Wandile Sihlobo: China is no replacement for the US in SA agri

The primary focus for South African trade this week is on United States policy and tariffs. In this interview with BIzNews, Wandile Sihlobo, the Chief Economist of the Agricultural Business Chamber of South Africa (Agbiz), warns that South Africa “cannot just substitute the US” and that “it's really about listening to what the US puts on the table, about what they demand, and see what South Africa can continuously improve on the offer that we have”. He lists all the reasons why China should not be seen as a replacement for the US market. He further cautions that trade with BRICS countries should also not be viewed as a replacement for the US or other markets. "We can't because…the US is about 4% of our agricultural exports, but the African continent, which is largely not part of the BRICS, accounts for about half of South Africa's agricultural exports. The EU accounts for about 19% of South African agricultural exports.” Sihlobo also gives an overview of major developments in the agriculture sector over the past 31 years, and lists all the steps needed to keep the sector on a positive footing.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.The auditorium doors will open for BNIC#2 on 10 September 2025 in Hermanus. For more information and tickets, click here..Watch here.Listen here.Edited transcript of the interview.Chris Steyn (00:01.548)The primary focus for South African trade this week is on United States policy and tariffs. We speak to Mr. Wandile Sihlobo, the Chief Economist of the Agricultural Business Chamber of South Africa, Agbiz. Welcome, Sir. Wandile Sihlobo (00:22.026)Thanks for having me on Chris. Chris Steyn (00:24.962)Time seems to be running out. What strategy does the South African government have in place to deal with a tariff fall-out? Wandile Sihlobo (00:38.838)Chris, I think the point I would start off with is to say for us in agriculture, we are export oriented. I mean, the South African agricultural sector exports roughly $13.7 billion of agricultural products a year to the world market. At least that's in 2024. If you think then about how big the US is in that 13.7 billion US dollars, it's about roughly half a billion, about 4% of our exports go to the US. And I know some people may think, OK, then that's relatively small or shouldn't be worried a bit about it. But it's concentrated in a few important industries. You have citrus, nuts, wine, table grapes being amongst those products that are there. And of course, our friends in the ostrich industries, they are all amongst that 4%. So that market is super important to them. But it's also super important in terms of the provinces. You have the Western Cape and Mpumalanga, all of these provinces that are exposed in the production of these products. That becomes important. So we have to work to continuously accessing the U.S. market. Of course, we know that the South African government did engage with the US at the end of June in Luanda to present the South African offer. That offer that they presented benefited from the inputs of the private sector, the miners, the agriculturalists, autos, and many others; they made their input on that. It's unclear then how much of that was taken into consideration leading up to announcements that we had seen on the 7th of July coming out of the White House. The very hope then is to say where to now. Where to now, it's really about listening to what the US puts on the table about what they demand and see what South Africa can continuously improve on the offer that we have. Because we cannot just substitute the US. It remains super important to us in agriculture. And I think that if you talk to our friends in the mining industry, in the auto industry and the others, you will get a similar message of saying, OK, let's go back to the drawing board and improve what we have… Wandile Sihlobo (02:45.204)…so that we continue to secure the US market because of its value. Chris Steyn (02:50.094)Now people have stated repeatedly that we should diversify and there many people who feel we should just tell the US to go, there's China. How realistic is that? Wandile Sihlobo (03:04.054)I mean, I hear a lot of people would say, look, for example, you people in agriculture, why are you sweating about the 4%? Why can't you go to other markets and switch and look elsewhere in the world? But the reality is that there's a number of things there. One, we cannot just switch a market overnight and take up all of the things and go to the next market because there's a supply chain dynamics and the relationship infrastructure and all of that that is built over the years so that you are able to export to one country. But the second aspect is also about whether the other markets really do have a better terms of trade, better tariff arrangements. And I can tell you this, in China, talking to us that are in South African agriculture, we continue to face higher tariffs in China. If you are sitting in the Western Cape and thinking about exporting wine to China, you face tariffs of between 14 and 20 percent. If you are in Mpumalanga thinking about exporting macadamia to China, you face tariffs of about 12 percent. So switching to China is not as easy because we don't have also a trade agreement with China. And even if we were to have the trade agreement with China, I think that that will involve a lot more of firstly dealing with the logistic and establishing the business dealings on that. Even if we were to go that path, the strategy that we are looking at as South African agriculture is rather export diversification on building and opening up as many export markets as we can. If you talk to anyone that is in the fruit industry, they will tell you that over the next couple of years, next five years or so, the South African fruit production will expand by plus 30% on just the trees that are already planted. Now that produce will not be for the domestic market. We already export about half of what we produce in South Africa. So much of that produce will need to go to the export markets. So the export diversification should continue, but not as a replacement to the US, but on building up the room so that much of the products that we will be producing will go to those new export markets. And I think the export diversification should be looked at in that way. And I mean, you and I have talked in previous conversations… Wandile Sihlobo (05:17.394)…that the South African government still has over 2 million hectares of land to be planted. If you consider then even that land, when it is fully planted and it is now in production, much of the produce that will come out there will need to go somewhere, which again builds on this story of the export diversification. But I would be quick to say the US, no one is aiming and looking at replacing it, but rather the diversification is really building on the capacity to export elsewhere while we should mend relations with the US because we have those business arrangements and it is an important market for us. It may look like 4% but it is key to certain sub-sectors. Chris Steyn (05:57.23)Now BRICS is being held in Brazil at the moment and US President Donald Trump has chosen this time to warn that an additional 10% tariff can be levied on any country aligned with anti-American policies of BRICS countries. What do you think of that? Wandile Sihlobo (06:23.338)I mean, look, BRICS grouping, looking at it purely from an agricultural perspective in South Africa at this moment, it lacks the economic ambition. It is an important grouping of countries. When you're looking at it, it accounts for roughly half of global agricultural trade. But if you ask me then and say, look, in the 13.7 billion dollars of agricultural exports of South Africa to the world in 2024, how much of that actually go to the BRICS countries? The BRICS countries account for less than 10 percent of our agricultural exports. The reason for it is not so much that BRICS doesn't import food. The BRICS grouping, just the original member countries before now the addition of the other countries were spending a year over 200 billion US dollars importing food products from the world market. But South Africa was still a very small part of that. And of course, China was a big part of those imports as well as India. The key issue that we face in the BRICS countries is are the higher tariffs, the ones that I've just mentioned in China, but in India, you get the similar matter whereby you are confronted by tariffs and you are also confronted by what we call the phytosanitary barriers. Those are the biological way of how you grow and handle your products, how you handle your meat products and all of those things. And as a result, they limit the trade in the scoping. And this is not the story of only South Africa. If you look at the intra trade in agricultural products in BRICS, it's still fairly low. The number of countries that end up exporting to the BRICS are the ones that are outside of that grouping. And my sense is that for South Africa and even some of the exporting countries, Brazil and the others, I think the wish is for us in BRICS to come up with something that I would call a BRICS agricultural trade agreement or whatever protocol that would actually deal with lowering the tariffs and then encourage trade in this grouping. Because if we don't do that… Wandile Sihlobo (08:27.508)…will continue then getting all of the political headwinds that you are experiencing, either from the US president or elsewhere. But some people, as they have often said to me, that we get too much trouble from BRICS, but we are not getting paid for it. And I do think that to a certain extent, they are right about that. And we have to argue for the members of BRICS to deepen trade. And they can do that by formally coming up with the BRICS Agricultural Trade Agreement. But Chris, I will be quick to say, even if we do come up with the BRICS Agricultural Trade Agreement, that is not and should not be a replacement of the US or the other markets. And there's always been this tone of saying, okay, if we dip in BRICS, then we can lessen the influence of Western world. We can't because I've said that the US is about 4% of our agricultural exports, but the African continent, which is largely not part of the BRICS accounts for about half of South Africa's agricultural exports. The EU, accounts for about 19% of South African agricultural exports. So you have about two thirds of your export markets being the EU as well as the African continent. So whatever we do either in BRICS or deepening our exports in China, India, and elsewhere, it must be an addition, not a replacement of what we are trying to do in here. Because again, we are an export-oriented agricultural sector that is looking to advance in a number of markets..Read more:.Pollak after last night’s focus on SA in updated Trump Tariffs: 30% + 10% BRICS surcharge from 1 Aug.Chris Steyn (09:55.47)What have been the biggest challenges for agriculture over the past 31 years? Wandile Sihlobo (10:04.468)I mean, look, I would say when I'm looking at the South African agricultural sector at this moment and say the biggest thing that all of us have to focus on is exactly on the advancing of the export markets. Because I mean, you look at the sector 31 years into democracy, it's more than double in value and in volume terms. And if you again look at the catalysts of that growth, the one catalyst that been the advancements that the farmers have done by investing in better technology, mechanical, but also utilising better genetics and better seed cultivars to grow the farming site at a farm level. But the second catalyst has been the opening up of the export markets. You go back to year 2000. In year 2000, our agricultural exports were around 2 billion US dollars. We are now close to 14 billion US dollars. And in a period between year 2000 and all the way to 2012 or so, we opened up a number of trade agreement, which is what has enabled us to have that access in the EU, which accounts for 19% of our agricultural exports, the African continent, roughly half. And of course, we have some markets in Asia, as well as the Middle East. And I think going forward, we need then to be opening up as many of those export markets as we can, so that whatever expansion we will continue to have at the production level is able to reach out the export markets. And Chris, I must say, as long as I'm emphasizing this export story, it is not really at the expense of a domestic market, because before we export anything, we always consider the needs of the domestic market to say in our food balance of any other commodity, how much is required for the South African market. And then the exports are usually the surplus of that, because some people may say, look, there's this poverty in South Africa. And you guys are busy talking about the exports. How about we first feed our people? The poverty that exists in South Africa is more of an income poverty challenge. It's not so much about the prices per se. The reason South African products are that competitive in the export markets is because of better prices and the better quality. We are amongst the cheapest when you're thinking in general about where our products are priced in the world. But the reason then we still have millions of people going to… Wandile Sihlobo (12:24.49)…bed without food. It's really the fact that they have no income, which is why the income support to households that the government usually provides, that does help. But we will also need to deal then with the issues of making sure that people can find work and able to have a little bit of an income and then afford food to deal with food security. But on agriculture purely, that is the issue of export. The other aspect, though, Chris, of saying what are some of the most important things we should be working on? For me, it will be the second in addition to exports, biosecurity. You probably have seen Minister John Steenhuisen and the others talking about Foot-and-Mouth disease, Avian Influenza. That speaks to animal health as well as plant health. Because for us to continue to access these export markets, we have to ensure that we don't have as frequent outbreaks of animal diseases or frequent outbreaks of plant diseases. And that process of improving that involves then reviving our capacity to produce vaccine. We used to be able to produce vaccines in South Africa. Today we're an embarrassment. We import vaccines from Botswana and the other countries. Not that we can't import from Botswana, but as a country that prides ourselves as a leading agricultural exporter in Africa, how can we not be able to produce the vaccines? And I think for me, the capacity that we lost through State Capture and the other things at OPP, we need to revive that capacity and invest more in that. That would be the other aspects that I would focus on, animal health and plant health. And of course, logistics and the other things enable them those exports, but the export area is super important for the growth of our sector. Chris Steyn (14:03.768)What are the biggest positive developments in agriculture at the moment that you can share with us? Wandile Sihlobo (14:11.54)I mean, look, this sector is actually sitting in a positive and excellent path at this moment. Yes, we're struggling with the Foot-and-Mouth disease. Vaccination had started with those imported vaccines, but that is one subsector of agriculture. But if you look away and you talk to people that are in fruit production or wine production in the Cape and the other areas, they will tell you that we are expecting now a double digit increase in a number of commodities on a year on year basis. And you drive up north in South Africa, you talk to anyone that is in the grain industry or in the sugar cane industry, they will tell you that the production also is recovering. So we are in a year that I would say it's a recovery year, but a recovery that is uneven. Those people that are in livestock will continue to suffer because of these animal diseases. Because the challenge about animal diseases, Chris, is also that we are in industry that even in red meat we are still in a path where we are building up our capacity to export as much red meat as we can. But with the frequent outbreaks of these diseases, we get temporarily closed in those export markets. Last year, for example, we're just recovering and seeing an increase in our exports of red meat. Now we are back to square one to like the stage we're in in 2023. So that weighs on that. But outside of that, thinking about the field crop, thinking about the fruit, vegetables and wine, I would say we are seeing a recovery. So that for me is a positive recovery. But not only just for the farmers, I've been thinking about the employment conditions also in agriculture. Employment conditions are looking well. We still have at least above 920,000 people that are working at a primary level of agriculture. At a value chain level, we have over 350,000 people that are in the value chain. So if you consider those aspects, and you consider the fact that we can still expand agricultural production in the new land. I do think that yet again, the point that we have made repeatedly that we can still add close to a million jobs in agriculture. That remains for me, really a possibility that can happen. But all of that and these good news will happen if we do a couple of things. Because, Chris, there are a few things we need to continue to do here to keep the sector in this positive footing. Wandile Sihlobo (16:31.074)One is strengthening the biosecurity animal and the plant health. Two, opening up these export markets as much as we can. Retain what we have in the US and elsewhere, but also open up in other markets. Three, deal with rural crime. Stock theft is a big thing in South Africa, and we really need to deal with the rural crime, and the police must assist on that. Four, I would say the municipalities must help us a great deal on improving the logistics, the roads, the water and all of the service delivery is something that is actually needed on that. Those for me will be some of the key aspect that I would say we start off with. And of course, in addition to the issues of water, stable electricity, but those are the fundamentals that would enable us to see the agricultural sector are growing. And I will close and overlay that with ensuring that we also implement the Agriculture and the Agro-Processing Master Plan. This is a plan that has been in place and mapped up about how to grow the South African agriculture. We don't all agree with it, but I think it is a lot more points of commonality between labour, farmers, agribusinesses, the government and many other stakeholders. And that should be the driving force that we should actually say, where do we agree? Can we do those things and put them in place? Then we build on this momentum that we already have in the sector to grow it. Chris Steyn (17:54.904)Thank you. That was Mr. Wandile Sihlobo, the Chief Economist of the Agricultural Business Chamber of South Africa speaking to BizNews. And I'm Chris Steyn. Thank you, S§ir.

Wandile Sihlobo: China is no replacement for the US in SA agri

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