South African citrus growers are getting a huge boost thanks to the African Growth and Opportunity Act (known as the Agoa Agreement) – and it’s giving them a competitive advantage in the lucrative American market.
Justin Chadwick, head of the Citrus Growers Association, says South African citrus is highly regarded worldwide thanks to its quality, and the USA is no exception.
“Over the past few years we have been exporting more and more of our citrus to this market and the Americans are eager to buy our oranges, tangerines and grapefruits. Exports to the USA almost doubled from 60 000 tonnes in 2020 to 112 594 tonnes last year, generating R1.6 billion in export earnings and supporting thousands of jobs,” says Chadwick.
The notable progress is mainly attributed to Agoa, which ensures preferential market access to various South African products – including citrus. Thanks to Agoa, citrus from South Africa is not subject to existing US tariffs and this helps to give them a much-needed market advantage.
“And we really need this market advantage,” says Chadwick.
“South Africa competes with other countries in the Southern Hemisphere, such as Peru and Chile, for shelf space in the American summer months. These countries already have their own advantage. Their citrus comes into the US duty free and thanks to shorter transport times to the US, there are lower costs through the supply chain.”
Chadwick says it is important to bear in mind that Agoa is not a trade agreement. This is a law that was passed in the US Congress in 2000.
“This leaves South Africa more vulnerable because traditional trade agreements can be negotiated in such a way that they are more difficult to dissolve; with Agoa this is not the case,” he warns.
It is expected that the agreement with South Africa will be renewed for another ten years when it expires in 2025, but there is increasing concern that the US Congress will possibly amend the renewal in such a way that South Africa is no longer eligible.
If South Africa were to be kicked out of Agoa, the local citrus industry – and several other sectors – would undoubtedly suffer.
“Almost R2 billion in export earnings will be at risk and thousands of rural jobs will be affected. At this stage, due to phytosanitary restrictions, only citrus from the Western and Northern Cape is shipped to the USA.”
In these two provinces alone, the citrus industry supports around 35,000 jobs at the farm level, with additional jobs throughout the value chain. Another 20,000 jobs in the US are also linked to the exports.