Cape Town - South Africa’s wine industry could add a further 100 000 jobs by 2025, mostly in the Western Cape, following the signing this month of the Economic Partnerships Agreement (EPA) between the European Union (EU) and the Southern African Customs Union (Sacu) countries.
So said Michael Mokhoro, stakeholder relationship manager for South Africa’s wine and brandy industries.
Countries in Sacu include South Africa, Botswana, Lesotho, Mozambique and Namibia.
The landmark agreement will mean South Africa’s current duty-free quota of 48 million litres of wine that can be exported to the EU will more than double, to 110 million litres.
Mokhoro said South Africa’s wine industry employs about 275 000 people and this number could swell to 375 000 by 2025. He said the EPA, which was finalised in 2014, needed to be ratified before the end of September, in order to take effect from October.
Although South Africa exports worldwide, the EU is by far the wine industry’s biggest export destination, accounting for 74.8 percent of annual off-shore sales volumes, worth R5.01 billion.
Mokhoro said, however, each of the five countries would first have to individually ratify the agreement through their respective parliamentary processes. The EU parliament would ratify the deal on behalf of its 28 member states.
Trade and Industry Minister Rob Davies said on Friday that South African exports to the EU increased from R151bn in 2011 to R216bn last year.
“The EU remains South Africa’s main trading partner. Total trade increased from R374bn in 2011 to R536bn in 2015, an increase of 43 percent.”
Davies said the EPA would provide improved market access opportunities for South African products, which entail a significant improvement in quota for wine and market access to sugar and ethanol.
“In addition, it will result in improvement on duty preference for SA exports of flowers and fruit products, as well as canned fruit, among others.”
Davies said the increase in the duty-free quota for wine equated to a saving of R108m a year and
the new duty-free market access for 150 000 tons of sugar equated to almost a R1bn market in terms of the average African Caribbean and Pacific Group of States sugar import prices in the EU last year.
He said the EPA would result in simplified rules of origin that would contribute to regional integration and the development of regional value-chains on the African continent, and make provisions for a bilateral protocol between South Africa and the EU on the protection of geographic indications, and on trade in wine and spirits.
President of the Cape Chamber of Commerce and Industry Janine Myburgh said the Western Cape would be one of the main beneficiaries of the EPA.
“Wine and canned fruit are in the agreement, so we are talking about value-added products, and that means jobs in the agri-processing area for the Cape. Agri-processing, such as tourism and green industries, is one of the growth areas in our economy, so the EPA is a particularly welcome boost. It falls into line with our strategy and we hope it will encourage further investment in the province and job creation, particularly in the country town.”
Economic Opportunities MEC Alan Winde welcomed the agreement with the EU. He said it would deliver a massive boost to the Western Cape’s wine exports.
Winde said that under the agreement, the Tariff Rate Quota of South African wine to be imported duty-free into the EU was set to more than double from the current 50 million litres to 110 million litres in the first year of implementation for bulk and bottled wine.
“This is also the first time the EU has signed a Free Trade Agreement in which the EU gives up the right to use agricultural export subsidies. This is a significant step towards equalling the playing field for our farmers.”
Winde said the development protected the geographical indicators of the province’s high-quality wines from several regions, including Paarl and Stellenbosch.
He said that through Project Khulisa, the Western Cape government had identified growing its wine industry as a focus area, and one of the goals was to increase exports to strategic markets.
“Our objective is to double wine exports to key destinations by 2025. We are adamant we will increase exports of our bottled wine. We are seeking to add up to 100 000 jobs to the agri-processing sector by 2019.”
He said increasing the volume of exports would create more jobs in the province.
“The Western Cape produces more than 50 percent of SA’s agricultural exports. We are supporting agri-business to strengthen their export position by growing exports from their current value added of R16.3bn. Research has found a 5 percent increase only in the value of deciduous fruit, and table grapes exports will create 4 261 and 2 073 new jobs, respectively.”
He said the same research showed that a 5 percent increase in wine exports would lead to 986 jobs, two-thirds of which would be off-farm.
Commissioner for trade Cecilia Malmstrom said the EPA would enhance market access for South Africa. “And South African geographical indications such as wines, Karoo meat and Rooibos tea will be protected.”
Mokhoro said that in the interests of promoting South Africa’s wine reputation and the sustainability of its exports, initially 70 percent of the 110 million litre quota would be directed to packaged wines, which were those in bottles or other containers of two litres or less.
“We hope to see winemakers capitalise on this opportunity to build Brand South Africa, as well as the reputation of their own brands.
“The deal offers an additional springboard for growing our credential for excellence of quality and originality.”