Organisations representing the interests of South Africa’s thousands of sugarcane farmers are deeply concerned about the threat posed by the United States’ proposed 30% import tariff to the country’s sugar exports and sugarcane farmers.
By Lloyd Phillips
Even when South Africa was subject to international sanctions during the apartheid era, the US still imported tons of the country’s sugar. In 1962, the US granted South African sugar a preferential import quota for the first time. Since then, the quota has been renewed annually – albeit occasionally with amendments – and South Africa has always complied.
In recent years, South Africa has had an annual tax-free quota of 24 744 tonnes of its sugar to the US. While this is the proverbial drop in the bucket compared to the two million tons of sugar delivered here each year, premium prices for it are most welcome in the sugarcane value chain, which has been financially struggling for a long time.
The 30% import tariff that President Donald Trump of the United States wants to levy on all South African products from 1 August will be an exceptionally bitter pill in the long, mutually beneficial relationship.
South Africa’s about 25 000 sugarcane farmers, 24 000 of whom are small-scale farmers, are among those who will be directly adversely affected by this impending significant tariff increase.
The Impact on South Africa’s Sugar Exports
Higgins Mdluli, chairperson of SA Canegrowers, South Africa’s sugar cane growers association, explains that the primary sugar cane value chain will not only lose those valuable premium incomes, but that there is also the possibility that it could become financially unviable to continue exporting any sugar to America.
He stresses that South African sugar “poses no threat” to the US market, which relies on sugar imports from various sources to meet its domestic demand. Furthermore, Trump’s 30% import tariff will make South African sugar less competitive in the US market compared to the heavily subsidised sugar of its competitors, such as Brazil, India and Mexico.
Information from several sources, including the US Department of Agriculture (USDA), indicates that the country currently relies on imports of approximately 2.2 million tonnes of sugar to meet its annual total domestic demand of around 11.1 million tonnes. South Africa represents only about 1.1% of the US’s total annual sugar imports.
Mdluli says this loss of competitiveness in the US market comes at the same time that South African sugarcane farmers are under pressure due to a deluge of cheap and heavily subsidised sugar from the same global competitors flocking to our ports.
“Our growers cannot compete with this, especially as the South African sugarcane value chain is under pressure due to factors such as erratic weather patterns, the closure of sugar mills, the health promotion levy (sugar tax) and now the US’s 30% tariffs. For every ton of imported sugar entering the local market, our industry loses R6 000.”
‘Protect farmers from sleepless nights’
Dr. Siyabonga Madlala, CEO of the South African Farmers Development Association (SAFDA), which primarily represents the interests of black sugarcane farmers, says the association is deeply concerned about the deteriorating trade relations between South Africa and the US.
He stresses that as a “constantly disadvantaged group due to structural inequalities inherent in South Africa’s agricultural sector”, black farmers will be hardest hit by the US’s 30% import tariff on all South African products.
The South African Canegrowers Association and SAFDA are separately calling on the South African government to intervene urgently.
“It is imperative that the government takes urgent action to protect the local industry from unfair trading practices by levelling the playing field, ensuring fair pricing and protecting precious jobs in the already struggling economy,” says Mdluli.
Madlala says they are aware that the government is negotiating with the US government. “We are hopeful that an agreement will be reached soon and that our farmers will not have to endure sleepless nights over excessive reciprocal tariffs.”
