As growers begin packing the first citrus fruits destined for the US market this week, US President Donald Trump’s 30% tariff on SA goods — including citrus — comes into effect.
Combined with a looming VAT hike at home, the effect from the different types of taxes holds nothing good for the citrus industry.
“The additional 30% tariff will make SA citrus uncompetitive in the US market,” the Citrus Growers’ Association of Southern Africa (CGA) said in a statement.
The statement comes in the same week as a study done by the National Agricultural Marketing Council (NAMC) and the University of Pretoria (UP).
The study forecasts a 0.21% decline in real GDP and a 0.22% drop in household consumption in the medium term once the half percentage point VAT increase takes effect. The horticulture subsector — including citrus — is expected to contract by 0.23%.
“The 30% tariff will place an additional $4.25 (about R80) per carton on SA citrus in the US,” the CGA said.
Marlene Louw, senior economist at Absa AgriBusiness, concurred: “With other notable southern hemisphere exporters like Chile already sending the bulk of their orange exports (75% or more) to the US during this period, there is limited capacity from other southern hemisphere producers to substitute SA volumes.”
Given the limited sourcing alternatives, the largest portion of the tariff burden is expected to be passed on to US consumers, she said.
According to the latest Absa AgriTrends report, mandarins are particularly vulnerable as Peru and Chile — facing only a 10% US tariff — may divert volumes from the EU into the US, further pushing out SA fruit.
SA is a counter-seasonal citrus supplier to the US, with the primary export window running from July to October. Oranges and mandarins are the main products destined for this market.
While South Africa only exports about 5% - 6% of our citrus to the US, many rural communities in the Western and Northern Cape are heavily dependent on US exports.
— Citrus Growers' Association of Southern Africa
CGA CEO Boitshoko Ntshabele emphasised that this seasonal dynamic means SA growers do not compete with their American counterparts.
“In fact, quite the opposite. Our high-quality produce sustains consumer interest when US local citrus is out of season, eventually benefiting US growers when we hand over at the end of our season,” he said.
In 2024, citrus exports from SA to the US amounted to about R1.8bn. This is 5.4% of the total citrus exports from SA. For the Western Cape citrus-producing area, the only area that has access to US markets, the share of total exports to the US amounted to about 20% for the same period.
“The US demand for SA's quality citrus is clearly shown by the increase in exports to the US since 2017. The amount of citrus exported to the US has almost doubled since then, to more than 6.5-million cartons.”
In light of the latest developments, the CGA has urged the government to prioritise immediate negotiations with the US
to secure tariff reductions or exemptions for citrus.
“This is urgently needed to avoid job and revenue losses in the citrus industry, SA’s largest agricultural export industry,” the CGA said in a statement.
“While SA only exports about 5%-6% of our citrus to the US, many rural communities in the Western and Northern Cape are heavily dependent on US exports,” the statement reads.
According to CGA chair Gerrit van der Merwe, a prime example is Citrusdal, where exports to the US form the economic heart of the town.
“The severity and immediate nature of the impending tariffs could mean that towns like it now face either increased unemployment or maybe even total economic collapse. There is immense anxiety in our communities,” he said.
He noted that 35,000 jobs in SA and 20,000 jobs in the US are linked to SA-US citrus trade.
But the export headwinds are not the only storm clouds gathering.
Back home, SA farmers now face the additional pressure of a VAT increase, set to climb by a 0.5 percentage point from May 1, and another 0.5 percentage point in the next financial year, bringing VAT to 16% by 2026/27.
According to the study by the NAMC and UP, the increase will have far-reaching consequences on both agricultural output and household welfare.
SA growers do not compete with their American counterparts. In fact, quite the opposite. Our high-quality produce sustains consumer interest when US local citrus is out of season, eventually benefitting US growers when we hand over at the end of our season.
— Boitshoko Ntshabele, CGA CEO
The model forecasts a 0.21% decline in real GDP in the medium term and a 0.22% drop in household consumption, as the VAT hike erodes disposable income.
Within the agricultural sector, all subsectors are expected to contract, with forestry (minus 0.4%), livestock (minus 0.26%), field crops (minus 0.24%), and horticulture (minus 0.23%) — which includes citrus — all set to shrink.
Though the government is targeting R30bn in additional VAT revenue, the model projects a net gain of just R20bn, due to second-round effects and lower tax collections elsewhere in the economy.
The second scenario in the study models the proposed 6.83% increase in excise duties on alcoholic beverages, which is expected to raise R1bn in additional revenue.
While the overall macroeconomic impact is marginal — with real GDP falling by just 0.01% — the effect on the wine and spirits industry is significant.
Output in the beverage sector is projected to decline by more than 0.3%, with the wine and brandy subsectors facing an average 1.5% drop in sales.
“This could place up to R150m in wage earnings at risk within the industry, along with potential indirect losses in the agricultural and retail sectors,” the study read.
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