By Diane Silcock
AS the 9th of July United States (US) export tariff deadline looms, with the possible imposition on South Africa of a 30% tariff, up from the current 10%, the agricultural sector and supply chains have been bracing themselves.
Amid ongoing uncertainty, as South Africa awaits a decision, Cape Business News spoke to the Perishable Products Export Control Board (PPECB) about the importance of the US market to producers of perishable products, and the impact an increased US export tariff is likely to have on the industry.
Why is the US important for South African produce?
PPECB CEO Lucien Jansen shares his sentiments around the reciprocal tariff and its impact, should it be imposed. “Roughly 150 000 tonnes of perishable produce – of which more than 100 000 is citrus – is exported to the US at its peak every year, which represents about 3,6% of the 4,1 million tonnes of the perishable produce that South Africa exports globally.
“South Africa has done very well in the US over the past years with citrus being the leading product from our store of products that is exported to the US. The citrus harvest season has started quite well and we really don’t want that season to be disrupted by an increased tariff when we are in the middle of the season. Hopefully, the increase can be postponed or reviewed as it would be of great benefit to the fruit industry.”
The ripple effect of a possible increased tariff
Increased tariffs would mean higher costs for South African produce in the US, which would need to be absorbed by someone—whether it is the South African exporter, the American importer, or the US consumer. The most immediate impact would be a drop in demand for South African produce in the US.
“For South African producers,” says Jansen, “this means reduced revenue, flooding in the local market, unsold stock, and a desperate scramble to find alternative markets. Farmers would receive less revenue for their produce that they have invested in for that season and over many years. In turn, this will impact the number of people the farmer employs and the viability of their business.”
Developing new markets for South African produce can take up to 12 years
In the PPECB’s experience, accessing new markets can take up to 12 years due to the complexities and technical processes that are required to be put in place.
“We’ve seen this in regard to Thailand and other countries as new markets are not familiar with South African products, therefore they need to be developed, which takes time. And usually these newly developed markets come with very stringent export requirements,” Jansen says.
Nonetheless, it’s essential that new markets are opened up for citrus in particular. It’s a collaborative effort between the Department of Trade, Industry and Competition (DTIC), the Department of Agriculture and the stakeholders within the citrus industry. Jansen says the focus remains on the Asian markets and the PPECB plays a supporting role.
PPECB’s critical role in South Africa’s export industry
The PPECB inspects around 190 different types of products annually valued at around R60-billion, which are exported to just over 100 countries. It has 31 offices across South Africa employing around 1 200 employees which includes contract and seasonal workers.
With the PPECB being volume driven, the net effect on their income that they earn from levies charged, would be drastic, should the full US tariff be imposed. Jansen is hopeful that the outcome from the talks with the US will be positive, to ensure that the PPECB can continue to provide the essential services they are renowned for and which they have been providing for almost 100 years.
