How GVCs have changed and are changing the international trade

1. Wine Industry GVCs in South Africa
Global Value Chains (GVCs) have changed and are changing the
international trade
In South Africa there is a Value Chain of wines especially in The Western Cape
Province where farmers large and small export their wine produce.
There is a gradual integration of economies into regional value chains (RVCs)
and global value chains (GVCs)
Participation in GVCs exposes firms to new technologies and know-how that
might otherwise be unavailable as well as to new sources of capital
1
• Farmers’ participation in GVCs can facilitate the
creation of agribusinesses for increased value
addition in exported goods
2
• Western Cape has a Mediterranean climate and
is the largest wine producing region in South
Africa
3
• Grapes harvested for 9 months in SA

2. GRAPE EXPORT AND PACKAGING
Grape and
Wine Export
December to
May is the
packaging time
for grapes in
South Africa
Containers should
be packed in a
manner which
ensure sufficient
airflow for the
packaged grapes
Packed fruit
must be loaded
into shipping
under
quarantine
officer
supervisor
Grape exported to
China from South
Africa must comply
with the relevant
phytosanity laws
and regulation of
China and be free
of quarantine pets
exported to China

3. South African Government’s Policies that support and broaden
participation in GVCs
Global value chains (GVCs) are giving rise to new trade patterns and are
helping to improve many countries’ growth prospects— particularly in the
developing world.
South Africa is ranked 12th
in the world for producing wine globally
and the industry has many cellars and employs a significant number of people
and contributes to South Africa’s GDP
South Africa needs to improve the Southern African Customs Union (SACU)
trade and investment policy and regional value chains
o South Africa struggles to participate in GVCs because the country relies
heavily on local sources material and the government’s industrial policy
tends to emphasise low value-added fabrication. Another inhibition to
South Africa’s participation is a trade policy that strongly favours exports
over imports.
o There is also a problem of other African government spawning regional
trade relationships, the GVC phenomenon has not taken off in Africa
due to weak trade liberalisation and regional integration attempts.
o If South Africa is to take advantage of the opportunities presented by
GVCs, and in the process enhance its growth and development
prospects, a new trade policy framework and a change of mind set are
urgently needed.
o South Africa is a bulk trader of wine and around 61% of the wine is
exported to United Kingdom is the largest export market for wines in
South Africa. Due to environment concerns, there is a requirement in
UK that a proportion of wines from developing countries be supplied in
bulk to the United Kingdom.
o The only problem is that the farmers are receiving a small fraction of the
ultimate value of their output even though theoretically they are
supposed to share the risks and the returns in the value chain.
Therefore, there is an issue of the viability of farmers in the GVC of
wine.
o The government need to come with policies and strategies to enhance
the export market for wines in the global value chain.

4. ComprehensiveTransformation
plan – to be aligned with National
Development Plan
Frameworks –Wine tourism for
local and global market
Value Chain Improvement
Analysis of FreeTrade Agreement
Protocols
Policies and
Strategies