Africa-Press – South-Africa. South Africa is missing out on billions of rands in potential agricultural exports by not fully utilising existing free trade agreements with major economies, particularly those within the European Union.
This has the ability to mitigate some of the impact of the tariffs imposed on South African exports to the United States, which will negatively effect the country’s citrus industry.
South African farmers are remarkably resourceful and entrepreneurial, consistently producing reliable, affordable, high-quality food that is trusted on the global stage.
All of this is despite an environment clouded by uncertainty, from geopolitics and tariff debates to shifting politics and regulatory hurdles.
This was the central message at a recent thought-leadership seminar hosted by KAL Group – the diversified, JSE-listed agri-retailer – in partnership with Grain SA, Plaasmedia and Nedbank.
CEO of Grain SA, Dr Tobias Doyer, said that while agriculture remains a strong performer in the broader economy, challenges persist.
These include fluctuating wheat prices, international tariffs, limited access to breeding technology, and chemical use.
“If we didn’t have a local wheat sector, for instance, and had to rely entirely on imports, South African consumers would pay R700 million more for wheat,” Doyer said.
Analyst JP Landman agreed that global trade is becoming more complex, particularly with tensions between China and the USA and the shifting power balance between the two nations.
He explained that in 1950, China produced 5% of global manufacturing; today it’s 30%, while the USA has fallen from 50% to 15%.
He emphasised that innovation and manufacturing are critical for economic power, and financial strength alone isn’t enough.
For South Africa to succesfully navigate changing global trade, it has to leverage existing agreements it has in place.
Apart from securing a deal with the United States, the country needs to make full use of existing free trade agreements, Stellenbosch professor Johan Fourie said.
Fourie called on South African agricultural players to sharpen their understanding of trade agreements, with the country missing out on billions in opportunities.
“We are losing billions of rands because we don’t know the rules. For example, our free trade agreement with Europe is underused, leaving exporters to pay tariffs that could be avoided,” Fourie said.
Recent data shows that South African exports to the UK are facing similar problems, with R2.7 billion in vehicle exports in 2024 paying full duties of 10% instead of the 0% tariff guaranteed under a trade deal.
South Africa and the United States
Making full use of existing trade deals could mitigate the impact of tariffs on goods exported to the United States.
South Africa has been hit by some of the highest tariffs of any country, with increased duties placed on its goods exported to the United States.
At 30%, the tariffs on South Africa are the third-highest of those tracked by S&P Global Ratings as part of its major emerging markets analysis.
This means that South Africa’s exports are effectively no longer competitive in the US market, with other countries experiencing far less severe tariffs.
Over the long run, this may result in companies shifting production to countries with lower barriers to entry into the American market.
In the immediate term, US companies are likely to source similar products elsewhere, with South Africa’s citrus industry particularly at risk.
South African citrus farmers have built strong export links with the United States as the country is in a different growing season to America. This has resulted in the sector being heavily reliant on a single consumer.
South African orange farmers compete with other southern hemisphere growers, notably Chile and Peru. For the time being, they face a 10% tariff compared to 30% on South African exports, giving them an advantage.
This makes citrus from these countries immediately cheaper than South African alternatives, making it likely that American companies will prefer to source their products elsewhere.
The other sector heavily impacted is the automotive industry. Exports to the US have already fallen sharply, which might lead to parent companies scaling back local operations.
At the start of the year, economists were pencilling in South African GDP growth of around 1.8% for 2025. This has now been cut to around 1% due to the tariff headwinds.
Standard Bank’s economics unit has calculated that for every 10 percentage point increase in the tariff rate, South Africa will lose 0.1% of GDP growth.
This may not appear significant, but considering the bank only expects South Africa to grow at 1.1% in 2025, a 30% tariff rate could shave off a significant amount of GDP growth.
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