South Africa is exploring alternative markets for its agricultural exports to counter the impact of US tariff hikes and the anticipated collapse of the African Growth and Opportunity Act (Agoa) agreement.
This comes after the global reciprocal tariffs announced by US President Donald Trump earlier this month, including a hefty 30% tariff on South African goods.
Agriculture minister John Steenhuisen said these reciprocal tariffs have already triggered turmoil in global politics.
“There is a great deal of geopolitical instability in the world that has been precipitated by the announcement of tariff increases on a number of countries in the world,” he said.
“The knock-on impact of this has already been seen with Tuesday's announcement by the World Bank and IMF, which lowered their projections for global GDP growth as a result.”
Steenhuisen was speaking at the opening of the G20 Agriculture Working Group and Food Security Task Force meetings in Durban on Wednesday.
The high-level meetings to strengthen global collaboration on food security and agricultural development will take place over three days and form part of a series of international events leading up to the G20 Summit to be held in South Africa in November.
He said the 30% tariff hike was of “grave concern” as it would price South African agricultural exports out of the US market, particularly since most of its competitors have been given only a 10% increase.
Though the US market constitutes only 7% of South Africa’s total global agricultural trade, Steenhuisen said it cannot be ignored since it formed a significant export of certain produce.
“Within that percentage is a very high concentration of certain goods including citrus, wine, nuts, ostrich meat, feathers, leather and other products. Sixty percent of the ostrich market is to the US so it has a potential to have a big impact on those particular sectors.”
The country has since formed an inter-ministerial committee that meets on a weekly basis to work on a solution to help South Africa retain access to the US.
The committee comprises Steenhuisen, trade, industry and competition minister Parks Tau and minister of international relations Ronald Lamola and their departments. It has three months to come up with a package they can present to the US to negotiate for a deal.
South Africa needs to start looking at a post-Agoa environment. I think with this recent tariff announcement, Agoa is all but cancelled and we need to prepare ourselves for this eventuality.
— John Steenhuisen, agriculture minister
“Our goal is to have the 30% tariff lowered dramatically, hopefully to no tariffs. If we are going to have them, then to 10%, which will bring some sort of equality against our competitors,” said Steenhuisen.
“We believe this will be in the US’s interest as well because they receive excellent quality agricultural products from South Africa and their consumers enjoy our products and they are in high demand. There will be price shocks for the US consumer if these tariffs start to have the effect that everyone predicts they will have.”
He added his department had adopted a two-pronged approach to this situation: to negotiate with the US to get a favourable trade deal and/or look for alternative markets to redirect South African goods.
“That is why we’ve invited other countries and therefore are able to open citrus to Thailand, grapes to the Philippines, and we continue being on the lookout for new markets so we can try to ensure that if Agoa is cancelled it doesn’t come as a total shock.”
“These processes are more medium- to long-term solutions. I believe that the real opportunity for us is to put a package of items on the table for the US to say, ‘this is a deal we want to make,’ and try to negotiate a favourable trade agreement between the two countries.”
“South Africa needs to start looking at a post-Agoa environment. I think with this recent tariff announcement Agoa is all but cancelled and we need to prepare ourselves for this eventuality.”
He indicated, however, the issues around the uncertainty over Agoa were not likely to be discussed at these meetings because most of the countries are not affected.
The meetings come on the eve of Ukrainian President Volodymyr Zelensky’s visit to the country.
Zelensky has been invited by President Cyril Ramaphosa and Steenhuisen is part of the delegation that will meet him.
He said he would use that opportunity to have further discussions with his Ukrainian counterpart responsible for agriculture about greater cooperation between the two countries after their meeting in Germany earlier this year.
“Of particular interest to me is fertiliser. Ukraine is one of largest fertiliser producers in the world and many of our small-scale and larger farmers struggle with input costs of fertiliser. It has gone up 300% over the last few years, which drives up the cost of production and is ultimately reflected in the cost of food on the shelves.”
Other issues up for discussion include grain imports and greater cooperation on technology.
“Ukraine, from my last visit there, employs quite a lot of precision agricultural technology, and I think there’s a lot we can learn from them to improve yields.”
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