Mercosur-EU trade deal threatens South Africa’s agricultural export competitiveness

SOUTH AFRICA – The pending trade agreement between the European Union and the Mercosur bloc could increase competition for South African agricultural exports, which currently account for nearly 20% of the country’s foreign agricultural sales, according to Wandile Sihlobo, Presidential Envoy on Agriculture and Land.

To begin with, the EU-Mercosur deal would remove tariffs on approximately 90% of trade in goods between the two regions over up to 12 years, with Mercosur agricultural exports entering the EU under gradually increasing quotas.

The bloc includes Argentina, Brazil, Paraguay, Uruguay, and Bolivia. “Growing competition from South America in the EU market is something we must watch closely following this deal,” Sihlobo noted.

South Africa’s agricultural exports to the EU primarily consist of higher-value products, including citrus, fruit juices, wine, avocados, mangoes, apples, pears, and berries.

On the other hand, Mercosur countries currently focus largely on grains, oilseeds, and beef. However, Sihlobo warned that broader competition could still increase over time. “The issue of generally increased competition, even if not at the initial stages, underscores the point that South Africa must consistently seek new export markets.”

South Africa exports roughly half of its agricultural production, valued at US$13 billion in 2023, with domestic output expected to rise further.

Therefore, Sihlobo identified BRICS nations as a priority for future trade growth. “The original BRICS members only account for 8% of South Africa’s agricultural exports. Yet, the BRICS countries are big agricultural importers.”

The primary barriers hindering expansion into BRICS markets include higher import tariffs and stringent phytosanitary requirements.

Furthermore, growing protectionism in traditional markets presents additional challenges, including EU farm protests and the ongoing citrus dispute between South Africa and the EU at the World Trade Organization.

Consequently, South African exporters face higher compliance costs and extended inspection delays.

Sihlobo emphasized that diversification should complement, rather than replace, existing trade relationships. “The new markets are not meant to replace the EU and other existing markets; they should be a means of diversification.”

For MEA fresh produce stakeholders, the South African case illustrates a broader truth: reliance on any single export market creates vulnerability.

Therefore, proactive diversification into BRICS, Gulf, and African markets, coupled with investment in phytosanitary compliance, offers a sustainable hedge against shifting global trade dynamics.

The window for action is narrowing as the EU-Mercosur deal moves toward finalization.

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