South Africa’s wine, citrus and fruit exporters could face growing pressure in Europe as the European Union moves closer to a major new trade deal with South American countries.
The warning comes from Wandile Sihlobo, South Africa’s Presidential Envoy on Agriculture and Land and chief economist of the Agricultural Business Chamber of South Africa.
He said the proposed EU-Mercosur agreement could increase competition in one of South Africa’s most important export markets.
The Mercosur bloc includes Argentina, Brazil, Paraguay, Uruguay and Bolivia.
The agreement would gradually remove tariffs on around 90% of goods traded between the EU and Mercosur countries over roughly 12 years.
Citrus and wine exports in the firing line
The EU currently accounts for nearly 20% of South Africa’s agricultural exports.
South Africa mainly exports higher-value products to Europe, including citrus, wine, fruit juice, avocados, berries, apples and pears.
“Growing competition from South America in the EU market is something we must watch closely following this deal,” Sihlobo warned in his blog.
Brazil and Argentina currently focus more heavily on grains, oilseeds and beef exports.
However, Sihlobo said the broader impact of increased competition could still affect South African producers over time.
“The issue of generally increased competition, even if not at the initial stages, underscores the point I have made before that South Africa must consistently seek new export markets,” he said.
South Africa urged to diversify trade
South Africa exported roughly half of its agricultural production in 2023, valued at around US$13 billion.
With local agricultural production expected to grow further, Sihlobo said the country would need access to more export destinations.
He stressed that diversification should not replace existing relationships with Europe.
“The new markets are not meant to replace the EU and other existing markets; they should be a means of diversification,” he said.
Sihlobo identified Brics countries as a major opportunity for future agricultural exports, despite barriers such as tariffs and phytosanitary restrictions.
The warning also comes amid ongoing trade tensions between South Africa and the EU, including the long-running citrus dispute currently before the World Trade Organization.
