When it comes to trade, South Africans are desperately keen for any glimmer of good news. Such news arrived this week in the form of our agricultural export numbers, which suggest that, despite what the sceptics say, improvements are evident in our ports.
In the three months to June, agricultural exports reached $4.1bn, up 10% from a year ago. In fact, in the first half of the year these exports actually rose 11%, to $7.8bn.
Now, it is true that higher commodity prices helped those numbers, but the improvement is due also to higher volumes, in part because of a strong harvest season but also thanks to strong global demand for food.
The products that dominated are, as you’d expect, citrus, apples and pears, maize, wine, dates, figs, pineapples, avocados, guavas, mangoes, wool, sugar, fruit juices, grapes and nuts.
It would seem that material improvements at the Durban and Eastern Cape ports contributed to this. The Port of Cape Town still has some way to go, especially given how crucial it is for agricultural exports, but overall it’s a positive story.
In a world of elevated geoeconomic tensions, it can only be good for South Africa when the self-generated friction eases, as the reduction of conflict is vital for the prospects of growth in our farming sector.
About 40% of our exports are being sent to other parts of Africa. The big-ticket items are maize, apples and pears, processed foods, sugar, soybean oil and wine.
Asia and the Middle East are growing markets for South Africa, accounting for 24%. Here, the products are similar — citrus, wool, maize and nuts, as well as mutton and beef.
The EU has 21% of the market. There are some variations in what the Europeans want most, but citrus, figs, pineapples, avocados, guavas and wine dominate.
Then, far down the list, at only 3% of our agricultural exports, comes the US. But what is arresting here is that agricultural exports to that country soared 56% in the second quarter, clocking in at $123m.
The reason for this trajectory is the drop in the tariffs imposed by President Donald Trump, from 30% to 12.5%. The US Supreme Court deemed the tariffs illegal in February, but the Trump administration nonetheless imposed the new 12.5% tariff in July.
Still, South Africa’s agricultural exports are much lower than in the pre-tariff era — 25% less than in the second quarter of last year, when exporters rushed to take advantage of the 90-day pause before Trump’s “liberation day” tariffs were to come into effect in July.
The 3% of our agricultural exports that are sent to the US isn’t an insignificant amount, as our raisin, table grape, wine and fruit juice producers rely on this.
In this regard the African Growth & Opportunity Act (Agoa) has been useful. Last week’s decision by the Trump administration to extend it for two years to 2028, while something of a surprise, will have been welcomed by our farmers. Without it our exports to the US would carry an extra tariff of about 3%, which, when added to the 12.5%, would push the tariff to 15.5%.
This would put us at a disadvantage to countries such as Chile and Peru, which are far closer.
The remaining 10% of South Africa’s agricultural exports go to the rest of the world, including the UK.
It must be pointed out that South Africa also imports quite a few agricultural products — $3.9bn worth in the first half of the year, which was up 5%. This includes wheat, as well as products we don’t make a lot of locally, like palm oil and rice.
Wheat is an interesting case, because South Africa imports about half of what it needs.
This suggests a growing dependence on the rest of the world for this staple, in part because production in the Free State, once one of the major wheat-growing regions, has fallen precipitously. Poor weather conditions in the province contributed to this, but the economics have changed too, which has made wheat less profitable than other crops.
Nonetheless, the picture is a positive one, with our agricultural sector recording a trade surplus of $2.1bn in the second quarter, which was 9% higher than the previous year.
It’s a solid start, illustrating that we have entrenched ourselves in the food chains of our trading partners. Agoa’s extension is a major reprieve for South Africa’s farmers — but this doesn’t remove the imperative to find new trading partners to replace countries such as the US.
Sihlobo is the presidential envoy on agriculture and land, and the chief economist of the Agricultural Business Chamber of South Africa
