Insights for agricultural importers and exporters when it comes to
Agriculture is one of the biggest contributors to the South African economy, accounting for just under 3% of GDP and adding approximately R118 billion to the fiscus in 2023. And while we tend to think of the sector’s imports and exports as primarily being agricultural produce, there’s more to it than that.
For example, much of the equipment that farmers rely on is imported. And even if it’s manufactured or assembled locally, it’ll likely contain imported components. Other crucial parts of the value chain depend heavily on imports, too. In 2022, for example, South Africa imported US$847 million worth of nitrogenous fertilisers. Then there are things like feed ingredients and veterinary supplements, while software and electronics also play an increasingly important role..
As anyone involved in the supply chain will tell you, these imports require international payments. It’s not just importers either. Agricultural exporters also have to pay for shipping and freight charges, international insurance, and legal and regulatory fees. For smaller players especially, these international payments can be a massive headache.
Banks bring issues
That’s especially true for those players who choose to go through their bank when making an international money transfer. While it’s understandable that a bank would be an agricultural importer or exporter’s first point of call for international payments, doing so comes with some serious pitfalls.
If a business hasn’t made an international payment before, it will quickly realise how much of a headache it is the moment that it tries. Navigating the forex section of a bank’s online presence can be tedious and confusing (as can the onboarding process, once the company gets there).
Should the company representative need help with this process, that will inevitably mean calling the bank’s customer care centre. That means spending hours on hold, being pushed from pillar to post , and dealing with a lot of people who aren’t forex experts. That process would then be repeated any time there’s an issue with a payment.
Once a company is in a position to make international payments, meanwhile, they’ll have to deal with the bank’s fee structures. At most South African banks, these fees aren’t displayed transparently. That not only means that they don’t have certainty on how much each transaction will cost (something vital in business), but also that they can end up paying a lot more on transactions than anticipated.
Finding dedicated expertise
So, if banks aren’t a good option, then where should agricultural businesses turn when making international payments?
Ideally, businesses should look for an independent international money transfer provider, with an established international payment track record. That provider should automate as much of the payment process as possible, be transparent in its fees and pricing, and prioritise customer service.
Automated onboarding and other parts of the international payments process are important because it ensures that businesses can get up and running much quicker than they otherwise would. In today’s fast-paced business environment, it’s particularly important for businesses to save themselves time and stress wherever possible. Transparent pricing, meanwhile, not only gives businesses certainty, but it also means that they’ll likely pay less in fees than they would through their bank.
Prioritising customer service, meanwhile, doesn’t just mean hiring customer relations staff with friendly attitudes. The provider should offer dedicated Account Managers who are experts in international payments and have an in-depth understanding of the nuances of the business. They will also have the expertise to help with any query, including those around regulatory requirements from SARS and the Reserve Bank.
A worthwhile business change
In a market as prone to changes and fluctuations as the agricultural sector, businesses within need to find competitive advantages wherever they can. Given the relative weakness of the rand in comparison to other major currencies, international payments is one area where they can gain at least some competitive edge, particularly if they choose the right provider.
Harry Scherzer, CEO, Future Forex
