Industry body SA Canegrowers implores the South African government to prioritise negotiations with the US on tariff reductions and exemptions to help create certainty in the agriculture industry.

This follows the April 2 announcement by the US administration of a 30% tariff on all South African goods imported into the US. The tariff was subsequently suspended for 90 days, with a 10% base tariff remaining 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,” SA Canegrowers says.

“The tariffs affirm the urgency to negotiate a new bilateral and mutually beneficial trade agreement with the US, as an essential step to secure long-term trade certainty,” the Presidency said in a statement issued on April 3.

In its announcement of the tariffs, the US administration said its new tariffs would address unfair disparities and non-tariff barriers imposed by other countries, including South Africa.

According to SA Canegrowers, the US does not produce sufficient volumes of sugar to meet its domestic demand and it, therefore, relies on imports to fill these gaps.

Up to now, the US has had a system in place to allocate import quotas to sugar-producing countries. This system was designed by the US to serve its local demand, both for US households and industrial users of sugar.

The US is a significant market for South Africa’s sugar exports, with over 24 000 t/y being exported, 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,” SA Canegrowers states.

South Africa is one of the world’s major sugar-producing countries, but when competing against countries in closer proximity to the US market, such as Brazil and Mexico, the tariff structure is tilted off balance and rendered unfair, the organisation points out.

Any increases in the US tariff structure disrupt a long-standing quota-based trade mechanism and will place US security of supply under threat, as including South Africa in the quota helps protect against supply disruptions that may occur when other sugar-exporting countries experience drought or disasters that limit their production, SA Canegrowers explains.

South Africa’s sugar industry supports one-million livelihoods. Sugarcane growers provide vital jobs and stability in rural KwaZulu-Natal and Mpumalanga.

“Any tariff hike, be it 10% or 30%, threatens to undo years of progress toward economic inclusion and rural development.

“Both large-scale and small-scale growers are exposed to the price and demand volatility in the export market. The industry is already under pressure from rising input costs, the sugar tax, and climate variability,” the organsiation notes.

SA Canegrowers therefore calls on South Africa’s trade and agriculture authorities to urgently engage with their US counterparts to review any further damaging tariffs for the US and South Africa.