Agricultural Policy Monitoring and Evaluation 2024

23. South Africa

Main findings

Support to agriculture

Support to producers in South Africa amounted to 2.5% of gross farm receipts in 2021-23, down from 7.4% in 2000-02. Market Price Support (MPS) and support for variable input use without constraints are the largest components of producer support, with the share of potentially most-distorting gross producer transfers amounting to 95% in 2021-23, slightly lower than the average of 97% observed in 2000‑02. Overall, domestic prices for most commodities align with world prices. Sugar is an exception, mainly due to import tariffs, leading to single-commodity support worth 20% of gross receipts. Most direct payments are provided as input subsidies (fuel tax refund) or as investment subsidies directed towards small-scale farming.

Support for general services to the sector (General Service Support Estimate, GSSE) has declined relative to the size of the sector. The GSSE averaged 1.1% of the value of agricultural production during 2021-23, below the 3.9% observed in the early 2000s, and below the average of 2.3% observed for the 54 countries covered in this report. Most payments to general services go to the agricultural knowledge and innovation system, and to infrastructure (mainly related to land reforms, irrigation, and other infrastructure). Support in these categories targets an enabling environment for small-scale farming, which became a priority following land reforms. Expenditures for inspection and control are also an important and growing element of the GSSE.

Total support to the sector fell in relative terms from an average 0.6% of Gross Domestic Product (GDP) in 2000-02 to 0.2% in 2021-23, with more than two-thirds of the support transferred to individual producers.

Key recent policy changes

The Agricultural Products Standards Amendment Bill was approved by parliament and entered into force on 3 April 2024. The bill makes provisions that allow the minister to assign independent entities to perform certain audit and inspection functions for quality control of agricultural products.

The Department of Agriculture, Land Reform and Rural Development (DALRRD) in partnership with the Land Bank established the ZAR 1.2 billion (USD 65 million) Agro Energy Fund (AEF) in 2023. The AEF is a blended finance programme that provides financial support to acquire renewable energy assets to alleviate the burden of load shedding on agricultural day-to-day operations. The fund targets farm operations that are energy intensive and has a sector-specific focus on dairy farming, poultry and piggeries, irrigated commodities, and on-farm processing.

The Preservation and Development of Agricultural Land Bill was passed by the National Assembly on 5 December 2023 and approved by the National Council of Provinces on 9 May 2024. The bill outlines the principles for the management of agricultural land and aims to secure the protection of high-potential agricultural land.

Assessment and recommendations

• Agricultural output growth over the past decade has predominantly been driven by increased use of intermediate inputs, while total factor productivity (TFP) growth has lagged behind the world average. In addition to electricity shortages, transport infrastructure and logistical barriers, environmental factors are an important constraint to sustainable productivity growth. In particular, nutrient balances are very low and even negative in the case of nitrogen, suggesting that low soil fertility is a problem across South Africa. The government should focus on improving soil fertility though conservation practices and other measures to strengthen sustainable productivity growth.

• Overall support is low, but the support that remains is highly market distorting and may be harmful to the environment. MPS for sugar remains high, and the government should consider reducing the import duty. The diesel rebate accounts for a large share of budgetary support and should also be phased out. It could be replaced with credit for working capital that is not input-specific, while providing targeted cash transfers and social welfare assistance to ease the transition for low-income and vulnerable farm households.

• Carbon taxes in place since January 2022 under the Carbon Tax Act have not been applied to agriculture. South Africa could consider extending the scope of the carbon tax to progressively include agricultural emissions, along with social safety-net policies to offset potential income losses for poor households and producers caused by this change. Furthermore, a sectoral emissions target for agriculture could be established under the Climate Change Bill once it becomes law, as such targets can be helpful for focusing mitigation efforts and measuring progress.

• Budgetary spending continues to be oriented towards land reform and its beneficiaries (mainly smallholders and emerging commercial farmers) in the form of research and development, knowledge transfer, and infrastructure. The government should focus efforts on strengthening land reform delivery instruments, providing adequate and timely funding for economically viable farm businesses, and tailoring support programmes to the needs of emerging commercial farmers.

• If support programmes are to help emerging entrepreneurs become commercial producers, they must draw upon the experiences of successful commercial farmers. Specifically, public-private partnerships and industry associations can help to strengthen programmes and services offered by public authorities and support the transfer of know-how to new entrant farmers.

• Expropriation of property without compensation remains a concern. Despite the failed attempt to amend the constitution for this purpose, uncertainty about property rights remains, and could undermine investor confidence in the sector.

• The pace of land reform should be linked to developing an enabling environment for its beneficiaries, including education, training, infrastructure, and access to modern farming equipment, finance, and markets. Particularly important is upskilling public-extension officers and providing them with resources to service rural communities and emerging commercial producers.

• Capacity in the private sector and learning and training institutions can be leveraged to revitalise public-extension services. Without these developments, land redistribution cannot deliver the expected outcomes, such as improving the welfare of rural black populations, increasing food security in rural areas, and developing a viable commercial sector.

• Recent outbreaks of foot-and-mouth disease (FMD) and highly pathogenic avian influenza (HPAI) underscore the need to strengthen the country’s biosecurity system. Temporary closures of export markets are costly for the agricultural sector, and the government should work closely with the private sector to address weaknesses in surveillance, strengthen livestock health, and build local capacity for animal disease control. This will be essential to achieving South Africa’s ambition of expanding its livestock exports and establishing itself as a reliable supplier in world markets.

Development of support to agriculture

Figure 23.1. South Africa: Development of support to agriculture

Table 23.1. South Africa: Estimates of support to agriculture

Million USD

	2000-02	2021-23	2021	2022	2023p
Total value of production (at farm gate)	6 824	24 420	25 214	25 366	22 680
of which: share of MPS commodities (%)	74.75	77.03	77.25	79.20	74.65
Total value of consumption (at farm gate)	6 000	20 500	20 262	20 397	20 842
Producer Support Estimate (PSE)	480	618	635	816	404
Support based on commodity output	441	449	458	644	247
Market price support¹	441	449	458	644	247
Positive market price support	453	449	458	644	247
Negative market price support	-12	0	0	0	0
Payments based on output	0	0	0	0	0
Payments based on input use	36	169	177	172	157
Based on variable input use	25	137	139	138	134
with input constraints	0	0	0	0	0
Based on fixed capital formation	11	31	38	34	22
with input constraints	0	0	0	0	0
Based on on-farm services	1	1	1	1	0
with input constraints	0	0	0	0	0
Payments based on current A/An/R/I, production required	3	0	0	0	0
Based on Receipts / Income	3	0	0	0	0
Based on Area planted / Animal numbers	0	0	0	0	0
with input constraints	0	0	0	0	0
Payments based on non-current A/An/R/I, production required	0	0	0	0	0
Payments based on non-current A/An/R/I, production not required	0	0	0	0	0
With variable payment rates	0	0	0	0	0
with commodity exceptions	0	0	0	0	0
With fixed payment rates	0	0	0	0	0
with commodity exceptions	0	0	0	0	0
Payments based on non-commodity criteria	0	0	0	0	0
Based on long-term resource retirement	0	0	0	0	0
Based on a specific non-commodity output	0	0	0	0	0
Based on other non-commodity criteria	0	0	0	0	0
Miscellaneous payments	0	0	0	0	0
Percentage PSE (%)	7.37	2.49	2.50	3.19	1.77
Producer NPC (coeff.)	1.08	1.02	1.02	1.03	1.01
Producer NAC (coeff.)	1.08	1.03	1.03	1.03	1.02
General Services Support Estimate (GSSE)	264	285	323	271	261
Agricultural knowledge and innovation system	146	111	129	110	93
Inspection and control	39	70	70	58	82
Development and maintenance of infrastructure	78	85	103	85	68
Marketing and promotion	0	19	21	18	17
Cost of public stockholding	0	0	0	0	0
Miscellaneous	0	0	0	0	0
Percentage GSSE (% of TSE)	34.04	31.71	33.70	24.93	39.24
Consumer Support Estimate (CSE)	-354	-403	-357	-590	-263
Transfers to producers from consumers	-351	-391	-342	-585	-247
Other transfers from consumers	-18	-12	-16	-6	-16
Transfers to consumers from taxpayers	0	0	0	0	0
Excess feed cost	14	0	0	0	0
Percentage CSE (%)	-6.08	-1.94	-1.76	-2.89	-1.26
Consumer NPC (coeff.)	1.07	1.02	1.02	1.03	1.01
Consumer NAC (coeff.)	1.06	1.02	1.02	1.03	1.01
Total Support Estimate (TSE)	745	903	957	1 087	665
Transfers from consumers	368	403	357	590	263
Transfers from taxpayers	394	512	616	502	418
Budget revenues	-18	-12	-16	-6	-16
Percentage TSE (% of GDP)	0.56	0.22	0.23	0.27	0.18
Total Budgetary Support Estimate (TBSE)	304	454	500	443	418
Percentage TBSE (% of GDP)	0.22	0.11	0.12	0.11	0.11
GDP deflator (2000-02 = 100)	100	353	337	353	369
Exchange rate (national currency per USD)	8.69	16.53	14.78	16.37	18.45

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for South Africa are: wheat, maize, sunflower, sugar, milk, beef and veal, pig meat, sheep meat, poultry, eggs, groundnuts, grapes, oranges and apples.

Source: OECD (2024), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.

Policy landscape

Main policy instruments

South Africa's National Development Plan 2030 (NDP) is a key national policy that was launched in 2012 and offers a comprehensive and forward-looking strategy to provide all sectors with a roadmap to address social, economic, and political challenges by 2030. For the agricultural sector, Chapter 6 of the NDP outlines the sector's vision to contribute to an integrated and inclusive economy through the expansion of agricultural activity, effective land reform, and sustainable rural development. In the medium term, this vision is expressed in priority one (economic transformation and job creation) of the Medium-Term Strategic Framework (MTSF) (2019-2024) which is aligned with the Medium-Term Expenditure Framework (MTEF).

The Agriculture and Agro-processing Masterplan (AAMP) was approved in May 2022 and identifies four pillars of agricultural policy:

• Resolving policy ambiguities and creating an investment friendly environment; investing in and maintaining an enabling infrastructure critical to industry.

• Providing comprehensive farmer support; improving food security.

• Facilitating market expansion and promoting trade.

• Increasing local food production and reducing reliance on imports.

The Agricultural Land Holding Account (ALHA) allows the state to proactively and legally target and acquire land using funds appropriated by parliament, in order to meet the demand or need for land to build sustainable rural livelihoods. Over the medium term, the entity aims to acquire 110 850 ha of strategically located land, of which 50% is set to be allocated to women, 40% to young people, and 10% to people with disabilities.

The Comprehensive Agricultural Support Programme (CASP) helps new beneficiaries of land reform to access credit from commercial banks and the government-owned Land and Development Bank. The CASP targets subsistence, smallholder, and black commercial farmers from a previously disadvantaged background. It focuses on providing producers with on- and off-farm infrastructure and production inputs; capacity building; marketing and business development support; advisory services; regulatory services; and financial services.

The Micro Agricultural Financial Institutions of South Africa (MAFISA) provides financial services to smallholders in the agriculture, forestry, and fisheries sector. The objective of the scheme is to address the financial services needs of smallholders. Services provided through the scheme include production loans, savings facilitation, and capacity building for member-owned financial institutions (intermediaries).

South Africa is a founding member of the Southern African Customs Union (SACU1), a full customs union with a common external tariff. Border measures applied on SACU common borders are the only price support policy. Such import protection for agricultural and food products at the SACU level is based on specific and ad valorem tariffs. The average applied Most Favoured Nation (MFN) tariff for agricultural products is 8.7%, which is higher than the average applied MFN tariff for non-agricultural products of 7.4% (WTO, 2023[1]). Tariff rate quotas (TRQs) exist for a range of agricultural products under the WTO minimum market access commitments.2 A zero import-tariff for maize applies since 2007. No tariffs have been levied on wheat imports since July 2021. Beef and sheep meat are subject to tariff rate quotas with outside-quota tariffs of 40% or ZAR 2.40/kg (USD 0.13/kg) for beef, and 40% or ZAR 2.00/kg (USD 0.11/kg) for sheep meat. For pork meat the outside-quota tariff is 15% or ZAR 1.30/kg (USD 0.07/kg), except for ribs, which are not subject to tariffs. Poultry products have import tariffs ranging from zero to 82%.

South Africa applies the dollar-based reference price (DBRP) mechanism to ensure that the price importers pay for imported sugar (inclusive of the duty) cannot fall below a fixed DBRP level, currently set at USD 680 per tonne. If import prices are lower than the DBRP, an import duty is applicable, whereas if import prices are higher than the DBRP, no import duty is owed (USDA, 2024[2]).3

South Africa is also a member of the Southern African Development Community (SADC4). Trade between South Africa and the European Union takes place under the SADC-EU Economic Partnership Agreement (EPA) regime. This is a free trade agreement between the SADC EPA States (comprised of all SACU Member States plus Mozambique) and the European Union. The most important benefit for South Africa is the enhanced market access for agricultural products such as sugar, wine, some dairy products, flowers, fruits and nuts as well as their preparations. The Agreement has contributed to an increase in South Africa’s exports of agricultural products to the European Union in recent years.

Other free trade agreements relevant to agriculture include the SACU-EFTA FTA, a free trade agreement between members of the European Free Trade Association (EFTA) and the SACU which came into force in 2008, and the SACU and Mercosur Preferential Trade Agreement (PTA) which came into force in 2016. Trade between South Africa and the United Kingdom is governed by the SACUM-UK EPA,5 which is a replica of the SADC-EU EPA in terms of market access commitments with the exception of a few provisions that were modified during negotiations. The agreement provides important benefits for South Africa, including enhanced market access for wines and sugar into the United Kingdom.

South Africa is also a beneficiary of the US African Growth and Opportunity Act (AGOA), a non-reciprocal trade preference programme that grants eligible Sub-Saharan African countries duty-free, quota-free (DFQF) access to the United States for selected export products. AGOA was enacted in 2000 for eight years. The Act has been extended twice and is now in place until 2025. During the 20^th AGOA Forum in November 2023, African trade ministers called for another extension, preferably for more than 10 years, and an early decision on renewal by the United States by 2024. South Africa’s major export products benefiting from AGOA are mandarins, oranges, macadamia nuts and wine.

According to South Africa’s Low Emission Development Strategy and its Nationally Determined Contribution (NDC), the country aims to reach net zero emissions by 2050 and has a fixed target of limiting annual greenhouse gas (GHG) emissions to 350-420 MtCO₂eq in 2030. Emissions from agriculture totalled 41 MtCO₂eq in 2020 (excluding LULUCF) and accounted for about 8.7% of total GHG emissions.

The Carbon Tax Act is an integral part of government policy on climate change and will be implemented in three phases. The carbon tax rate since January 2022 was ZAR 144 (USD 7.80) per tonne of carbon dioxide equivalent (tCO₂eq), increasing to ZAR 159 (USD 8.62) in 2023 and ZAR 190 (USD 10.30) in 2024. The tax covers about 90% of South Africa’s GHG emissions, but excludes the agriculture, forestry, land use and waste sectors. Agriculture will continue to be excluded from the carbon tax until at least 2026, for the duration of the first transition phase of the carbon tax.

Fuel taxes are relatively high in South Africa and contribute about 6% to government revenues (OECD, 2022[3]). However, primary producers on land (farming, forestry and mining) qualify for full or partial relief for the fuel levy. The refund amounts to 100% of the Road Accident Fund levy and 40% of the fuel levy, applicable to 80% of eligible diesel fuel purchases. In order to claim the refund, farmers must be registered for VAT purposes and are required to maintain records of purchase invoices, sales invoices, and logbooks.

Innovation for sustainable productivity growth

The Agriculture and Agro-processing Master Plan (AAMP) is the product of a social compact between the government, business, labour, and civil society organisations. It was co-created in 2022 and sets out a number of specific objectives for the agricultural sector, including: increasing food security; promoting and accelerating sustainable transformation; improving access to local and export markets; enhancing competitiveness and entrepreneurship opportunities through technological innovation; creating an effective farmer support system; creating decent, growing and inclusive employment; improving the safety of the farming community; creating a capable state and enabling policy environment; and enhancing resilience to the effects of climate change. However, labour organisations have not signed the AAMP, and implementation continues without their consent.

The National Advisory Council on Innovation (NACI) monitors and evaluates South Africa’s National System of Innovation (NSI), including that of the agricultural sector. Funding in agricultural sciences research has grown between 2011/12 and 2020/21 by 55.2%, and more than 60% of all published research papers involve international collaboration (NACI, 2023[4]). Over the same period, agriculture’s share of total business-sector R&D expenditure has grown from 2.7% to 4.5%. Agriculture and agritech (ICT) accounted for 6.8% of the value of all venture capital investments in 2020/21.

The National Biosecurity Hub was launched by the Department of Science and Innovation (DSI) and the Department of Agriculture, Land Reform and Rural Development (DALRRD) in October 2022 under the Technology Innovation Agency (TIA). The TIA is responsible for the Agriculture Bioeconomy Innovation Partnership between DSI and industry. This partnership supports the creation of enabling environments for the development of agricultural technologies and facilitates technology transfer to emerging farmers. To date, three technology innovation clusters in agriculture have been formed by TIA, including the Animal Health Cluster, the Beef Genomics Programme, and the Dairy Genomics Programme. The programme also seeks to enable collaboration and innovation to support the prevention, reduction and management of crop and animal diseases. DALRRDs MTEF allocation, as part of its Agricultural Production, Biosecurity and Resources Management programme, is ZAR 2.3 billion (USD 124.7 million) to strengthen biosecurity, sanitary and phytosanitary standards for agricultural products.

TIA has funded efforts by the firm AgriViro to develop novel environmentally friendly biopesticides to manage economically important pests such as codling moth (Cydia pomonella), oriental fruit moth (Grapholita molesta), and Lepidopteran on fruits including apples, cherries, peaches, and apricots. TIA also funded the Council for Scientific and Industrial Research’s (CSIR) efforts to develop a point-of-care diagnostic kit for early foot-and-mouth disease detection in rural areas. This kit has the added advantage of being linked to South Africa’s regulator database, which ensures timely monitoring and improves the government’s disease surveillance.

On 12 August 2023, South Africa hosted the 13^th Meeting of BRICS Ministers of Agriculture under the theme “Strengthening collaborations among BRICS countries towards sustainable agricultural production and increasing productivity”. There was strong consensus that the outcomes of the COP27 Joint Work on Implementation of Climate Action on Agriculture and Food Security are critical to climate change adaptation in the agricultural sector. There was also strong support for the development of research programmes under the framework of the BRICS Agricultural Research Platform (BARP). BARP is designed to facilitate the exchange of research findings, innovations, and best practices, and to foster their widespread adoption in the respective BRICS nations.

Recent policy developments

Domestic policy developments in 2023-24

The Agricultural Products Standards Amendment Bill was approved by Parliament on 23 November 2023 and entered into force on 3 April 2024. This bill aims to modify provisions in Act No. 119 of 1990 to address deficiencies in the management control system of agricultural products. Specifically, it makes provisions that allow the minister to assign independent entities to perform certain audit and inspection functions for quality control of agricultural products.

DALRRD in partnership with the Land Bank established the ZAR 1.2 billion (USD 65 million) Agro Energy Fund (AEF) in 2023. The AEF is a blended finance programme that provides financial support to acquire renewable energy assets to alleviate the burden of load shedding on agricultural day-to-day operations. The fund targets farm operations that are energy intensive and has a sector-specific focus on dairy farming, poultry and piggeries, irrigated commodities, and on-farm processing.

In 2023/24, the Livestock Development Strategy (LDS) programme appropriated ZAR 449 million (USD 24.3 million) to support farms with production inputs, mechanisation, on-farm infrastructure, machinery, and operational costs.

In 2022, 15 853 and 25 781 farmers were supported by the Comprehensive Agricultural Support Programme (CASP) and Ilima/Letsema grants, respectively. A provision of ZAR 2.15 billion (USD 116.5 million) has been set aside for 2023/24 for these programmes to further assist farmers with production inputs and infrastructure development.

The Plant Health (Phytosanitary) Bill was introduced to the National Assembly on 20 February 2024 but is still under consideration with proposed amendments. This bill provides measures for the control of pests, by controlling their entry, establishment and spread throughout the country.

The Preservation and Development of Agricultural Land Bill was passed by the National Assembly on 5 December 2023 and approved by the National Council of Provinces on 9 May 2024. This followed extensive public consultations and a series of public hearings conducted in all nine provinces from 30 June to 20 September 2023 and in Parliament on 10 October 2023. The bill aims to outline the principles for the management of agricultural land, secure the protection of high-potential agricultural land, promote a balanced approach to the use of agricultural land by introducing strategic and technical instruments to preserve agricultural land, and provide the general objectives of agro-ecosystem management.

Policies to facilitate climate change mitigation and adaptation

The Climate Change Bill was approved by the National Assembly in October 2023 and the National Council of Provinces (NCOP) in April 2024, and is awaiting signature by the President. Once passed into law, the Climate Change Bill will serve as the legal framework for action on climate change to move to a net-zero emissions economy by 2050. It will establish sectoral emissions targets, including for agriculture.

In July 2023, the government released the South African Renewable Energy Masterplan (SAREM) for public comment. SAREM seeks to develop renewable energy value chains to enable inclusive participation in its energy transition efforts. Within SAREM, DALRRD is assigned the mandate to design and implement concessional financing mechanisms for small and medium-sized farming operations to procure renewable energy and storage. This mandate is implemented by the Industrial Development Corporation (IDC), Land Bank, and National Empowerment Fund.

South Africa has been fostering collaborations in its efforts for carbon reduction and will host the Global Research Alliance on Agricultural Greenhouse Gases (GRA) Council in 2024. The GRA’s broad work encompasses efforts to develop solutions that minimise agricultural GHG emissions in four specific research areas, including livestock, paddy rice, croplands, and integrative research.

Trade policy developments in 2023-24

Exports of fresh produce have been expanding as a result of concerted efforts by the government to address sanitary and phytosanitary barriers. In August 2023 during the BRICS summit, South Africa’s Minister of Agriculture, Land Reform and Rural Development signed an agreement with China’s Minister of Foreign Affairs granting South African avocados access to the Chinese market. South Africa also recently obtained market access for avocado exports to India and Japan in 2024.

To alleviate regulatory challenges faced by South Africa’s citrus industry, DALRRD and the Land Bank secured ZAR 19 million (USD 1 million) of funding for the Ripplemead Citrus Pack shed to assist exporters to meet stringent regulations on prolonged cooling by EU importers.

On 4 August 2023, the South African Revenue Service reduced the sugar import duty from ZAR 1.5254 (USD 0.083) per kg to zero. Thus, no duty was owed on imports of sugar below the DBRP (USD 680/tonne). However, due to a decline in international sugar prices towards the end of 2023, on 15 March 2024, the custom duty on sugar was adjusted to ZAR 1.4091 (USD 0.076) per kg (USDA, 2024[2]).

In response to an unprecedented number of foot-and-mouth disease (FMD) outbreaks in areas of the country that were not previously affected, a number of trade partners (including China) temporarily banned South African exports of live cattle, other cloven-hooved animals, and their products (including beef). Project Separako was launched to strengthen and assist the veterinary services of Limpopo to bring the outbreaks of FMD to a stop and prevent spillover of outbreaks to the rest of the country.

In response to outbreaks of highly pathogenic avian influenza (HPAI), a number of trade partners including Namibia, Botswana and Lesotho imposed restrictions on South African poultry exports. To replenish egg stock levels, DALRRD opened import permits for eggs and poultry products from a select few countries where outbreaks of HPAI had not been reported. The HPAI outbreaks affected exports of poultry to the Middle East for a significant period, as well as exports of ostrich meat mainly to the European Union. According to the South African Poultry Association, over 7 million birds have been culled since April 2023, including approximately 5 million layers and 2.5 million broilers. The government announced containment measures to limit the spread of the disease, including placing affected farms under quarantine and culling of infected birds. At the request of industry, South Africa registered a few vaccines and a vaccination protocol was signed into effect in November 2023. A temporary rebate provision on meat and edible offal, fresh, chilled or frozen fowls6 was implemented on 26 January 2024.

The imposition of anti-dumping duties on bone-in poultry meat from Brazil, Denmark, Ireland, Poland, and Spain had been suspended for a twelve-month period by the Minister of Trade, Industry and Competition, and were reinstated in August 2023.

South Africa has applied anti-dumping duties to US origin poultry since 2000 and is currently applying them on all other major exporting countries except Argentina. A tariff rebate is in place, rebating the full anti-dumping duties on the importation of frozen bone-in cuts of chicken meat, imported from or originating in the United States. In 2023/24 an import tariff rate quota (TRQ) of 71 963 metric tonnes was set, which is free of the anti-dumping duty of ZAR 9.40/kg (USD 0.51/kg). However, South Africa applies a de-facto restriction on general tariff rebates for poultry imported under the TRQ.

South Africa has signed and ratified the African Continental Free Trade Agreement (AfCFTA). On 25 February 2023 SACU finalised and submitted its tariff offer that covers 90% of the tariff book to the AfCFTA Secretariat. After its technical verification and approval by the AfCFTA Council of Ministers, it then became SACU’s Provisional Schedule of Tariff Concessions. This paved the way for SACU to participate in the Guided Trade Initiative that is intended to pilot the implementation of the AfCFTA on the basis of the concluded and approved work programme and legal instruments. Negotiations to finalise remaining work continues as part of the Built-in Agenda. Twelve countries, including South Africa, have finalised their legal modalities to enable trade to commence in thousands of product lines, including food and beverages.

Policy context

Key economic and agricultural statistics

South Africa has the most industrialised and diversified economy in Africa, and the second largest economy (after Nigeria) on the African continent. With the largest GDP per capita of the continent, it ranks as an upper middle-income country. However, income inequality is high and widespread poverty persists.

Agriculture represents a small share of the economy, at just 2.8% of GDP, although its share in employment is substantially higher, at 19.3% (Table 23.2). South Africa has abundant agricultural land, but only 12% of it is arable, while the remaining agricultural area is mostly semi-arid pastures with extensive livestock production. The farm structure is highly dualistic, with a well-developed and market-oriented sector of large-scale commercial farms and a large number of smallholder farms.

Table 23.2. South Africa: Contextual indicators

	South Africa		International comparison
	2000*	2022*	2000*	2022*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	382	953	1.0%	0.7%
Population (million)	44	60	1.0%	1.1%
Land area (thousand km2)	1 213	1 213	1.5%	1.5%
Agricultural area (AA) (thousand ha)	98 125	96 341	3.3%	3.3%
			All countries1
Population density (inhabitants/km2)	38	49	52	64
GDP per capita (USD in PPPs)	8 154	15 905	9 363	25 965
Trade as % of GDP	17.5	28.7	12.3	16.6
Agriculture in the economy			All countries1
Agriculture in GDP (%)	2.8	2.8	2.9	3.8
Agriculture share in employment (%)	21.0	19.3	-	-
Agro-food exports (% of total exports)	8.5	10.6	6.4	8.0
Agro-food imports (% of total imports)	5.2	6.5	5.8	6.9
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	56	53	-	-
Livestock in total agricultural production (%)	44	47	-	-
Share of arable land in AA (%)	14	12	32	34

Note: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; International Labour Organization (ILO); UN Comtrade; World Bank, WDI; FAO database and national data.

Inflation in South Africa has been relatively moderate, increasing gradually from 3% in 2020 to 6% in 2023. The unemployment rate is persistently high, reaching 33% in 2023, and remains an obstacle for alleviating poverty. Real GDP growth has been declining since 2011 and dropped to -6% in 2020, in response to COVID-19 restrictions and impacts, before rebounding strongly in 2021 to 5% and then slowing to just 0.7% in 2023 (Figure 23.4).

South Africa is consistently a net exporter of agro-food products (Figure 23.5). In 2022, the share of agro-food exports in total exports was around 11%, while the share of agro-food imports was around 6.5% (Table 23.2). The majority (57%) of agro-food exports are primary agricultural products, whereas around three-quarters of agro-food imports are processed products (Figure 23.5).

Agricultural output growth has been similar to the global average over the 2012-21 period, but driven predominantly by increased use of intermediate inputs (Figure 23.6). This was not the case in the 1990s, where annual TFP growth averaged 1.6%, however TFP growth has slowed somewhat since then, growing by 0.9% per year during 2012-21, slightly below the world average (Table 23.3).

Phosphorus and nitrogen balances are very low and negative, respectively, and well below the OECD average. Although agriculture uses most (58%) of abstracted water, only a few regions have irrigated land, and water resources are scarce in most of the agricultural areas (Table 23.3). The livestock sector is an important source of water consumption. Agriculture’s share in total energy use has increased to 3% and remains above the OECD average.

Table 23.3. South Africa: Productivity and environmental indicators

	South Africa		International comparison
	1991-2000	2012-2021	1991-2000	2012-2021
			World
TFP annual growth rate (%)	1.6%	0.9%	1.7%	1.1%
			OECD average
Environmental indicators	2000*	2022*	2000*	2022*
Nitrogen balance, kg/ha	-6.3	-4.3	32.1	28.2
Phosphorus balance, kg/ha	0.2	0.0	3.3	2.3
Agriculture share of total energy use (%)	2.6	3.0	1.7	2.0
Agriculture share of GHG emissions (%)	9.1	8.7	8.7	10.1
Share of irrigated land in AA (%)	1.5	2.2	-	-
Share of agriculture in water abstractions (%)	70.6	57.5	47.0	49.5
Water stress indicator	33.7	65.8	8.7	..

Note: * or closest available year.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

Historical trends in agricultural policies

Widespread support, regulation, and price and production control within a closed economy characterised agricultural policy in South Africa under the apartheid regime between 1955 and 1990.

Post-apartheid, quick and substantial reforms in the mid-1990s reduced state intervention in agricultural markets and led to more market-oriented commercial farming. Domestic marketing of agricultural products was deregulated, and barriers to agricultural trade were reduced by replacing direct import controls with tariffs, removing state controls over exports, and eliminating export subsidies. These reforms reduced market price support and budgetary support to commercial farming.

As stated in the White Paper on Land Policy of 1997, land reform aimed to redress past injustices, foster reconciliation and stability, support economic growth, improve household welfare, and alleviate poverty. Key elements of the land reform included land restitution, land redistribution and land-tenure reform. The land reform process is ongoing and further legislative regulations have been submitted to facilitate the acceleration of the land reform process: 13.22 million ha (or 17% of land used for agriculture) had been transferred away from white landowners (this includes restitution, redistribution, private transactions, and State procurement) by 2020 (Kirsten and Sihlobo, 2021[5]). Of this, 3.08 million ha have been transferred to the state and 10.14 million ha have been transferred to black owners. In several instances, communities elected to receive financial compensation where land was successfully identified for restitution (2.34 million ha in addition to the transferred land). Since it started, the land reform has been accompanied by agricultural support targeting black smallholders and emerging producers who were previously excluded from support by the apartheid government. Mainly provided within the Comprehensive Agricultural Support Programme (CASP), these measures include subsidies for variable and fixed input credit and financial support, extension, marketing, and training services (Table 23.4).

Table 23.4. South Africa: Agricultural policy trends

Period	Broader framework	Changes in agricultural policies
Prior to mid-1990s	Closed economy under the apartheid regime	Large subsidies for commercial agricultural producers Import controls; export subsidies for agricultural products Price and production controls under the Agricultural Marketing Act of 1937
Mid-1990s-present	Post-apartheid period; democratic government; market deregulation and trade liberalisation Land redistribution; emphasis on black small-scale producers’ development	Marketing of Agricultural Products Act (1996) brings market deregulation and trade liberalisation WTO accession Agricultural tariffs replace import controls Import tariffs applied to sugar and livestock products (except eggs), with tariff-free imports of maize (since 2007) and wheat (since 2021) Land restitution and redistribution Land reform-related programmes supporting black smallholder farmers: - Increased spending to finance the land reform process - Direct support targeting black smallholders

Support to farmers has been decreasing as a share of gross farm receipts (with some year-to-year variation) during 1995–2007 because of policy reforms and deregulation of the market. Since then, support has tended to stabilise at a relatively low level, around 4% of gross farm receipts. Budgetary support to producers, mostly input subsidies, is targeted to black smallholders. Budgetary expenditures on general services to the sector are increasing and spent mainly on knowledge transfer and infrastructure.

References

[5] Kirsten, J. and W. Sihlobo (2021), How a land reform agency could break South Africa’s land redistribution deadlock, https://theconversation.com/how-a-land-reform-agency-could-break-south-africas-land-redistribution-deadlock-165450 (accessed on 10 June 2024).

[4] NACI (2023), “South African Science, Technology & Innovation Indicators Report”, National Advisory Council on Innovation, https://www.naci.org.za/wp-content/uploads/2023/08/STI-Indicators-2023-Report.pdf (accessed on 6 June 2024).

[3] OECD (2022), OECD Economic Surveys: South Africa 2022, OECD Publishing, Paris, https://doi.org/10.1787/d6a7301d-en.

[2] USDA (2024), “South Africa: Sugar Annual”, Global Agricultural Information Network (GAIN), https://fas.usda.gov/data/south-africa-sugar-annual-8 (accessed on 6 June 2024).

[1] WTO (2023), Tariff profiles - South Africa, https://www.wto.org/english/res_e/statis_e/daily_update_e/tariff_profiles/ZA_e.pdf (accessed on 3 April 2024).

Notes

← 1.  The SACU members are: Botswana, Eswatini (former Swaziland), Lesotho, Namibia, and South Africa.

← 2.  TRQs are allocated based on historical trade as specified under each TRQ. If the TRQs are unused by 1 September each year, then unused TRQs are available to other member states. The establishment of a permanent TRQ Management System at the SACU level is still in progress.

← 3.  Adjustments to the level of protection granted are made when the 20-trading day moving average of the London No. 5 settlement price shows a variance of more than USD 20 per tonne from the previous trigger level for 20 consecutive trading days. The resulting Dollar duty is then converted to Rand, based on the Rand/Dollar exchange rate prevailing on the day that the adjustment is triggered, and subsequently adjusted with the latest available Real Effective Exchange Rate as published by the South African Reserve Bank.

← 4.  The SADC member countries are: Angola, Botswana, Democratic Republic of Congo, Eswatini, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Tanzania, Zambia, and Zimbabwe.

← 5.  The Economic Partnership Agreement between the SACU Member States (Botswana, Eswatini, Lesotho, Namibia and South Africa) and Mozambique on the one part, and the United Kingdom of Great Britain and Northern Ireland on the other part (SACUM-UK EPA) entered into force on 1 January 2021.

← 6.  The rebate was implemented in Government Gazette No. 50045, Notice R.4282 and applied to the species Gallus Domesticus classifiable under HS0207.1.