- New US tariffs have deprived South Africa of preferential access to the sugar market under AGOA.
- Cheaper imports from Eswatini and overproduction in Brazil and India are reducing the competitiveness of South African sugar.
- The crisis is hitting small farmers hardest, as they have neither financial reserves nor the tools to compete.
- Job losses in the sector threaten to increase poverty and social problems in local communities.
Challenges of tariffs and cheap imports
Sugar cane farmers in South Africa faced a double crisis. President Donald Trump has imposed 30 per cent tariffs on imported sugar, depriving the country of its previous privileges under the African Growth and Opportunity Act. Previously, under AGOA, South Africa could ship up to 24 000 tonnes of sugar a year duty-free to the US market. The new regulations mean the loss of access to the premium market, which accounted for only 5% of exports, but played a key role through higher prices and stable revenues.
At the same time, the local sector is facing competition from cheaper supplies from neighbouring Eswatini. Global overproduction in Brazil and India is pushing prices down further, making South African sugar less competitive in other markets as well. As a result, producers have been hit from both the export side and the domestic market, leading to worsening financial problems for many farms.
The economic and social impact on the sector
South Africa’s sugar industry is worth about 25 billion rand, the equivalent of nearly US$1.42 billion, and provides employment for more than 300 000 people. The structure of the sector reflects historical inequalities, with around 26 000 small growers operating and around 1 100 large farms. It is the small producers who are most affected by the crisis, as they do not have sufficient financial reserves or tools to compete with imports.
One long-standing plantation owner in KwaDukuza has announced the need to lay off around 20 workers, exacerbating problems in the local community. The downsizing could lead to an increase in poverty, malnutrition and a lack of prospects for entire families making a living on the plantations. The South African Cane Growers Association is calling on the government to negotiate a new trade agreement with the US, but experts stress that even if negotiations are successful, the impact will not be felt during the current season.
