Agricultural sector can withstand potential AGOA exit

Proactive groundwork should soften the blow

- MELEUKI NZIMANDE and MEGAN JARVIS

THE hostile disposition of the United States’ (US) President Donald Trump towards South Africa raises serious concerns about the possible exclusion of South Africa as a beneficiary of the African Growth and Opportunity Act (AGOA) which is set for renewal in 2025.

With South Africa consistently ranking as the top AGOA user, as well as the number one African agricultural exporter under AGOA, we look at the possible ramifications for agriculture. A law implemented in 2000 by the US, AGOA, establishes a unilateral trade preference programme, allowing certain exports from South Africa and many other eligible sub-Saharan African countries to enter the US market, duty-free. Under AGOA, two-thirds of South Africa’s agricultural exports to the US benefit from tariff-free treatment. Since its inception, South Africa has exported over $7 billion (R125 billion) worth of agricultural products to the US.

A November 2023 report published by the Brookings Institution, a non-profit organisation based in the US, detailed the potential impact of an AGOA exit for South Africa. The report found that the impact of a loss of preferential market access under AGOA on exports and gross domestic product (GDP) would be small. Their model estimated that, at worst, South Africa’s total exports to the US would fall by about 2.7%, with the biggest losses felt by the food and beverages, the transport equipment, and the fruit and vegetable sectors. Yet, in total, a loss of AGOA benefits would lead to a GDP decline of just 0.06%, the paper argued. Agriculture would constitute just a percentage of that.