Dr. Thomas Funke, CEO of SA Canegrowers, on Monday urged the government to continue to prioritise negotiations with the US on tariff reductions and exemptions to help create certainty in the agricultural industry.
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South African sugarcane farming associations have raised alarms as potential tariff increases by US President Donald Trump threaten to disrupt the already precarious equilibrium of the local sugar industry.
Dr. Thomas Funke, CEO of SA Canegrowers, on Monday urged the government to continue to prioritise negotiations with the US on tariff reductions and exemptions to help create certainty in the agricultural industry.
Funke said the US did not produce sufficient volumes of sugar to meet its domestic demand, and it therefore relies on imports to fill these gaps.
“Although the punitive 30% export tariff on South Africa has been suspended for 90 days, a 10% blanket tariff still remains in place. Even a 10% tariff on exports has negative consequences for South African sugarcane growers and the rural economies that depend on sugar production for jobs and livelihoods,” Funke said.
“Up to now, the US has had a system in place to allocate import quotas to sugar-producing countries, designed to serve local demand for both US households and industrial users of sugar.
“The US is a significant market for South Africa’s sugar exports, with over 24 000 tons being exported annually, as much as the current quota allows. Any new tariff structure, whether 10% or 30%, threatens the viability of this mechanism by increasing production and transport costs and makes the industry less competitive.”
Dr Siyabonga Madlala, executive chairperson of the South African Farmers Development Association (Safda), said that they had noted with concern the ongoing diplomatic spat between the US and South Africa with the country being one of the targets of the crippling tariffs that President Donald Trump has unleashed.
“Sugarcane farmers benefit from the sugar exported to the US under a special dispensation that sees about 24 000 tons of South African sugar getting into the US market duty-free and fetching a premium price,” Madlala said.
“The current total gross sugar industry revenue is about R25 billion. We are a net sugar exporter as a country and do so at a loss of about R4 000 per ton in the main. The US market is one of the lucrative destinations for the South African sugar notwithstanding the quantum.
“Any reduction in our export earnings due to the imposed tariffs will reduce the price of sugar for farmers and threaten the sustainability of the 24 015 registered small-scale sugarcane farmers, which may go out of business and lead to loss of million livelihoods.”
Wandile Sihlobo, chief economist at the Agricultural Business Chamber of SA (Agbiz), said that since the US authorities announced import tariffs on an unprecedented scale against several countries, the confusion about how practically they will apply lingers.
“We still have insufficient details regarding tariff levels by product as the US authorities have not provided much official guidance. This dearth of detail creates uncertainty and limits the ability of the South African authorities to engage productively with their US counterparts,” Sihlobo said.
“They can start gathering a rough assessment of the impact the rise in the US tariffs to 31% would have on their exports, mainly citrus, grapes, wine, and nuts, amongst other products, as well as the impact on jobs in their regions. Most South African competitors in these agricultural products in the US market currently face relatively lower tariffs of around 10%. This will disadvantage South Africa in the US market.”
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