the agriculture industry is expected to feel the effects only at a regional level and within certain sectors, particularly citrus and table grapes. Photo: Supplied
The impending 30% tariff on South African exports to the United States will probably affect the agriculture industry and certain commodities only at a regional rather than a national level, economists have said.
South Africa is one of 14 countries that received formal communication earlier this week that Washington will slap higher tariffs on their products. This follows a three-month pause effected in April on the tariffs President Donald Trump had announced earlier in the year. He said the 90-day reprieve was meant to give affected countries a chance to negotiate better trade terms with the US.
Analysts say the punitive tariffs will impede South Africa’s economic growth in the long-term, with the minerals, vehicle and agriculture sectors being hit the hardest.
But the agriculture industry is expected to feel the effects only at a regional level and within certain sectors, particularly citrus and table grapes.
South Africa’s exports to the US account for only 4%, Louw Pienaar, a senior analyst at the Bureau for Food and Agricultural Policy, told a business conference in Cape Town this week.
“In terms of our export basket the 4% doesn’t seem big, but if you take that per province and per commodity, then it becomes concentrated as well,” Pienaar said.
“I am worried because it’s a risk factor. We don’t know exactly, but we don’t think the overall impact for South Africa will be that big, but we do think the impact on certain industries, in particular in the Western Cape, will be very big.”
In 2024, grapes were the biggest product that South Africa exported to the global market, followed by maize, oranges, mandarins, apples, wine and lemons, respectively, according to the National Agricultural Marketing Council.
Import duties are one of the biggest obstacles for the table grape industry, especially in respect to other competitors, said Francois Rossouw, the managing director at Mooigezicht Estates, an agribusiness that specialises in the production and export of the fruits.
South Africa’s biggest competitors in the table grape sector in the southern hemisphere are Chile, Peru, Australia and Brazil and their response to Trump’s tariffs will also affect how South Africa operates in its various export markets, Rossouw told the conference.
“Because their traditional markets are North America, their decision could be to send their volumes to the United Kingdom and to Europe, which are our traditional markets, and they’ll flood the market … So, we are very concerned,” he said.
As a result, Rossouw’s company will start focusing on direct exports especially to African markets.
While the African market has great potential and opportunities for intra-continental trade, the US market should not be dismissed in its entirety. Rather, the South African government should negotiate better terms with Washington, said Louis van Ravesteyn, head of agribusiness at Standard Bank.
“[Citrus] is our fastest growing market in the last 10 years from a low base [to the US]. America is important to us like any other market,” Ravesteyn told the Mail & Guardian on the sidelines of the conference.
“We want America and we need America because they’re high LSM [living standard measure], they pay in dollars, they pay well and they pay a good price. So we want to export. We also want to export to the EU and to the UK and to the east. We also have to diversify.”
He recommended that South Africa export citrus and grapes to the US on a period-basis — when the country cannot produce its own fruit due to the climate — with reduced tariffs.
“We don’t want to be in competition with the local producers — if you can produce 80% of citrus during the year, allow us a quantitative for 20% of the year because we don’t want to compete with your market and you can tariff us, maybe less,” Ravesteyn said.
But he warned that South Africa needs to tread carefully because the conditions of the tariffs and how other countries respond are yet to be seen.
Before it makes any major moves, South Africa must also factor in its agreement within the Southern African Customs Union, whose other members include Botswana, Eswatini, Lesotho and Namibia, Ravesteyn said. These countries maintain a common external tariff and have duty-free trade with each other.
On the domestic front, smallholder farms need to be better financed, and the country’s land policy needs to be refined to increase productivity.
“There are two million hectares of land available, held by the government, that need to be distributed to the small and emerging farmers in South Africa so that they can hold the land title,” he said.
“But with that, we must help them with skills. We must help them with financial inclusion and help them farm those farms profitably. At the end of the day, there must be a network around them. I think that’s a big opportunity to go for.”
The journalist’s trip to Cape Town to attend the Standard Bank Africa Unlocked Conference was sponsored by Standard Bank