Article
The SACU region remains a crucial market for South Africa's agricultural exports
Published: 29/01/2025
With the return of Donald Trump as US President, trade relations have become a top-of-mind issue and likely will be for some time to come. Trump has indicated plans to impose import tariffs against various countries. One week into his term, Trump is still to announce concrete measures in this regard. However, in this world of potential trade disruptions, it is important for countries with strong trade ties to strengthen relations. For South Africa's agricultural sector, the African continent is the largest trading partner, accounting for roughly 40% of South Africa's agricultural exports of around US$13,2 billion in 2023. While prospects for growth of this market remain uncertain because of higher saturation presently, with much faster growth in exports likely to be in Asia and the Middle East, retaining the current export markets, such as the African continent, is critical for South Africa's agriculture.
- With the return of Donald Trump as US President, trade relations have become a top-of-mind issue and likely will be for some time to come. Trump has indicated plans to impose import tariffs against various countries. One week into his term, Trump is still to announce concrete measures in this regard. However, in this world of potential trade disruptions, it is important for countries with strong trade ties to strengthen relations. For South Africa's agricultural sector, the African continent is the largest trading partner, accounting for roughly 40% of South Africa's agricultural exports of around US$13,2 billion in 2023. While prospects for growth of this market remain uncertain because of higher saturation presently, with much faster growth in exports likely to be in Asia and the Middle East, retaining the current export markets, such as the African continent, is critical for South Africa's agriculture.
- In the recent past, some trade friction in South Africa's trade relations with the African continent has mainly been within the SACU region, a customs union that is a free trade zone, which includes Botswana, Namibia, Lesotho and Eswatini. From around 2021, Botswana banned imports of vegetables from South Africa, which continued until its removal by the new administration of President Duma Boko in December 2024.
- Namibia's ban, which started around the same time as Botswana, on imports of South Africa's vegetables remains in place. Each country's rationale for banning vegetable imports was that they were building their domestic industries and required cushioning. These bans on imports of agricultural products add uncertainty and weigh on business. Moreover, they have fueled a lingering political sentiment in some quarters that SACU needs a review.
- On January 16 2025, there was once more friction as Botswana banned the imports of grains from South Africa, including maize, sorghum, and wheat. The ban extended to pawpaw, kiwi, and coconut, amongst other products. The reason for this was the detection of the Goss's wilt in a few maize-growing regions of Free State, North West, Gauteng, and Eastern Cape. Even then, the South African scientists were still studying the bacteria. Notably, Botswana banned imports of a wide range of products while the research showed that the risk was mainly in maize seeds for planting, and the bacteria would not be transferred to maize for feed or human consumption. There was no scientific evidence of risks to other products. This decision again raised the question of why SACU is not cooperating better on these scientific questions. Fortunately, on January 24 2025, after the authorities from South Africa and Botswana deliberated on the issue, Botswana removed the ban and allowed trade to resume.
- Namibia also followed Botswana's actions and banned the imports of South African grains and various agricultural products, as we list above in Botswana's case. This added to Namibia's current ban on importing vegetables from South Africa. At the time of writing this note, Namibia had not followed the same approach as Botswana to remove restrictions. Both Botswana and Namibia are maize export markets for South Africa's agricultural exports to SACU.
- Botswana and Namibia's trade policy approach has weighed negatively on South Africa's agricultural exports. Putting everything aside and reviewing purely from an agricultural trade, the SACU region is vital to South Africa. According to our calculations using data from Trade Map, the region accounted for about 20% of South Africa's agricultural exports of US$13,2 billion in 2023. This equals the same value as South Africa's agricultural exports to the EU. The only difference between the EU and SACU is the products in the export basket. The EU tends to import more fruits and wines, while the SACU basket is heavy on grains and beverages.
- South Africa imports under a billion dollars of products from SACU, averaging at US$769 million over the past five years. This is about an 11% share of South Africa's agricultural imports, on average, in the past five years. The imports are mainly live animals (cattle) and sugar. The major exports to South Africa in SACU are Eswatini and Namibia.
- Given that this is a huge export market for South Africa and an essential one for SACU nations, the logical steps should be to preserve trade and reduce the frequent occurrence of export bans targeted at South Africa. The policy ambitions of the SACU members to increase their domestic production could focus on leveraging scientific advancements and investments from South Africa, which has mature agriculture and food, fibre, and beverage value chains. Ideally, collaboration should be the path forward rather than confrontations.
- Indeed, South Africa's SACU market does not represent much growth potential beyond what exists. Still, exports are vital for regional food security and stability. Diversifying export markets to other regions to ease risk in the future is key, but it should be viewed as part of the long-term market development and not a replacement of the market currently existing in SACU. Over time, SACU may have to export to the world and promote products from a regional perspective.
- In a global environment that appears likely to have more inward-looking trade policies, countries with long-standing trade relations, such as those in SACU, need to strengthen their partnerships and avoid the allure of antagonistic trade policy approaches that we see in various regions of the world.
- Therefore, South Africa's Department of Agriculture, Trade, Industry and Competition and the Department of International Relations and Cooperation should work collectively to strengthen trade ties with South Africa's existing partners. The SACU relationship should also be maintained, and the focus must not be primarily on the EU, US, BRICS, and others. It is through such an approach that South Africa's agricultural sector will secure lasting export markets. The export markets are essential to South Africa's plans to grow the domestic agricultural sector, as South Africa already has an export-oriented agricultural sector.
