs on China in early 2025.
The import prices of Lucerne hay in China were found to be unresponsive to changes in the prices of South African Lucerne hay. This indicates that the demand for South African Lucerne hay in China is not influenced by its prices. Instead, China heavily depends on the USA and Australia for Lucerne hay, as evidenced by the positive and greater-than-unit price elasticities for these countries. This suggests that Chinese preference for USA and Australian Lucerne remains strong despite price changes. Additionally, the cross-price elasticity of demand for the USA and Australian Lucerne hay in China being insignificant suggests that fluctuations in their import prices do not significantly influence the demand for South African Lucerne hay.
These findings can be understood through several key aspects of demand elasticity and market dynamics. Grübler et al. (2022) emphasized the significance of import demand elasticities in comprehending trade patterns. Nevertheless, the absence of statistical confidence for cross-price elasticity for Lucerne hay suggests that consumers do not consider the USA and Australian Lucerne hay alternatives to South African Lucerne hay. This notion is reinforced by China’s increased imports from these nations despite price hikes, particularly from mid-2021 to early 2023.
Consequently, South African Lucerne hay exporters to China may capitalize on expanding export volumes. Cheng et al. (2015) discovered that while certain imported goods display complementary relationships, others, such as logs from Australia and the USA, are substitutes. However, this does not apply to Lucerne hay, indicating distinctive market behavior. Furthermore, Matlasedi’s (2017) examination of South Africa’s import demand function implies that relative prices and exchange rates are influential. Yet, the specific dynamics for Lucerne hay demonstrate resilience against price fluctuations from competing imports. Although South African Lucerne hay demand in China is unresponsive to price, future market conditions may shift and changes in consumer preferences or trade policies could alter demand elasticities, potentially impacting the demand for South African Lucerne hay.
6. Conclusion and policy remarks
The study sought to investigate the South African Lucerne hay export competitiveness and evaluate its demand in the Chinese market. The research aimed to gain insights into the factors influencing the Chinese Lucerne hay market and identify potential opportunities for South Africa within this expanding sector. The analysis considered the context of both nations being members of BRICS, an intergovernmental organization striving to enhance its global economic influence.
The research employed Balassa’s index and Vollrath’s indices to assess South Africa’s Lucerne hay exports’ comparative and competitive advantages, respectively. The findings from Balassa’s index regarding comparative advantage show mixed results. Subsequently, the AIDS model was used to determine demand parameters for Chinese Lucerne hay imports from South Africa and primary suppliers between 2019 and 2023. The resulting parameter estimates were used to calculate expenditure, own price elasticities and cross-price elasticities. The study revealed that South Africa experienced fluctuating comparative advantage and relatively stable competitiveness during 2019–2023.
South African Lucerne hay export to China is observed to be negatively influenced by its export prices and those of Australia and Spain, and positively influenced by export prices of USA Lucerne hay and that from ROW; this implies that the market shares of South Africa would decrease in Australia and Spain export prices. At the same time, they would increase the USA and ROW prices. On the other hand, the China Lucerne hay import market is observed to be influenced by the USA and Australian exports. The price parameters for the demand in the USA were revealed to be significantly influenced by its export prices and those of Australia. Similarly, price parameters for Australian demand were shown to be influenced by its export prices and those of the USA.
Chinese spending on imports positively affects South Africa’s Lucerne hay market share. Generally, expenditure parameters suggest that China favors importing Lucerne from the USA and Australia over South Africa and other exporting nations, likely because of quality concerns. As the coefficient of elasticity is more significant than a unit and positive, it shows that South African Lucerne hay is a luxury good for Chinese importers.
South Africa’s comparative and competitiveness of Lucerne hay was not satisfactory during the study period, even if competitiveness and comparative advantage of Lucerne hay were observed. As a result, the study recommends that South Africa should exploit product differentiation, improved quality, appropriate management and marketing strategies, research and promotion to enhance competitiveness and comparative advantage and position South Africa in the international market, including tremendous opportunities in the Chinese market. Because South African Lucerne hay export to China is not responsive to price changes, policy actors should consider strengthening bilateral trade agreements to increase market access conditions. This should also involve negotiations to capitalize on the BRICS preferential trade agreements to boost South Africa’s Lucerne hay exports.
The 2024–2025 economic and geopolitical/trade tensions, compounded by tariff barriers between the USA and China, have significantly disrupted China’s Lucerne hay import patterns, creating a strategic opportunity for South Africa to expand its market share. This study’s findings, particularly the price inelasticity of Chinese demand and the complementarity of USA and Australian Lucerne hay, highlight that South Africa cannot compete on price alone. Supply-side interventions are therefore called for as an alternative to enhance South African Lucerne imports in China. Policymakers and stakeholders should prioritize scaling production capacity through supply-side interventions (such as investing in drought-resistant Lucerne varieties, irrigation infrastructure and mechanization) and enhancing quality certifications to meet China’s stringent phytosanitary standards. Concurrently, proactive monitoring of China’s evolving agricultural policies, such as subsidies for domestic feed production or shifts toward alternative protein sources, is essential to anticipate long-term demand fluctuations. China’s emphasis on “green development” in livestock farming may also foster demand for high-quality forage like Lucerne, further positioning South Africa as a sustainable supplier. To capitalize on this geopolitical shift, South Africa should also leverage its BRICS membership’s privileged trade terms, tariff decreases and streamlined customs procedures, thereby institutionalizing its role as a reliable alternative to traditional exporters.
Note
Noting that, South African Lucerne hay is mostly produced in the south African summer months, there is no Lucerne being produced in the winter months. Thus, the supply of Lucerne hay tend to decrease in the winter months, with a high demand.
