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IOL News
04-07-2025
- Business
- IOL News
Fears of 30% tariffs loom as US-South Africa trade negotiations remain unresolved
Economists and other experts say that there is some concern following the expiry of US President Donald Trump's 90-day pause on tariff hikes on South Africa and other countries announced on Liberation Day in April. South Africa faces up to 30% tariffs if implemented. As July 9 approaches, economists and industry experts have expressed serious concern about the potential consequences of the expiry of US President Donald Trump's 90-day pause on tariff increases affecting South Africa and other countries. Following the promise of a 10% universal tariff, there is a looming threat of substantial tariffs rising to an alarming 30% if a deal is not reached by the impending deadline. This situation sends ripples of uncertainty among South African exporters who rely heavily on the US market for their products. Wandile Sihlobo, chief economist at Agricultural Business Chamber of South Africa, on Thursday highlighted the ongoing negotiations between South African businesses and US authorities but noted the prevailing ambiguity regarding future trade terms. 'South African businesses and the government have engaged, and continue to interact with US authorities regarding the path forward. However, the path forward remains unclear at this moment, although we would all like to see the continuation of the 10% tariffs rather than the 31% tariffs South Africa faced,' he said. 'The export diversification part is, of course, sound advice. However, we cannot completely abandon the US market; it is vital to South Africa and crucial to us in the agricultural sector. The export diversification comments typically point to China, suggesting that we should focus more on that area. Indeed, regular readers of this letter will be aware that China has been a primary focus for some time.' Professor Raymond Parsons, an economist from North West University, said that this was another period of heightened uncertainty for key SA exporters to the US. 'Unless a US-SA deal is struck by then, or the deadline is extended, the immediate economic worry is about the impending rise in reciprocal tariffs. About 80% of all products exported to the US by SA will get the full impact of the 30% reciprocal tariff increase,' he said. 'We must therefore not underestimate how crucial the current dialogue between the US and SA is for future trade and investment relations. This also needs to cover the future of Agoa. SA needs to buy time to stabilise and consolidate its US-SA economic relations.' Annabel Bishop, chief economist at Investec, however suggested that there might be extensions on negotiations for various US trade partners that could mitigate imminent tariff hikes. 'Substantial progress made in negotiations with most of the US's major trade partners has reduced global economic growth concerns, with time expected to be extended past next week for those still 'negotiating in good faith'. A number of key US trade partners have not had smooth sailing with their negotiations, with the biggest, the EU trade bloc, set to face tariffs up to 50% if it does not come up with a deal the Trump administration finds suitable,' Bishop said. 'However, should the period not be extended for negotiations for key trade partners, this would have a negative impact on the growth outlook.' University of KwaZulu-Natal academic and political analyst Siyabonga Ntombela, encouraged a focus on bolstering the South African economy itself, suggesting that any negative impacts from tariff hikes would also have repercussions for US companies operating in the country. 'The government should focus on growing the South African economy and not worry too much about US-imposed tariff hikes. Remember, there are more than 600 US companies in SA that stand to benefit from a healthy and functioning economy, so anything that will cripple the South African economy will have a direct and adverse impact on these companies too,' Ntombela said. Professor Bonke Dumisa, an independent economic analyst, said that the pause announced by Trump initially worked positively. 'However, it is now a well-accepted fact that Trump's tariff wars have failed; many countries are no longer scared of them. Hence, I do not think any additional days or weeks will make a positive impact. It is precisely for this reason that the USA did not publicly disclose the contents of their international agreement with China,' Dumisa said. BUSINESS REPORT
IOL News
04-07-2025
- Business
- IOL News
Fears of 30% tariffs loom as US-South Africa trade negotiations remain unresolved
Economists and other experts say that there is some concern following the expiry of US President Donald Trump's 90-day pause on tariff hikes on South Africa and other countries announced on Liberation Day in April. South Africa faces up to 30% tariffs if implemented. As July 9 approaches, economists and industry experts have expressed serious concern about the potential consequences of the expiry of US President Donald Trump's 90-day pause on tariff increases affecting South Africa and other countries. Following the promise of a 10% universal tariff, there is a looming threat of substantial tariffs rising to an alarming 30% if a deal is not reached by the impending deadline. This situation sends ripples of uncertainty among South African exporters who rely heavily on the US market for their products. Wandile Sihlobo, chief economist at Agricultural Business Chamber of South Africa, on Thursday highlighted the ongoing negotiations between South African businesses and US authorities but noted the prevailing ambiguity regarding future trade terms. 'South African businesses and the government have engaged, and continue to interact with US authorities regarding the path forward. However, the path forward remains unclear at this moment, although we would all like to see the continuation of the 10% tariffs rather than the 31% tariffs South Africa faced,' he said. 'The export diversification part is, of course, sound advice. However, we cannot completely abandon the US market; it is vital to South Africa and crucial to us in the agricultural sector. The export diversification comments typically point to China, suggesting that we should focus more on that area. Indeed, regular readers of this letter will be aware that China has been a primary focus for some time.' Professor Raymond Parsons, an economist from North West University, said that this was another period of heightened uncertainty for key SA exporters to the US. 'Unless a US-SA deal is struck by then, or the deadline is extended, the immediate economic worry is about the impending rise in reciprocal tariffs. About 80% of all products exported to the US by SA will get the full impact of the 30% reciprocal tariff increase,' he said. 'We must therefore not underestimate how crucial the current dialogue between the US and SA is for future trade and investment relations. This also needs to cover the future of Agoa. SA needs to buy time to stabilise and consolidate its US-SA economic relations.' Annabel Bishop, chief economist at Investec, however suggested that there might be extensions on negotiations for various US trade partners that could mitigate imminent tariff hikes. 'Substantial progress made in negotiations with most of the US's major trade partners has reduced global economic growth concerns, with time expected to be extended past next week for those still 'negotiating in good faith'. A number of key US trade partners have not had smooth sailing with their negotiations, with the biggest, the EU trade bloc, set to face tariffs up to 50% if it does not come up with a deal the Trump administration finds suitable,' Bishop said. 'However, should the period not be extended for negotiations for key trade partners, this would have a negative impact on the growth outlook.' University of KwaZulu-Natal academic and political analyst Siyabonga Ntombela, encouraged a focus on bolstering the South African economy itself, suggesting that any negative impacts from tariff hikes would also have repercussions for US companies operating in the country. 'The government should focus on growing the South African economy and not worry too much about US-imposed tariff hikes. Remember, there are more than 600 US companies in SA that stand to benefit from a healthy and functioning economy, so anything that will cripple the South African economy will have a direct and adverse impact on these companies too,' Ntombela said. Professor Bonke Dumisa, an independent economic analyst, said that the pause announced by Trump initially worked positively. 'However, it is now a well-accepted fact that Trump's tariff wars have failed; many countries are no longer scared of them. Hence, I do not think any additional days or weeks will make a positive impact. It is precisely for this reason that the USA did not publicly disclose the contents of their international agreement with China,' Dumisa said. BUSINESS REPORT
Daily Maverick
19-06-2025
- Politics
- Daily Maverick
Loaded for Bear: Sihlobo peels off the gloves and busts SA agriculture myths in new book
This book weeds out many of the myths about the platteland — myths sprung from the manure spread by self-serving politicians that can find fertile soil in the withered fields of disillusion. In his previous two books about South African agriculture, the affable Wandile Sihlobo generally took a diplomatic tone when it came to government failures and half-baked policies. But Sihlobo, the chief economist at the Agricultural Business Chamber of South Africa (Agbiz), has taken the gloves off in his latest book, co-authored with Johann Kirsten, Director of the Bureau for Economic Research at Stellenbosch University. The Uncomfortable Truth about South Africa's Agriculture takes aim at decades of government bungling, missteps, corruption and ill-conceived policies that have squandered the promise of land reform, a process that is crucial for food security, economic growth and the rectifying of glaring economic imbalances rooted in apartheid. This book also weeds out many of the myths about the platteland — myths sprung from the manure spread by self-serving and populist politicians that can find fertile soil in the withered fields of disillusion. Among the domestic challenges confronting South African agriculture, Sihlobo and Kirsten are scathing in their assessment. 'A malfunctioning State Veterinary Service is unable to prevent and manage disease outbreaks and unable to comply with requirements of trade partners,' they note — an issue that has been thrown into sharp relief by the recent outbreak of foot-and-mouth disease among livestock. They also point to the 'complete destruction of the rural road and rail system' and 'dysfunctional local municipalities resulting in no service delivery'. Not 'poor' service delivery — 'no' service delivery. The rural road and rail system is not just coming off the rails but has collapsed into 'complete destruction'. The state vet service is 'malfunctioning'. This is no mincing of words and is a grim but accurate reflection of the unfolding disaster of government breakdowns and the bitter harvest they are reaping in the agricultural sector. Still, against the odds and in the face of other challenges such as climate change, agriculture in South Africa is in many ways thriving. This crisp and concise book is not all doom and gloom and offers a number of sensible policy recommendations. Myth-busters The book busts many of the myths around South African agriculture that have ripened on the vines of state failure. First off is the widely held perception that 40,000 white farmers own 80% of South Africa's land. 'The magic number of 40,122 commercial farmers is widely quoted as the total number of farmers earning a commercial income from farming. The number comes from the 2017 census of commercial agriculture, but is based only on farmers registered for value-added tax (VAT),' the authors write. 'The 2017 census excludes 92,634 households that practise commercial farming as their main source of income, and a further 109,465 households that practise commercial farming as a secondary source of income. So, in total, there are 242,221 households (black and white) in South Africa that practise some form of commercial farming.' And in 1994, white commercial farmers owned 63% of the total surface area of the country. That's a lot, but it's not 80% and has since declined. Another myth is that commercial agriculture is characterised by large-scale white commercial farmers. 'This myth results from a misinterpretation of the concept of 'commercial' and 'scale'. Commercial agricultural production indicates production beyond subsistence needs, with some, or a major share, of the total production sold to the market,' the book says. And unlike fishing, size does not always matter. 'Land size is not a good indication of the scale of the farming operation. For example, a small irrigation farm of 10ha can deliver millions in turnover, while a 10,000ha Karoo farm with extensive grazing is unlikely to exceed R1-million in turnover per annum.' The big myth centres on land reform and the mantra that only 8% of farmland has been redistributed to black people. I have been covering such issues for years, and the 8% figure has been thrown around now for mor3 than a decade, seemingly stuck in an endless time loop. 'These arguments typically ignore the statistics on the land market… and the fact that black South Africans have been acquiring farmland on their own. Taking account of all the pillars of the land reform programme, it is estimated that 25% of all farmland has been redistributed or land rights have been restored,' the authors assert. This is also close to the 30% goal by 2030. But '… the incorrect presentation of progress with the land reform process is… maliciously used to inflate the argument for expropriation', the authors pointedly note. It is all fodder for the populist and authoritarian MK and EFF parties and the radicals within the ANC's fold. 'These arguments also conveniently ignore the bureaucratic inefficiencies in the government land reform programme, and the many cases of patronage and corruption in the programme that derailed the noble idea of assisting the rightful beneficiaries to acquire land in the market.' The bottom line is that the state is now one of the biggest owners of farmland in South Africa, but much of it lies fallow and weed-strewn. 'There are vast tracts of land in the government books that could be transferred to black South Africans… for the benefit of agricultural progress and land reform success. To date, the process has not been transparent and many of the allocated parcels of agricultural land remain unproductive.' Disappointing The programme under the Proactive Land Acquisition Strategy (Plas) has been disappointing, the authors note, because '… virtually no land has been transferred to individuals'. 'The performance on most Plas farms is disappointing. More than half of the current beneficiaries aren't doing any substantial agricultural production, and the same number were evaluated as having a low capacity to achieve commercial status.' A poor beneficiary selection process — you are either a farmer or you are a cadre — inadequate support, poor infrastructure, a lack of access to the finance that comes with ownership, and rampant crime have dashed the promise of Plas. Among the sensible policies proposed to kick-start aspiring black farmers and bring land back to productive use is the transfer of title deeds to capable farmers to enable them to access finance through a reinvigorated Land Bank. The Land Bank itself should be focused squarely on mortgage finance for land purchases and wholesale finance for production credit, its cost of capital should be below prevailing market rates set by the Reserve Bank, and its funding models need revision. There is a lot more cud to chew in this book, which lays bare many of the uncomfortable truths about South African agriculture while charting a way forward. DM
The Citizen
06-06-2025
- Business
- The Citizen
Ban on Brazil poultry imports adds to SA food insecurity
The country's agricultural sector faces setbacks from disease outbreaks and food insecurity affecting millions of households. While the year began on a positive note for South Africa's agriculture, particularly in terms of exports, this is no time for celebration, said Agricultural Business Chamber of South Africa chief economist Wandile Sihlobo yesterday. 'We face serious challenges in South Africa's agriculture, the most pressing one being foot-and-mouth disease (FMD),' he said. Brazil ban disrupts South Africa's poultry supply 'Another issue we are monitoring is the impact on poultry supplies resulting from the ban on Brazil's poultry imports due to the avian influenza outbreak in that country.' In February, Statistics South Africa noted that the General Household Survey in 2019, 2022 and 2023 indicated households in South Africa continue to experience challenges related to both moderate to severe and severe food insecurity, despite the country being generally food secure at the national level. The report suggests in 2023, about 19.7% (roughly 3.7 million households) experienced moderate to severe food insecurity while about 8% (1.5 million households) experienced severe food insecurity. Sihlobo said there are ways of addressing the concerns of poultry supplies by restricting imports from affected regions, rather than the whole country, a step that Namibia has taken. Call for more targeted import restrictions and better data 'It is also in this perspective that I worry about the constant news flow that suggests South Africa will face a food crisis if we temporarily limit Brazil's poultry imports,' he said. 'It would have been much more helpful to provide regulators with valuable insights and data on imports, as well as potential opportunities for the future so that they could make informed decisions.' ALSO READ: Industry warns of meat price spike and hunger as SA faces supply crisis Sihlobo said a ban on imports was costly and may have implications for jobs in the importing businesses. 'However, this is not a permanent decision and regulators continually assess issues, taking into account the impact of their decisions on the value chain,' he said. 'What we should help them with is valuable data to aid their choices. This is not the time for the economics of Chicken Little. We need poultry imports. South Africa imports roughly 20% of its annual poultry consumption and Brazil is the major supplier – that is clear. 'However, the path now lies in navigating the issue delicately. We must also be extra cautious when outbreaks occur and allow scientists the space to make informed judgments.' Farmers raise alarm over FMD impact and vaccination costs Free state cattle farmer Tewie Wessels said he was very unhappy about the outbreak of FMD. 'What happens at the end of the day, is the farmer and the consumer will come short and take the knock,' said Wessels. A farmer, who agreed to speak anonymously, said there was more to FMD than meets the eye. The farmer said it didn't affect a small-scale farmer with 10 cattle, but large-scale farmers with 1 000 cattle. 'It's a money-making scheme because the only solution at the end of the day is to vaccinate all our cattle.' NOW READ: Will SA run out of beef and chicken? Animal disease hits SA's top producer — what it means for consumers
IOL News
02-06-2025
- Business
- IOL News
What do agriculture experts predict for South Africa's GDP growth in 2025?
There have been mixed reactions from the Agriculture sector and economists on expectations for Tuesday's announcement of the GDP growth for the first quarter of 2025. There have been mixed reactions from the agriculture sector and economists on expectations for Tuesday's announcement of the GDP growth for the first quarter of 2025. Wandile Sihlobo, the chief economist of the Agricultural Business Chamber of South Africa (Agbiz), said, 'One sector that some may be observing is the performance of agriculture, which last year was a significant drag on the economy. The mid-summer drought, delays in harvesting deliveries, and animal diseases were some of the challenges we encountered in 2024.' This year, the conversation should shift somewhat and become more upbeat. 'We have an excellent summer grains and oilseeds season, with the latest production forecasts by the Crop Estimates Committee suggesting a harvest of 17.98 million tonnes, up by 16% from the 2023-24 drought season. Favourable rains and decent area plantings support this,' he said. Sihlobo said South African sugar production for the 2024-25 production season is forecast to recover by 7% year-on-year to 2.09 million tonnes. 'This is also due to favourable weather conditions and the availability of sufficient water for irrigation. We have also received encouraging production data from SA Wine and Vinpro, forecasting South Africa's wine grape harvest at 1.244 million tonnes, an 11% recovery from the exceptionally poor harvest of 2024. We also see encouraging production data from citrus, various fruits, and vegetables. In poultry production, the moderating prices of maize and soybeans should help the industry in its ongoing recovery.' Sihlobo said the one area that remains a concern is the livestock industry, primarily due to the recent outbreak of foot-and-mouth disease. 'We have already seen various trading partners temporarily banning South Africa's beef exports due to the foot-and-mouth disease outbreak. Given the sizable share contribution of the livestock industry to South Africa's agricultural gross value added, its challenges are something worth reflecting on when considering South African agricultural performance.' Francois Rossouw, the CEO of Southern African Agri Initiative (Saai), said the sector is certainly in a recovery period after the excessive rain the country had. 'It was positive to see a healthy jump in our exports in the first quarter of the year, helped a bit by things running smoother at the ports. However, there are big external challenges ahead, especially when it comes to securing good access to important markets like the US and navigating hurdles in promising places like China. So, while there's some positive momentum, the outlook is definitely shaped by these significant trade issues that need sorting out.' Investec economist, Lara Hodes, said that they expect a weak quarter one 2025 reading, following quarter four 2024's 0.6% quarter-on-quarter seasonally adjusted lift, with incoming data readings for the quarter unfavourable. Specifically, industrial production (mining, manufacturing and electricity), which makes up a substantial 19.5% of GDP, declined by -2.9% qqsa in the first quarter, while the trade sector, which makes up around a further 12.5% of GDP, disappointed, she said. Hodes said the outlook is reflective of a still subdued economy, which continues to face a number of challenges, notably on the logistics front. 'Business Confidence is likely to have remained in contractionary territory at around 47, from 45 logged in Q4.24 and Q3.24 respectively. While political uncertainty has eased to an extent and the GNU is expected to endure, domestic growth remains lacklustre while global uncertainty remains elevated, with the tariff situation fluid.' Johann Els, Old Mutual Group Chief economist, said that given the performance of high-frequency data, he expects GDP growth to be negative. 'I project GDP to be - 0.1% in the first quarter of 2025. This compares to a +0.6% growth in the last quarter of 2024. The reason for the negative projection is the severe production performance in the mining and manufacturing sectors. Mining production, with a weight of 4.8% into the economy, was down more than 16% on an annual basis quarter-on-quarter, and similarly, manufacturing production at a bigger weight of 12.5% of the economy was down 9% on an annual basis quarter-on-quarter.' TLU SA general manager, Bennie van Zyl, said that there are so many interchangeables in the Agriculture sector that it is difficult to compare one year to next year. 'This is due to us having late rain, but it could still result in a good harvest. There are also farmers that haven't harvested yield yet due to the late rains. We also have farmers who are not able to sell cattle due to foot-and-mouth disease, so we have to wait and see. I'm cautious to make a prediction on the sector GDP growth.' BUSINESS REPORT Visit:
