By Justin Chadwick
This week the 20th Agoa Forum is being held in Johannesburg. Government representatives from the US and eligible African countries gathered alongside regional organisations, private sector role-players, civil society groups and labour leaders.
The African Growth and Opportunity Act (Agoa) benefits 35 countries in sub-Saharan Africa. Thanks to the act, many South African export products, including citrus, is exempt from import duties, giving them a much-needed edge in the massive and competitive American market.
The forum comes at a time of global uncertainty. To many people, the Agoa Forum seems to be a political event, and one in tension with the BRICS Summit, also held in Johannesburg, precisely two months ago. But for us in the citrus industry, an industry with an immense potential for growth, we see th gatherings only as opportunities for job creation and revenue generation.
The story of South African citrus in the US is a story of growth. This season saw the 25th year of the Summer Citrus from South Africa programme, a collaboration of nearly 300 South African growers who work together in exporting fruit to the US. In 1999, only 40 000 15kg cartons of citrus was shipped by the programme; last year, they shipped 6.7 million.
Seen through a different metric, between 2019 and 2022 the amount of citrus exported to the US more than doubled.
Only growers in the Western and Northern Cape export citrus to the US. This is technically due to phytosanitary restrictions. In the provinces, the American market sustains an estimated 35 000 jobs at farm level and contributes R1.6 billion in export revenue. If we could open other South African provinces to the US market, everyone would benefit.
South Africa has world-class phytosanitary standards and practices. Many other markets across the world trust that citrus from all our provinces will arrive in their harbours without the threat of spreading pests. Phytosanitary concern regarding citrus is not the reason for the barrier to trade with the US.
Access is being blocked largely due to other trade issues relating to US exports of pork to South Africa. One hopes this is the type of administrative growth barrier and trade irritant that will be discussed by the representatives of our two countries as they meet in and alongside the Agoa Forum this week.
Wider access to the US is particularly important for our mandarin growers, as their plantings in Limpopo and the Eastern Cape are nearing export-quality fruit. American importers have indicated a preference for mandarins from South Africa.
Apart from the economic benefit for South Africa in expanding citrus exports, the US stands to benefit as well. It is estimated that 20 000 US jobs are supported by our citrus exports to the country. But, after having just returned from a trade visit to the US, I can also say that the Americans appreciate the quality of our citrus. We have a great product to sell and there is a demand for it.
The US market has been hungry for citrus. Since 2012, their imports of the fruit have been increasing at an average rate of 11% a year. There are some factors that can dampen the phenomenal growth somewhat.
Zak Laffite, the CEO of the US citrus giant Wonderful Citrus, recently highlighted the negative effects of climate change, supply increases after high planting rates, inflationary pressures on consumers and escalating agricultural input costs. He said strong investment in the industry would keep it sustainable, profitable and resilient.
A good way for the US to assure their citrus market's resilience, is to welcome good quality summer citrus from importers, because it keeps their local citrus consumers loyal to the product, retaining an interest through constant supply. South Africa does not compete with the citrus producers of Florida or California, in fact, quite the opposite – we sustain their customers’ interest when their local citrus is out of season.
Our citrus is competitive in the US market because Agoa assures it duty-free access. Agoa comes up for review in 2025 and, as always, there is concern about continued South African inclusion. It is hoped that the renewal will be secured soon to assure confidence in exports going forward. In the longer term, the citrus industry would prefer a trade agreement to be concluded, as that would be much more stable and could include many aspects other than just tariffs.
Because of larger geopolitical issues, mostly relating to the war between Russia and Ukraine, US congressional leaders have called for South Africa to be expelled from Agoa. Recently, our Minister of Trade, Industry and Competition, Ebrahim Patel, was even asked in Parliament by an MP whether he thought South Africa’s response to the conflict between Israel and Hamas could further endanger our inclusion in the act. However, many are optimistic that South Africa’s inclusion will be renewed.
The renewal can, in a certain sense, be the first step in expanding our citrus presence in the US. It is a destination that values our citrus and has massive scope for increased exports.
If all local role-players worked together, projections are that over the next nine years an additional 100 million 15kg cartons of citrus could move from our orchards to the ports. That would mean a job creation figure of 100 000 and an additional R20 billion in revenue. The US market, and the edge Agoa gives us in that market, is an essential part of achieving this goal.
Justin Chadwick is the CEO of the Citrus Growers' Association of Southern Africa.
BUSINESS REPORT