South Africa’s agricultural sector has achieved a remarkable feat, with exports reaching a record $13.7 billion in 2024. This surge, a 3% increase from the previous year, underscores the resilience and competitiveness of the nation’s agricultural producers. However, this success story is tempered by growing concerns over escalating global trade tensions, particularly between the US and China, which threaten to cast a shadow over South Africa’s export prospects.
The Agricultural Business Chamber (Agbiz) has issued a stark warning, highlighting the precarious position South Africa finds itself in amidst the current geopolitical climate. While the nation boasts a healthy trade surplus of $6.2 billion, a slight decline from the previous year, the volatility of the rand, driven by US dollar fluctuations and evolving US trade policies, adds another layer of complexity.
South Africa’s agricultural exports to the European Union (EU), its third-largest market, are a testament to the sector’s diversity and quality. Citrus, grapes, wines, avocados, and a host of other produce have found a receptive audience in Europe, contributing significantly to the nation’s export earnings. However, the reliance on single markets is a double-edged sword, particularly in light of the ongoing trade war between the US and China.
China’s retaliatory tariffs against the US, triggered by disputes over fentanyl and other issues, underscore the urgent need for South Africa to diversify its export markets and enhance its logistical infrastructure. The nation must strengthen its presence in the EU, Africa, Asia, the Middle East, and the Americas to mitigate the risks associated with over-reliance on any single market.
The spectre of South Africa’s potential exclusion from the African Growth and Opportunity Act (Agoa) further complicates matters. Wandile Sihlobo, Agbiz chief economist, warns that this would expose South African agricultural exports to an average import duty of 3% at the Most Favored Nations Rate, eroding the price competitiveness currently enjoyed by exporters.
“The 3% tariff would advantage other competitors that access the US market duty-free as South Africa currently does under the Agoa,” Sihlobo explains. “South Africa’s agricultural exports to the US – mainly citrus, grapes, wine, and fruit juices – account for 6%, which also includes exports to the Americas.”
The delicate political relationship between South Africa and the US, strained by recent diplomatic disagreements, adds another layer of uncertainty. Investec chief economist Annabel Bishop notes that markets perceive a deterioration in this relationship, raising concerns over South Africa’s continued access to Agoa.
To navigate these challenges, South Africa must accelerate its efforts to improve port and rail infrastructure, enhance road networks in farming regions, and actively seek new export markets. Sihlobo emphasizes the importance of strengthening ties with BRICS nations, including China, India, Saudi Arabia, and Egypt, and exploring opportunities in other strategic markets such as South Korea, Japan, and Vietnam.
“The BRICS grouping should emphasize the need for member countries to lower the import tariffs and address artificial phytosanitary barriers hindering deeper trade within this grouping,” he said.
The departments of trade, industry and competition, international relations and cooperation, and agriculture must take the lead in driving export expansion and market diversification. The private sector and the government must work in tandem to navigate the complexities of the global trade landscape and ensure the continued success of South Africa’s agricultural exports.
