JOHANNESBURG: Walk down the aisles of a Trader Joe’s or Whole Foods Market in the United States and chances are many of the piles of oranges, lemons, limes and grapefruit will be labelled “Produce of South Africa”.
They have become a staple in the United States – the world’s largest citrus importer – especially during the off-season summer months when in the southern hemisphere the South African winter harvest is at its peak.
But now, those supplies are threatened by a potential 31% tariff that President Donald Trump has said will go into effect on July 9, adding that he won’t consider delaying the deadline.
The looming levy has cast a cloud over the sunny valleys of Citrusdal, a tiny, serene farming town nestled amid rolling green hillocks in the Western Cape area of South Africa. Tucked into the base of the Cederberg mountains about 100 miles north of Cape Town, the area is dominated by citrus farms, giving the town its name.
For a quarter century, the juicy produce of the area’s orchards – owned over generations by people mostly of Afrikaner heritage – has journeyed thousands of miles to make it to the fruit bowls of American homes.
But this season is different. Now, Trump’s tariff policies are threatening the very same White farmers to whom he offered asylum, falsely claiming that they are targets of a genocide and that their land is being seized by the state.
The levies are likely to have a debilitating impact on their operations, the livelihoods of the thousands of people they employ and the country’s 35 billion-rand (US$2bil) citrus industry – one of the rare bright spots in South Africa’s stagnant economy.
“Our business is built for the US market, and for about 25 years we’ve planted, we’ve picked, we’ve planned accordingly,” said Gerrit van der Merwe, the chief executive officer of family owned ALG Estates, as he stood in his 2,500-acre farm donning a gray puffer jacket, jeans and a pair of Veldskoen – leather footwear made famous by Afrikaner farmers.
South Africa is the world’s second-largest exporter of citrus fruits, behind Spain. Trump’s tariffs are now threatening to price farmers in the Western Cape – the country’s prime area for the produce – out of a key market, leaving them to navigate an uncertain future.
Citrus growers have been preparing for a new reality. Over recent weeks, some orchards have been in a panicked rush to get their produce to the US market ahead of the looming deadline.
Van der Merwe’s farm, whose packing season began May 1, has been working on getting as much fruit as possible on vessels and shipped, he said.
But longer term, the damages could be more devastating and may push farmers to shrink orchards that are specifically developed to meet demand in the United States, said Van der Merwe, whose farms employ 2,000 people and have been managed by his family for eight generations.
“We’ve built our supply chains, we’ve built our supermarkets, we’ve built our importing companies on that side, so we’ve been trying to own that market to make sure that we are very, very efficient, and that we can send the maximum fruit into that market,” he said.
“For us, we’ve become dependent on the US market, but also the US consumers have also become dependent on our fruit.”
The United States is the second-largest destination for South African exports after China, accounting for more than US$20bil last year. Major exports include precious stones and metals, organic chemicals and edible fruit.
Although the nation sends just 5% to 6% of its citrus produce to the United States, the exports had been expected to rise about 7.7% to seven million cartons this season, and the industry had ambitious plans to grow that share.
The US duties will be the latest blow to the industry that employs about 140,000 people at the farm level. A rare South African export success, it has been threatened by the crumbling domestic infrastructure at state-owned rail and ports operator Transnet SOC Ltd, that has been blamed for delays and dwindling shipments of key commodities.
Should the higher tariff “take effect, it would make our citrus completely uncompetitive in the US market,” said Boitshoko Ntshabele, chief executive of the Citrus Growers’ Association (CGA). The CGA estimates that logistical inefficiencies already cost the sector 5.3 billion rand a year.
South Africa is among countries slapped with the steepest tariffs, placing it at an immediate disadvantage.
To mitigate the impacts of the tariffs, growers may opt to reroute their fruit to other markets, including Europe, but that could undermine the stability in those markets and have “a knock-on effect on the entire Southern African citrus industry,” Ntshabele warned.
The sector is “looking to add about 100 million export cartons by 2032, and therefore continuously working on diversifying exports markets,” he said.
Europe is already among the biggest citrus export markets for South Africa. The industry is locked in a dispute over the European Union’s regulations, which mandated stringent cold-treatment measures and additional inspections of South African citrus following cases of fruits affected by the false codling moth. — Bloomberg
