a profile of the south african potato market value … · in 2015, potato industry contributed...

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A PROFILE OF THE SOUTH AFRICAN POTATO MARKET VALUE CHAIN

2016

Directorate Marketing Tel: 012 319 8455 Private Bag X 15 Fax: 012 319 8131 Arcadia E-mail:[email protected] 0007 www.daff.gov.za

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TABLE OF CONTENTS 1. DESCRIPTION OF THE INDUSTRY 3

1.1 Production areas 3

1.2 Total production 4

1.3 Potato production vs. consumption 5

2. MARKET STRUCTURE 6

2.1 Domestic market 6

2.2 Exports 7

2.3 Provincial and district export values of South African potatoes. 14

2.4 Share analysis 22

2.5 South Africa’s potato imports 28

2.5 Processing 31

3. MARKET INTELIGENCE 33

3.1 Competitiveness of South African potato exports 33

4. MARKET ACCESS 39

4.1 Tariff, quotas and the price entry system 39

5. DISTRIBUTION CHANNELS 44

6. LOGISTICS 44

6.1 Mode of transport 44

6.2 Cold chain management 45

6.3 Packaging 45

6.4 Quality control 45

7. TRANSFORMATION 45

8 BUSINESS OPPORTUNITIES AND CHALLENGES 45

8.1 Business opportunities 46

8.2 Challenges 46

9. SOUTH AFRICAN POTATO MARKET VALUE CHAIN 48

9.1 Informal sector 48

9.2 Formal sector 48

10. ACKNOWLEDGEMENTS 48

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1. DESCRIPTION OF THE INDUSTRY

Potatoes are the most important vegetable crop in South Africa and the world’s recognized stable food consumed by many people. It is grown in more than 125 countries and consumed almost daily by more than a billion people. In 2015, potato industry contributed approximately 57.7% to the total gross value of vegetable production, 11% of horticultural products and 2.9% of total agricultural products. Processing of potatoes has grown at a rapid rate over the past ten years, but it is still behind in size when compared to the potato processing industries in the developed countries. According to Potatoes South Africa, the processing industry represented 20% of the total potato crop. The rapid increase in potato processing can be attributed to consumer need for convenience ready to eat foods. The domestic processing sector uses potatoes primarily for, French fries, crisps, and frozen products. Potatoes are also fat and cholesterol free and high in fibre, Vitamin C and essential minerals like potassium, phosphorus and calcium.

Source: Statistics and Economic Analysis, DAFF

Depicted in the Figure 1 above is the contribution of the potato industry to the gross value of agricultural production from 2006 to 2015. The lowest gross value of production was recorded in 2006, due to a record low production output recorded in the same year. The contribution increased steadily from 2007 and the increase in 2010 was 17% compared to the previous year. In 2011, potato industry contribution increased by 7%, in comparison to 2010 production year. During 2012, gross value of production grew by 4.7%, when compared to gross value of the previous years. This can be attributed to the 2.5% increase in production output and favourable producer prices in the same year. In 2013, potato gross value grew by 13.4% when compared to the previous year gross value and this can be directly attributed to 16.9% increase in producer price in the same year. During 2014, the gross value grew by 7% in comparison to the 2013 and this can be ascribed to increase in production output and favourable producer price. There was a slight increment of 4.9% in potato gross value during 2015, when compared to 2014 gross value.

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Figure 1: Gross value of potato production

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1.1 Production areas

Potatoes are produced from sixteen production regions which are spread throughout South Africa. The main producing regions are situated in the Limpopo, Free State, Western Cape, Mpumalanga, Kwazulu Natal and Eastern Cape. In 2015, Limpopo province was still the leading producer of potatoes with 21% of hectares of the total national production (Potatoes SA). Eastern Free State comes second with 20%, Sandveld is in third place with 14% and Western Free State comes fourth with 13%. Potatoes are planted at different times due to climatic differences in the production areas. This has resulted in fresh potatoes being available throughout the year. A total of 53 933 hectares were planted during the 2015 production year. This represents a 4.8% increment in area under production when compared to the 2014 production year. The crop is produced all year round both in dry land and under irrigation. There has been a major shift for the past two decades from dry land production to production under irrigation. Today, almost 75% of the area is planted under irrigation. Plantings in dry land thrive well in areas where there is reliable summer rainfall such as Eastern Free State, Mpumalanga and Eastern Cape. A successful potato production, which is to a large extend dependent on quality planting material obtained from seed producers. Globally, China is still the biggest potato producer, followed by India, Russian Federation, Ukraine, United States and Germany are the top countries producing potatoes. According to FAO, a third of all potatoes are harvested in China and India. 1.2 Total production

According to Potatoes South Africa, in 2014 there were 578 commercial table potato farmers. This represents a 1.6% increment in the number of producers compared to the previous production season. There are approximately 220 registered potato seed growers under the supervision and administration of potato certification services. From a production perspective the input cost for potato production has been high and escalating international fuel and input prices. From a Marketing perspective, the strength of the South African currency negatively affected the export of potatoes, including to destinations in the Southern African Development Community (SADC) region. Total potato production from 2006 to 2015 is illustrated in figure 2 below. Figure 2 below shows that, the lowest volume of potato production was recorded in 2006. In 2007 and 2008, production output has increased steadily until 2009 and there was an 8.7% drop in production volumes. From 2010 production output increased steadily and the total production of 2 250 085 tons were produced during 2012. This represents a 2.5% increase in production output compared to the tons produced in 2011. During 2013, production volumes slightly dropped by 3% when compared to the previous year production output. There was a 2.9% increment in production output in comparison to the previous year. A record high production volume of 2 486 646 tons were produced during 2015 and the production output was 10.7% higher when compared to 2014 production output.

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1.3 Potato production vs. consumption Figure 3 below depicts local consumption of potatoes compared to the production over the period of ten years. The figure indicates that the production of potatoes was fairly higher compared to fresh consumption. This indicates that South Africa is self-sufficient in terms of potato production and surplus potatoes are exported to other countries. South Africa’s average potato consumption was approximately 1 495 445 tons per annum.


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Figure 2: Total potato production

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Figure 3: Production vs Consumption

Production (Tons) Consumption (Tons)

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2. MARKET STRUCTURE In South Africa potatoes are sold through different marketing channels such as national fresh produce market, informal trade (street hawkers), directly to retailers and processors for manufacturing of dry, frozen and fresh chips. Lastly potatoes are also exported to other countries through export agents and marketing companies.

2.1 Domestic market Sales of potatoes at the National Fresh Produce Markets (NFPMs) have been declining over the years, but NFPMs remain an important channel for the sale of fresh potatoes in South Africa. In 2015, Johannesburg fresh produce market with 37% share is the biggest potato market, followed by Tshwane with 18%, Durban and Cape Town have both recorded 9.3% share. Johannesburg market has increased its market share by 1% while Durban and Cape Town markets have dropped from 10% to 9.3%. According to Potatoes South Africa, 35% of potatoes were distributed through formal market, 29% through informal markets (hawkers), 20% were processed, 8% were seed and 8% was exported in 2014.


As indicated in Figure 5 below, there have been fluctuations in the quantities of potatoes sold in the major fresh produce markets over the last ten years. The main reason for the lack of growth in potato sales has been the departure from the National Fresh Produce Markets (NFPMs) by the potato producers because they now sell directly to the potato chips companies, processors, wholesalers and retailers.

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Figure 4: Potato market share by the major NFPMs

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Potato prices in the NFPMs are primarily determined by market forces of supply and demand, which is the preferred way of marketing channel for potatoes. Product grading is a critical component of price determination in the market and as a result potatoes are still officially graded at the NFPMs. The price received by the primary producers on the NFPMs is a basis for the determination of the price for direct purchases from the producers. During 2009, there was a notable decline of potato volume supplied at the market and this has resulted in a notable higher price of R3 357/ton. As of 2010 to 2011, the supplied volume has increased steadily, which resulted in a steady drop in market prices during the same years. In 2012, there was a 5.5% increase in quantities of potatoes supplied to the NFPMs and at the same time the prevailing price in the NFPMs increased by 2% which can be attributed to a strong potato uptake in the markets. During 2013, quantities of potatoes supplied to the NFPMs dropped by 2%, which resulted in the 27.6% increase in the market price. The other factor that influences the price in the NFPMs is the quality of produce. In 2014, there was a slight increase in volume supplied at the NFPMs and the price was also favourable as it has gone up by 1.5%, when compared to the 2013 season. Potato price has dropped by 17% during 2015, and this can be ascribed to 13.8% increase in the volume supplied at the market.


2.2 Exports Potatoes are probably the most suitable vegetables for the export market (easy to grade and pack an under correct conditions, their shelf life is much longer than most other vegetables). However, South Africa is not considered to be a major exporter of potatoes, primarily because it contributes 1.5% and it is ranked number 17 in the world potato exports. In 2015, South Africa has position has not changed in terms of competitiveness in terms of potato export since it is still ranked number 17.

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Figure 5: Sales of potatoes at major national fresh produce markets

Volume (Tons) Price (Rand/ton)

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Mozambique is the leading recipient of South Africa potato exports with 27.8% share followed by Namibia with 19.7% , Botswana with 17.3% and Angola with 16.5% share.. The bulkiness of potatoes, perishability and associated transport costs make the export of potatoes prohibitively expensive and for this reason South Africa’s primary export markets are located within the Southern Africa (Mozambique, Botswana, Angola and Zimbabwe). Table 1 show that, South Africa, potato exports to Angola has increased by 42% in value and 47% in quantity between 2010-2014 period. South Africa export to Mozambique has increased by 11% in value and 23% in quantity between 2011-2015 period. France, Germany, China, Egypt, Netherlands, United States of America, Netherlands, Canada and Belgium are the top countries exporting potatoes. Egypt is the only African country which is among the top five potato exporters in the world. Table 1 and figure 6 illustrates South Africa’s potato export markets during 2015. Table 1: South Africa potato exports in 2015

Importers

Exported value 2015 (USD thousand)

Trade balance 2015 (USD thousand)

Share in South Africa's exports (%)

Exported quantity 2015 (tons)

Exported growth in value between 2011-2015 (%, p.a.)

Exported growth in quantity between 2011-2015 (%, p.a.)


World 38426 38425 100 155667 0 -19 -17

Mozambique 10664 10664 27.8 58721 11 23 5

Namibia 7554 7554 19.7 22651 -14 -6 -28

Botswana 6631 6631 17.3 23328 6 -51 27

Angola 6344 6344 16.5 21132 -1 9 -50

Lesotho 2937 2937 7.6 10825 41 106 -4

Swaziland 1669 1669 4.3 11615 -7 14 -6

Zambia 1172 1172 3.1 3855 20 14 14

Malawi 245 245 0.6 573 32 31 25

Mauritius 238 238 0.6 584

Qatar 224 224 0.6 495 372 52

Congo 176 176 0.5 478 -10 -9 27

Gabon 116 116 0.3 210 202 278 107

Area Nes 113 113 0.3 407 8 -32 Source: ITC Trade Map

Figure 6 illustrates South Africa’s potato exports destinations during 2015.

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Source: International Trade Centre (ITC)

Southern African Development Community (SADC) and SACU countries such as, Namibia, Mozambique, Angola, Botswana, Lesotho and Swaziland hold a bigger market share of South African potato exports according to figure 6 above. Together they constitute approximately 93% of South African potato exports. There should be attempting to expand other markets like the Middle East. That will enable the South African potato exports to grow. In 2015, South African potato exports that remained in the ship stores and bunkers (This is the place where products without proper documents are held) has accounted for 0.3% of potato exports.

Source: Quantec Easydata *Potato export data was adjusted from 2010 to reflect SACU export data.

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Figure 6: South Africa's potato exports destinations in 2015


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Figure 7: South Africa potato exports

Volume (tons) Value ( Rand)

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As indicated on the figure 7 above, there have been fluctuations in the real value of potatoes exported. In 2007, there was a 16.6% increase in potato exports and at the same time there was an 11% increase in value of exports. In 2009, there was an 8% decline in volumes of potato exports and the value of potatoes has increased by 23% at the same season. The export volumes were incomparably higher in 2010, when compared with 2009 export and the high increase can be attributed to 11% increase in production volumes in the same year. During 2011, the export volume has drastically dropped by 54.7%, despite a 5% increase in domestic production. It was more profitable to export potatoes in 2005 and 2009, since higher values were recorded for volumes exported. During 2012, South Africa’s potato exports have surged by 122%, which can be attributed to 2.5% increase in domestic production output. In 2013, South Africa exported less volume of potatoes by 79.6% in comparison to the 2012 potato export, which can be ascribed to a 3% drop in the domestic potato output in the same year. During 2014, South Africa potato export has gone up by 28.6%, in comparison to 2013 exports. It was also more profitable to export potatoes in 2012 and 2014, when compared to the other years. The export volume has gone up by 12% in 2015, and this can be attested to 10.7% increase in the potato domestic output. During the same year it was also less profitable to export potatoes when compared to 2014 export values. According to Figure 8 and Table 2 below, Southern African Development Community (SADC) countries such as, Zambia and Zimbabwe hold a bigger market share of South African potato seed exports. Together they constitute approximately 54.1% of South African potato seed exports. South Africa has also exported considerable share of potatoes to Mozambique, Namibia and Botswana. There should be attempting to expand other markets like the Middle East. That will enable the South African potato exports to grow. In 2015, there was no percentage of South African potato seed exports remained in the ship stores and bunkers (This is the place where products without proper documents are held).Table 2 shows that South Africa, potato seed exports to Zimbabwe has increased by 132% in value and 144 in quantity between 2011 -2015 period. South African potato seeds to Zambia have increased by 38% in value and 57% in quantity between 2014 and 2015 period.

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Figure 8: South Africa's potato seed export destinations in 2015


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Source: International Trade Centre (ITC)

Table 2: South Africa potato seed exports in 2015

Importers

Exported value 2015 (USD thousand)

Trade balance 2015 (USD thousand)


Exported quantity 2015 (tons)


Exported growth in quantity between 2011-2015 (%, p.a.)


World 8042 8007 100 15520 14 25 3

Zimbabwe 2478 2478 30.8 4562 132 144 92

Zambia 1877 1877 23.3 3912 38 57 -5

Mozambique 1048 1048 13 2133 -3 1 -14

Namibia 975 975 12.1 1529 -1 6 -4

Botswana 513 513 6.4 946 14 41 -42

Angola 459 459 5.7 775 1 4 -37

Lesotho 156 156 1.9 960 -18 80 -18

DRC 154 154 1.9 204 -9 -6 11

Swaziland 139 139 1.7 240 -22 -13 14

Mauritius 88 88 1.1 218 184

China 61 56 0.8 3 183 -26 Source: International Trade Centre (ITC)

Figure 9 is an illustration of South Africa’s potato export to the various regions.

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Source: Quantec Easydata

Figure 9 above shows that South Africa exported high quantities of potatoes to the African region followed by Europe and Oceania. South Africa also exported notable volumes of potatoes to Asia, and Americas regions. In 2010, there was a significant increase in exports to the African region, at the same time, there were no export to the Americas region. A notable export to Antarctica was recorded in 2007. From 2005 to 2010 and 2012 to 2014, a substantial volume of South African potato exports were not allocated to any region and in 2011, the unallocated exports have dropped significantly. In 2011, considerable volumes of South African were exported to Oceania and Americas regions. During 2012, African region continued to be the preferred export market for potatoes originating from South Africa. African region continued to be the primary market for potato exports from South Africa in 2013. In the same year the exports to the Asia and Europe has notably increased and the exports to the Americas has dropped by 64.7% in comparison to 2012 potato exports. During 2014, exports to Africa and Asia regions have notably increased and export to Americas and Oceania have significantly dropped. In the same year Europe and Antarctica regions have recorded zero trade for potatoes. In 2015, Africa region is still the leading recipient of potato exports from South Africa, followed by Asia. At the same time, a notable 7 000 kg was not allocated to any region, while exports to America, Europe and Oceania were trivial.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Africa 26220473 30746786 28073712 25800415 516989628 234124097 519891381 105084286 134376729 15482234

Americas 152422 292 21039 2060 0 66311 93700 33010 6000 475

Asia 8490 1857 22802 80380 5842 8498 16942 601322 1487715 30446

Europe 381477 263466 128245 26000 28448 26000 36361 52670 0 163

Oceania 0 113300 68222 39000 13838 132000 33828 45220 11820 27

Antarctica 390 25738 404 260 43 0 0 0 0 0

Not allocated 342114 462914 437633 396495 266348 1908 500242 140822 459354 7000

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Figure 9 :South Africa's potato exports to various regions

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Figure 10 above shows the value of South Africa’s potato exports earned from the regions. African region has recorded high export value than the other regions as high quantities of potatoes were exported to this region during the period under review. In 2011, it was more profitable to export potatoes to the European region, followed by America region then African region. It was less profitable to export potatoes to the Asian region during 2011. During 2012, it was more profitable to export to Asia followed by Europe, while Americas and African regions were less profitable markets during the same year. In 2013, potato export has fetched higher value, followed by Europe and America regions. In the same year, potato exports to Oceania were less profitable. During 2014, it was more profitable to export potatoes to Americas, followed by Oceania and Africa regions. Oceania was the least profitable export market. In 2015, it was relatively more profitable to export potatoes to Oceania region, followed by Asia and Africa region.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Africa 59261814 65661577 59169178 74230790 319611985295981080323478031372161918490187624483780864

Americas 49314 1332 65520 25015 0 482877 263029 118840 11400 2800

Asia 13307 15291 107406 561750 60392 14074 177196 3251037 8101545 3713320

Europe 1203907 719715 1236505 52000 140710 136937 237836 258572 0 0

Oceania 0 338829 172845 102690 37808 326100 126440 80324 31120 169160

Antarctica 1026 45592 2545 4370 1063 0 0 0 0 0

Not allocated 1272463 1963847 1911221 2454384 1548869 5354 1489770 532535 1794403 1468450

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Figure 10: Value of potato exports to various regions

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Figure 11 above, shows that in Africa region, SADC countries (Mozambique, Zimbabwe, Angola, Zambia, Congo and Democratic Republic of Congo) were the primary potato export market for South African potatoes from 2006 to 2009. South Africa exported considerable quantities to West African countries (Ghana, Saint Helena and Nigeria), Eastern Africa (Kenya, Reunion and Uganda) and Middle Africa (Congo and Gabon). South Africa’s potato exports to Northern Africa were 2009 and were less significant. In 2010, exports to Africa region have been divided into SADC and SACU. From 2010 to 2013, SACU followed by SADC regions were the primary export markets for potato export originating from South Africa Considerable volumes were also exported to Middle Africa and West Africa during 2011 while in 2012; the exports to these regions have dropped by half. Export to Eastern Africa (Kenya and Uganda) region has slightly increased during 2012. In 2013, SADC and SACU region continued to be the preferred potato export market. High percentages of exports were destined to Namibia and there was a notable volume of exports to Botswana, Lesotho and Swaziland. In the same year, potato exports to Western Africa (Ghana, Togo, Senegal, Cote devoir and Nigeria) has notably increased when compared to the previous year exports. During 2014, potatoes were mainly exported to SADC and SACU region. At the same time exports to Middle Africa has notably increased. SADC countries( Mozambique, Angola and Zambia) followed by SACU( Namibia, Botswana, Lesotho and Swaziland) countries were the main recipients of South Africa potato exports in 2015. Considerable volumes of potatoes were also exported to Middle African countries. 2.3 Provincial and district export values of South African potatoes A review of provincial level trade data presents an interesting but somewhat misleading view of the source of potatoes destined for the export markets. Firstly, the fact that 59.7% of potatoes exported

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Eastern Africa 95491 378495 180006 5670 5411 3202 9111 48538 928 32672

Middle Africa 63632 323585 381760 339423 351652 753633 318869 306779 401736 688035

Northern Africa 0 0 0 6300 0 0 0 7 0 0

Western Africa 162712 416353 242109 220781 157931 235045 126398 364200 168435 252779

SADC 25898638 29628353 27269837 25228241 39603454 46019951 62963308 63763185 80488466 85108358

SACU 0 0 0 0 476871177 187112267 456473698 40601575 53317165 68418118

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Figure 11: South Africa potato exports to Africa region

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in 2015 were from the Gauteng province does not imply that the potatoes were produced there but that the registered exporters were based in the Gauteng. Secondly provinces the Western Cape and Kwa-Zulu Natal serves as exit points for potato exports through the Cape Town and Durban harbour respectively. Figure 12 below depicts the value of potato exports from each province of South Africa from 2006 to 2015. Highlights of the potato exports were that the provinces of the Western Cape, Gauteng and to a lesser extend Kwa-Zulu Natal were consistently the top exporting provinces of South Africa over the last decade.


From 2006 to 2009, Gauteng and Western Cape provinces were mainly the preferred exit points for South Africa’s potato exports. In 2010, a record high export value was recorded for Gauteng province. At the same time, Limpopo and Mpumalanga provinces have also recorded a significant increase in export values. Export values for Gauteng Limpopo and Kwazulu Natal have significantly increased during 2011, while the Western Cape export value has notably increased. In 2012, Eastern Cape and Free State have recorded export values after eight years of recording zero trade. During 2013, Western Cape and Gauteng provinces continued to be major role players in potato exports from South Africa and their export value has notably increased. In the same year Northern Cape and North West and Free State exports have notable increased. This can be ascribed to increased potato exports to the neighbouring Namibia, Lesotho and Botswana. During 2014, all nine provinces have recorded export values, however Gauteng export value has slightly dropped when compared to the 2013 export value. In 2015, Gauteng province was still the leading exit point for South Africa’s potato exports and the export value has gone up by 11.4%, while Western Cape export value has experienced a sharp decrement of 31%. In the same year, Eastern Cape, Free State, Kwazulu Natal, North West, Mpumalanga and Limpopo provinces have substantially increased their potato export values in comparison to 2014 export values.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Western Cape 39532460 42779729 39156934 45582395 21506362 40786255 79151297 96853095 216638694148386648

Eastern Cape 0 0 0 0 0 0 10383 9090 224690 287657

Northern Cape 0 0 0 0 0 0 0 135300 520016 21676

Free State 0 0 0 0 0 0 7580513 9584540 27153673 33593458

Kwazulu-Natal 437601 330190 609290 693595 1253580 321363 479818 563077 2026451 2427768

North West 0 0 0 0 635 0 0 508028 5159575 15157707

Gauteng 21778937 25590827 22898994 31107834 285380834255792204231283595257269193228179907254207957

Mpumalanga 52833 17031 0 0 6275452 7345 7256832 11446854 16387358 21387247

Limpopo 0 28409 0 47175 6984364 39255 9865 34046 3835738 13680540

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Figure 12: Value of potato exports by South African Provinces

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The following figures (Figures 13 – 21) show the value of potato exports from the various districts in the nine provinces of South Africa.


From Figure 13 above, it is clear that potato exports from the Western Cape province were mainly from the City of Cape Town Metropolitan Municipality. West Coast, Cape Winelands and Eden municipalities contributed to a lesser extent. In 2010, there was a significant drop in export value recorded for the City of Cape Town. The use of the Cape Town harbour as an exit point may have played a major role in the metropolitan municipality being a leader in the export of potatoes from the Western Cape province. City of Cape Town, West Coast and Eden municipalities have recorded high export values during 2011, while the export value for Cape Winelands has notably dropped. In 2012, the City of Cape Town remained the leading municipality in potato exports and export values for West Coast, Cape Winelands and Eden has also increased significantly when compared to the previous year. During 2013, the City of Cape Town was by far still the leading municipality in terms of potato export from Western Cape. In the same year West Coast, Cape Winelands and Eden municipalities have notably increased their export values in comparison to 2012 export values. The highest export value for the leading municipality was recorded in 2014. West Coast, Cape Winelands and Eden export values have significantly gone up. City of Cape Town has continued to lead in Western Cape potato export. However the export value has sharply dropped by 30% in comparison to 2014 export value. At the same time, Western cape has also exported potatoes through West Coast, Cape Winelands and Eden but the export values for these municipalities have experienced notable declines. Figure 14 below illustrates the potato exports from Gauteng province from 2006 to 2015.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

City of Cape Town 38453894 42448653 39009120 44962882 21245435 40324600 74249000 86388257 182991962127243203

West Coast 0 0 0 0 0 195650 1603320 946560 21220229 13792532

Cape Winelands 0 72295 16827 273978 60253 6559 2734601 8645014 9977049 5917422

Overberg 0 0 0 0 0 0 0 66000 0 0

Eden 1078566 258781 130987 345535 200674 259446 564376 873264 2449454 1433491

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Figure 13: Value of potato exports by Western Cape Province

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In Gauteng province, there has been fluctuation on the potato export values for the past ten years (see Figure 14). The leading role players are City of Johannesburg, Ekurhuleni and City of Tshwane to a lesser extent. In 2007, Sedibeng municipality has recorded a notable increase in potato export value. High export values of the leading municipalities were recorded in 2010 for the City of Johannesburg and 2011 for Ekurhuleni. In 2011, export values for the City of Johannesburg and Ekurhuleni have notably dropped. During 2012, West Rand and City of Tshwane municipalities have recorded notable potato export values while at the same time export value for the City of Johannesburg had significantly dropped. In 2013, City of Johannesburg continued to lead in potato export from Gauteng province. Ekurhuleni and City of Tshwane have notably increased their export value during the same year. In 2014 West Rand, Ekurhuleni and City of Tshwane have notably contributed to the Gauteng provincial potato exports, while City of Johannesburg export has severely decreased. City of Johannesburg has continued to be the leading exit point for Gauteng potato exports in 2015, and the export value has risen by 28.9% and Tshwane export value has gone up by 25%. In the same year, Ekurhuleni has experienced a sharp decrease of 55.6% in export value, while West Rand exports have dropped by 6.9%.

From Figure 15 below, it is clear that potato exports from the Kwa-Zulu Natal province are primarily from eThekwini Municipality. High export values for the Municipality were recorded in 2005. In 2006 and 2007, there was a significant decline in potato value recorded for eThekwini Municipality. In 2009, Ugu district recorded its first potato export value in a 10 year period. In 2010, there was a significant increment in export value recorded for eThekwini municipality. Export value for the leading municipality has declined to a record low in 2011. During 2012, eThekwini municipality continued to lead in Kwazulu Natal potato exports and Uthungulu also contributed significantly to

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sedibeng 50492 1304950 0 0 220 0 0 0 600 0

West Rand 0 27755 0 0 0 0 77020 16382 10004893 9306580

Ekurhuleni 313678 259380 2056693 1298002 2286055 1620307 1138261 2270444 40501706 17955869

City of Johannesburg 21414767 23358794 20708279 27909582235764848192305990167354546205287162108985051140588737

City of Tshwane 0 639948 134022 1900250 47329711 61865907 62713768 49695205 68687657 86356771

0

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Figure 14: Value of potato exports by Gauteng Province

18

Kwazulu Natal exports after six years of recording a zero trade. During 2013 eThekwini continued to lead in potato exports from Kwazulu Natal and export value for Uthungulu has significantly dropped in comparison to 2012 export values. In the same year, Zululand district contributed to Kwazulu Natal potato exports for the first in a ten year period, but the value was insignificant. The use of the Durban harbour as an exit point may have played a major role in the eThekwini municipality being a leader in the export of potatoes from the Kwa-Zulu Natal province. During 2014, Uthungulu district has notably contributed to Kwazulu Natal potato exports and eThekwini export has significantly increased in comparison to the previous year export values. eThekwini district has continued to lead in Kwazulu Natal potato exports and the export value has notably increased by 16%. ILembe has also recorded a notable export value of R186 980. At the same time, Umgungundlovu, Zululand and Sisonke potato export values were less significant.


Figure 16 below shows that, from 2006 to 2011, there was no potato exports recorded from Free State province despite being one of provinces producing high volumes of potatoes. During 2012, Xhariep recorded a significant export value for the first time in a ten year period. This is a good development as it shows that the Free State is producing and exporting its own potatoes. In 2013, Free State province exported potatoes through Xhariep and Lejweleputswa districts, and the export value for both districts have surged when compared to the previous year. During 2014, Thabo Mofutsanyane was the main contributor to Free State potatoes exports, Fezile Dabi export value has notably gone up while Xhariep export value has slightly decreased. Overall Free State export value had a positive growth, which can be attributed to an increase in potato exports to the neighbouring Lesotho. Thabo Mofutsanyane has contributed significantly to Free State provincial potato exports in 2015. At the same time, Mangaung and Lejweleputswa have also recorded

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Ugu District 0 0 0 119739 0 0 0 0 0 0

UMgungundlovu 0 0 0 0 0 0 0 0 0 17700

Zululand 0 0 0 0 0 0 0 1149 0 30391

Uthungulu 0 0 0 0 0 0 93412 5798 229090 92390

ILembe 0 0 0 0 0 0 0 0 0 186980

Sisonke 0 0 0 0 0 0 0 0 0 8700

Ethekwini 437567 330182 609290 573855 1253572 321363 386406 556130 1797360 2091607

0

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Figure 15: Value of potato exports by Kwazulu Natal Province

19

notable increases in potato export values, while Xhariep export value has dropped by 11.7% in comparison to 2014 export value.


Figure 17 below illustrates the potato exports from Limpopo province from 2006 to 2015.


2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Xhariep 0 0 0 0 0 0 7566836 9575950 8333984 7358079

Lejweleputswa 0 0 0 0 0 0 12177 0 3201616 6391571

Thabo Mofutsanyane 0 0 0 0 0 0 1500 0 1328589716822354

Fezile Dabi 0 0 0 0 0 0 0 8590 248411 72878

Mangaung 0 0 2083764 2948576

0

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Figure 16: Value of potato exports by Free State Province

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Mopani 0 0 0 0 0 0 0 0 959961 110969

Vhembe 0 0 0 0 33170 39255 640 27000 3499 4665

Capricorn 0 28409 0 47175 6951194 0 3225 461 1366453 11880625

Waterberg 0 0 0 0 0 0 6000 6585 1505825 1557830

Greater Sekhukhune 0 0 0 0 0 0 0 0 0 126451

0

2000000

4000000

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Figure 17: Value of potato exports by Limpopo Province

20

Figure 17 above shows that, in 2006 and 2008, Limpopo province has recorded zero trade for potatoes. Capricorn recorded its first export value in 2007 and during 2009, export value has notably increased.. In 2010, the high export value was recorded for Capricorn district municipality. During 2011, Limpopo province potato exports were exported through Vhembe district. In 2012, Waterberg district recorded its first export value in a ten year, but the value was less significant. In the same year, export values for Mopani and Vhembe district were insignificant. In 2013, Limpopo province exported potatoes through Vhembe, Capricorn and Waterberg districts; however the export value for Capricorn district was insignificant. During 2014, Waterberg district was the main contributor to Limpopo provincial potato exports, followed by Capricorn and Mopani districts. In 2015, Limpopo province has exported potatoes through Mopani, Vhembe, Capricorn, Waterberg and Greater Sekhukhune. This is a good development as Limpopo is one of the provinces with high potato production. The highest export value was also recorded during 2015 and it was recorded for Capricorn district.


From Figure 18 above, it is clear that potato exports from the Mpumalanga province were mainly from Ehlanzeni and Nkangala District Municipalities. High export values for the leading municipalities were recorded in 2010 (for Nkangala) and 2012 (for Ehlanzeni). However, there has been fluctuation in terms of export values from the leading municipalities in the past ten years. In 2008 and 2009, the province has recorded a zero trade for potatoes. In 2011, export values for both Nkangala and Ehlanzeni has dropped significantly when compared to 2010 export values. During 2012, Mpumalanga exported potatoes only from Ehlanzeni district and the value has surged when compared to the 2011 export value. In 2013, Gert Sibande contributed for the first time to Mpumalanga potato exports during a ten year period. At the same time Nkangala export value has increased while the export value for the Ehlanzeni has surged when compared to 2012 export values. In 2014, Ehlanzeni continued to lead in Mpumalanga potato exports and Gert Sibande has recorded high export value compared to the previous year. During 2015, Ehlanzeni potato export value has sharply increased by 32%. Nkangala export value was incomparably higher when compared to 2014 export value. in the same year, Gert Sibande export value has experienced a 5% decrement.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Gert Sibande 0 0 0 953080 0 0 0 35468 1381030 1309997

Nkangala 0 0 0 0 6093000 594 0 29167 29994 262180

Ehlanzeni 52832 17031 0 0 182452 6751 7256832 11382219 14976331 19815070

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Figure 18: Value of potato exports by Mpumalanga Province

21


Figure 19 shows that, from 2006 to 2011, Eastern Cape province has recorded a zero trade for potatoes. In 2012, Nelson Mandela district municipality has recorded considerable export value after seven years of zero potato trade from Eastern Cape province. During 2013, Cacadu district contributed to Eastern Cape potato exports for the first time in a 10 year period. In 2014, Eastern Cape exported potatoes primarily through Alfred Nzo and Amatole districts. Exports from Joe Gqabi and Nelson Mandela districts were less significant. During 2015, Nelson Mandela district potato export have substantially increased, while Alfred Nzo export value has slightly dropped in comparison to 2014 values. At the same time, Cacadu export value has notably improved while Chris Hani and Joe Gqabi export values were trivial.


2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Cacadu 0 0 0 0 0 0 0 0 9090 0 24474

Amathole 0 0 0 0 0 0 0 0 0 37393 0

Chris Hani 0 0 0 0 0 0 0 0 0 0 120

Joe Gqabi 0 0 0 0 0 0 0 0 0 5418 220

Alfred Nzo 0 0 0 0 0 0 0 0 0 177513 167913

Nelson Mandela 0 0 0 0 0 0 0 10383 0 4366 94930

020000400006000080000

100000120000140000160000180000200000

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Figure 19: Value of potato exports by Eastern Cape Province

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Bojanala 323374 0 280052 168057 229020 251123 710797 1280227 5516765 15082640

Ngaka Modiri Molema 0 0 0 0 0 0 0 0 74640 557557

Dr Ruth Segomotsi Mompati 0 74800 0 0 0 393388 3730235 115745482397212631086482

Dr Kenneth Kaunda 0 0 0 0 0 0 0 0 16047 93150

0

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Figure 20: Value of Potato exports by North West Province

22

Figure 20 shows that, Bojanala district municipality was the exit point for potato exports from the North West province during 2006. In 2007, Dr Ruth Segomotsi Mompati was the exit point for North West Potato exports. From 2008 to 2010, the province has recorded potato trade through Bojanala district. As of 2011 to 2013, North West has exported potatoes from Dr Ruth Segomotsi Mompati and Bojanala districts. During 2014, overall export values for North West have notably increased and the exports were sourced from Bojanala, Dr Ruth Segomotsi Mompati and Ngaka Modiri Molema. High exports values can be attributed to an increase in potato exports to the neighbouring Botswana in the same year. In 2015, the overall export value for North West has continued to increase and all districts export values have experienced significant increments when compared to previous year values. This can be attributed to 17.3% of South Africa’s potato exports destined to the neighbouring Botswana.


Figure 21 above shows that from 2006 to 2012 the Northern Cape province has recorded a zero potato trade. During 2013, Namakwa district contributed for the first time to Northern Cape potato exports and the export value was notable. In 2014, Northern Cape exports were exported through Namakwa and Siyanda districts. The high export value by Northern Cape can be attributed to an increase in potato exports to neighbouring Namibia. During 2015, Namakwa and Siyanda have dramatically dropped and this can be attested to 28% decrement in value of exports destined to Namibia. 2.4 Share analysis Table 3 is an illustration of provincial shares towards national potato exports. It shows that Western Cape and Gauteng provinces have commanded the greatest share of potato exports for the past ten years. From 2006 to 2008, Western Cape has commanded more than 60% and Gauteng export share range between 25% and 35% of South Africa potato export shares. This is in spite of the fact that Free State and Limpopo together with the Western Cape are the leading producers of potatoes. As explained earlier, this means that the leading export provinces (Western Cape and Gauteng) derive their advantage from the fact that the registered exporters are based in their

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Namakwa 0 0 0 0 0 0 0 135300 223016 14440

Siyanda 0 0 0 0 0 0 0 0 297000 7236

0

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Figure 21: Value of potato exports by Northern Cape Province

23

provinces and they also have exit points for potato exports. In 2010, Gauteng has commanded the greatest share of 86.14% of potato export share. During 2011, Gauteng continued to lead in potato export share and it has commanded 86.14%, while export shares for Western Cape has recorded low export share of 13.74%. During 2012, Western Cape has increased its export share to 24.30% and Gauteng export share has dropped to 71% in comparison to 2011 export share. In the same year, Free State province has commanded 2.33% of South Africa’s potato export share. This is a positive development considering that the province has commanded zero shares for that past seven years, despite being one of the top provinces producing potatoes. In 2013, Gauteng province continued to command high potato export share, but the export share has dropped to 68.35%. At the same time, Western Cape export share has slightly gone up to 25.73%, while Mpumalanga export share has gone up to 3.04% when compared to 2012 export shares. During 2014, Western Cape export share has notably increased to 43.32%, Gauteng export share has dropped from 68.35% to 45.62%, while Free State export share has gone up to 5.43%. During 2015, Western Cape export share has dropped to 30.34% and Gauteng share has increased to 51.97%. Limpopo export share has increased to 2.80%, Free State share has gone up to 6.87% and Mpumalanga province has recorded 4% share.

The above scenario raises concerns about the availability of marketing infrastructure and agro-logistics in the other major potato producing provinces of South Africa like Free State and Limpopo because Gauteng not a potato producing region and yet above 50% share of South African potato exports in 2015) are exported through this province. Table 3: Share of provincial potato exports to the total RSA potato exports (%)

Years Province

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Western Cape 63.97 62.23 62.49 58.87 6.69 13.74 24.30 25.73 43.32 30.34

Eastern Cape 0 0 0 0 0 0 0 0 0.04 0.06

Northern Cape 0 0 0 0 0 0 0 0.04 0.10 0

Free State 0 0 0 0 0 0 2.33 2.55 5.43 6.87

Kwazulu-Natal 0.71 0.48 0.97 0.90 0.39 0.11 0.15 0.15 0.41 0.50

North West 0 0 0 0 0 0 0 0.13 1.03 3.10

Gauteng 35.24 37.23 36.54 40.17 88.79 86.14 71.00 68.35 45.62 51.97

Mpumalanga 0.09 0.02 0 0 1.95 0 2.23 3.04 3.28 4.37

Limpopo 0 0.04 0 0.06 2.17 0.01 0 0.01 0.77 2.80

South Africa 100 100 100 100 100 100 100 100 100 100

Source: Calculated from Quantec Easydata

The following tables (Table 4 – 12) show the share of provincial potato exports to the total national potato exports.

24

Table 4: Share of district potato exports to total Western Cape provincial potato exports (%) Year District

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

City of Cape Town 97.27 99.23 99.62 98.64 98.79 98.87 93.81 89.20 84.47 85.75

West Coast 0 0 0 0 0 0.48 2.03 0.98 9.80 9.25

Cape Winelands 0 0 0 0.60 0.28 0.02 3.45 8.93 4.61 3.99

Overberg 0 0 0 0 0 0 0 0.07 0 0

Eden 2.73 0.60 0.33 0.75 0.93 0.64 0.71 0.90 1.13 0.97

Western Cape 100 100 100 100 100 100 100 100 100 100 Source: Calculated from Quantec Easydata

Table 4, above indicates that the City of Cape Town municipality commanded the greatest share of potato exports from Western Cape Province. From 2006 to 2011, City of Cape Town has commanded more than 95% of Western Cape potato export shares. The City of Cape has continued to command high export shares and during 2012, it commanded 93.81% share of exports and Cape Winelands export share has increased to 3.45%. During 2012, West Coast, Cape Winelands and Eden have increased their export shares. In 2013, City of Cape commanded 89.20% of Western Cape potato export share. At the same time Cape Winelands has slightly increased its export share to 8.93% and West Coast and Eden export shares were insignificant. Cape Town Harbour renders exit point for exports from this province. During 2014, City of Cape Town export share has dropped further to 84.47% and West Coast export share has notably gone up to 9.80% share. City of Cape Town has continued to lead in Western Cape potato exports and in 2015, the district has increased its export share to 85.75%, while other district has experienced slightly decrement in their export shares. Table 5: Share of district potato exports to the total Gauteng provincial potato exports (%) Year District

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sedibeng 0.23 5.10 0 0 0 0 0 0 0 0

West Rand 0 0.11 0 0 0 0 0.03 0.01 4.38 3.66

Ekurhuleni 1.44 1.01 8.98 4.17 0.80

0.63

0.49 0.88 17.75 7.06

City of Johannesburg 98.33 91.28 90.43 89.71

82.61

75.18

72.36 79.79 47.76 55.30

City of Tshwane 0 2.50 0.59 6.11 16.58

24.19

27.12 19.32 30.10 33.97

Gauteng 100 100 100 100 100 100 100 100 100 100


Table 5 above shows that the City of Johannesburg has commanded the greatest shares of potato exports from Gauteng province. As of 2006 to 2008, City of Johannesburg has commanded more than 90% of Gauteng export share. In 2010, City of Johannesburg commanded export share has dropped to 75.18% and City of Tshwane export share has gone up to 16.58%. During 2012, City of Johannesburg has commanded the greatest share in Gauteng and the City of Tshwane has

25

increased its export share to 27.12%. During 2013, City of Johannesburg was still the highest contributor to Gauteng potato export shares. It has commanded 79.79%, followed by the City of Tshwane with 19.32% and Ekurhuleni export share was insignificant. OR Tambo International Airport renders exit point for exports from these municipalities. In 2014, there was a severe drop in the City of Johannesburg export share which was 47.76%. At the same time, City of Tshwane, Ekurhuleni, and West Rand have notably increased their export shares. City of Johannesburg has continued to lead in Gauteng potato exports and in 2015, it has commanded 55.30% share of exports. At the same time, City of Tshwane export share has increased to 33.97% share, while Ekurhuleni and West Rand have dropped their export shares to 7.06% and 3.66% respectively. Table 6: Share of district potato exports to the total Limpopo provincial potato exports (%)

Year District

2006 2007 2008 2009 2010 2011 2012 2013 2014

2015

Mopani 0 0 0 0 0 0 0 0 25.03 0.81

Vhembe 0 0 0 0 0.47 100 6.49 79.30 0.09 0.03

Capricorn 0 100 0 100 99.53 0 32.69 1.35 35.62 86.84

Waterberg 0 0 0 0 0 0 60.82 19.34 39.26 11.39

Greater Sekhukhune 0 0 0 0 0 0 0 0 0 0.92

Limpopo 0 100 0 100 100 100 100 100 100 100 Source: Calculated from Quantec Easydata

Table 6 illustrates that, Capricorn commanded the greatest share of potato exports from Limpopo province. In 2006 and 2008, Limpopo province has recorded a zero potato trade. During 2007 and 2009, Capricorn has commanded 100% share of Limpopo provincial export share. Capricorn continued to dominate in Limpopo export and it has commanded a 99.53% share. In 2011, Vhembe commanded a 100% share of potato exports from Limpopo province. During 2012, Waterberg contributed to Limpopo potato export share for the first time in a ten year period and it has commanded 60.82% share and Capricorn has recorded 32.69% share. At the same time, Vhembe district export share has drastically dropped from 100% to 6.49% share. In 2013, Vhembe has recorded 79.30% share while Waterberg export share has dropped from 60.82% to 19.34%. During 2014, Mopani export share has increased to 25.03% and Capricorn export share has gone up to 35.62%. At the same year, Waterberg export share has gone up from 19.34% to 39.26% share. In 2015, Capricorn has commanded a greatest share of 86.845% for Limpopo potato export while Waterberg district export share has dropped from 39.26% to 11.39%. Table 7: Share of district potato exports to the total Kwa-Zulu provincial potato exports (%)

Years District

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Ugu District 0 0 0 17.26 0 0 0 0 0 0

UMgungundlovu 0 0 0 0 0 0 0 0 0 0.73

Zululand 0 0 0 0 0 0 0 0.20 0 1.25

Uthungulu 0 0 0 0 0 0 19.47 1.03 11.30 3.81

ILembe 0 0 0 0 0 0 0 0 0 7.70

26

Years District

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sisonke 0 0 0 0 0 0 0 0 0 0.36

EThekwini 100 100 100 82.74 100 100 80.53 98.77 88.70

86.15

Kwazulu Natal 100 100 100 100 100 100 100 100 100 100 Source: Calculated from Quantec Easydata

Table 7 above indicates that eThekwini district municipalities commanded the greatest share of potato exports from Kwazulu Natal province. From 2006 to 2008, 2010 and 2011, eThekwini commanded a 100% share of potato exports from Kwazulu Natal province . The greatest share by eThekwini can be attributed to Durban harbour which renders export exit point. Ugu district has contributed to Kwazulu Natal export share only in 2009 and it has commanded 17.26%. In 2012, the eThekwini continued to lead in potato exports, but the export share has decreased to 80.53%. Uthungulu contributed notably by commanding a 19.47% share. During 2013, eThekwini district increased its export share to 98.77% and Zululand and Uthungulu export shares were insignificant. During 2014, Uthungulu has increased its export share from 10.3% to 11.30% and eThekwini export share has gone down to 88.70%. At the same time Uthungulu export share has dropped from 26.71% to 1.03% share. eThekwini potato export share has dropped slightly to 86.15% in 2015, while ILembe has commanded 7.70% share of potato exports from Kwazulu Natal province. Table 8: Share of district potato exports to the total Free State provincial potato exports (%)

Year District

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Xhariep 0 0 0 0 0 0 99.82 99.91 30.69 21.90

Lejweleputswa 0 0 0 0 0 0 0.16 0 11.79 19.03

Thabo Mofutsanyane 0 0 0 0 0 0 0.02 0 48.93 50.08

Fezile Dabi 0 0 0 0 0 0 0 0.09 0.91 0.22

Mangaung 0 0 0 0 0 0 0 0 7.67 8.78

Free State 0 0 0 0 0 0 100 100 100 100 Source: Calculated from Quantec Easydata

Table 8 shows that, from 2006 to 2011, the province has recorded a zero trade for potatoes. Xhariep commanded more than 99% of potato exports in the Free State province in 2012 and 2013. During 2014, Xhariep export share has dropped from 99.91% to 38.11% and Thabo Mofutsanyane has recorded a greatest share of 60.75% of Free State potato exports. At the same time Fezile Dabi export share has gone up to 1.14% share when compared to 0.09% in the previous year. In 2015, Thabo Mofutsanyane has commanded 50.08% potato export share, Lejweleputswa export share has notably increased to 19.03%, while Xhariep export share has dropped to 21.90% in comparison to the 2014 export share.

27

Table 9: Share of district potato exports to the total Mpumalanga provincial potato exports (%)

Year District

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Gert Sibande 0 0 0 0 0 0 0 0.31 8.43 6.13

Nkangala 0 0 0 0 97.09 8.09 100 0.25 0.18 1.23

Ehlanzeni 100 100 0 0 2.91 0 0 99.44 91.39 92.65

Mpumalanga 100 100 0 0 100 8.09 100 100 100 100 Source: Calculated from Quantec Easydata

Table 9 above illustrates that Ehlanzeni district has commanded 100% share of potato exports from Mpumalanga province in 2006 and 2007. During 2008 and 2009, Mpumalanga has recorded a zero potato trade. In 2010, Nkangala district commanded a 97.09% share of potato exports and 2011, Nkangala commanded a 100%% share. During 2013, Ehlanzeni commanded 99.44% while Gert Sibande and Nkangala export shares were insignificant. Ehlanzeni continued to dominate in Mpumalanga export share and it has commanded 91.39% share of potato export share from Mpumalanga province. In the same year, Gert Sibande export share has gone up from 0.31% to 8.43%. Ehlanzeni has continued to lead in Mpumalanga Potato export and during 2015, it has commanded 92.65%, while Gert Sibande export share has dropped to 6.13%. Table 10: Share of district potato exports to total Eastern Cape provincial potato exports (%)

Year

District

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Cacadu 0 0 0 0 0 0 0 100 0 8.51

Amathole 0 0 0 0 0 0 0 0 16.64 0

Chris Hani 0 0 0 0 0 0 0 0 0 0.04

Joe Gqabi 0 0 0 0 0 0 0 0 2.41 0.08

Alfred Nzo 0 0 0 0 0 0 0 0 79.00 58.37

Nelson Mandela 0 0 0 0 0 0 100 0 1.94 33

Eastern Cape 0 0 0 0 0 0 100 100 100 100

Source: Calculated from Quantec Easydata Table 10 shows that in 2012, Nelson Mandela district commanded a 100% share of potato exports from Eastern Cape Province and from 2006 to 2011, the province has recorded a zero potato trade. In 2013, Cacadu district municipality has commanded 100% share of Eastern Cape potato export. During 2014, Alfred Nzo has commanded the greatest share of 79% of Eastern Cape, Amathole has commanded 16.64% share while Joe Gqabi and Nelson Mandela exports share were insignificant. In 2015, Alfred Nzo potato export share was down from 79% to 58.37%, whilst Nelson Mandela and Cacadu districts have increased their export shares to 33% and 8.51%. Table 11: Share of district potato exports to total North West provincial potato exports (%)

Year Districts

2006

2007

2008

2009

2010

2011 2012 2013 2014 2015

Bojanala 100 0 100 100 100 38.9 16.0 9.96 18.6 32.2

28

Year Districts

2006

2007

2008

2009

2010

2011 2012 2013 2014 2015

6 1 5 1

Ngaka Modiri Molema 0 0 0 0 0 0 0 0 0.25 1.19

Dr Ruth Segomotsi Mompati 0 100 0 0 0

61.04

83.99

90.04

81.04

66.40

Dr Kenneth Kaunda 0 0 0 0 0 0 0 0.05 0.20

North West 100 100 100 100 100 100 100 100 100 100 Source: Calculated from Quantec Easydata

Table 11 above illustrates that, in 2006, 2008 to 2010, Bojanala commanded 100% share of North West potato export share. During 2007, Dr Ruth Segomotsi Mompati district has commanded 100% share of North West potato export share. In 2011, Dr Ruth Segomotsi Mompati district and Bojanala have commanded 61.04% and 38.96% shares of potato exports from North West province. As of 2012 to 2013, Dr Ruth Segomotsi Mompati district export share have increased steadily, while Bojanala export share has steadily declined. In 2014 and 2015, Dr Ruth Segomotsi Mompati district was still the main role player in North West potato export share, even though there was a steady decline in export share recorded for this municipality. During the same time, Bojanala district export share has steadily increased to 32.21%. . Table 12: Share of district potato exports to the total Northern Cape provincial potato exports (%)

Year

District

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Namakwa 0 0 0 0 0 0 0 100 42.89 66.62

Siyanda 0 0 0 0 0 0 0 0 57.11 33.38

Northern Cape 0 0 0 0 0 0 0 100 100 100


Table 12 above shows that from 2006 to 2012, Northern Cape province has recorded a zero trade for potatoes. During 2013, Namakwa has commanded the 100% share of potato exports from Northern Cape province. During 2014, Namakwa potato export share has dropped to 42.89% and Siyanda has recorded 57.11% of Northern Cape province and, this was the first export share recorded for this district municipality. In 2015, Namakwa export share has gone up from 42.89% to 66.62%, whilst Siyanda export share has dropped to 33.38%. 2.5 South Africa’s potato imports South Africa is self-sufficient in terms of potato production; this is attested by low potato imports by South Africa. During 2015, South Africa’s potato imports represent 0% of world imports for potatoes and its ranking in the world is 201. South Africa potato imports were ranked number 158 in 2014. In 2010, South Africa imported potatoes from Zambia and Nigeria. During 2011, Zambia was the sole supplier of potato imported from by South Africa. In 2012, South Africa imported potatoes from Ghana. In 2013, South Africa imported 70.1% of potatoes from Swaziland, 22.1% from Namibia and 2.6% from Botswana. During 2014 South Africa has sourced potatoes from Swaziland (70.8%), Namibia (25%) and Botswana (3.3%). Globally, Russian Federation, Belgium,

29

Netherlands, Italy, United States of America, Spain and United Kingdom were the top countries importing potatoes during 2014. In 2015, South Africa has imported insignificant 2.72 tons of potatoes.


Figure 22 above illustrates South Africa’s potato imports in a period of 10 years. In 2006, South Africa has imported just above 100 tons of potatoes and during 2007, the imports were insignificantly low. The high potato imports were recorded in 2008, despite a 6% increase in the domestic output. In 2009, potato imports decreased by 83% despite low domestic production output in the same year. During 2011, potato import has increased by 10% despite a 5% increase in the domestic output. In 2012, South Africa potato imports increased by 81% despite a 2.5% increase in the domestic production output. It was more expensive to import potatoes in 2007, since high values were recorded for lower volumes imported. It was cheaper to import potatoes during 2012. During 2013, South Africa potato imports surged by 144% and this can be ascribed to 3% decline in potato output in the same year. South Africa paid lower value for 2013 potato imports in comparison to 2012 import value. South Africa’s potato import volume has dropped by 25% in 2014 in comparison to 2013. It was also cheaper to import potatoes when compared to 2013 imports. In 2015, South Africa potato import has sharply dropped from 357 tons to 2.72 tons, and it was fairly cheaper to import potatoes when compared to 2014 export value. Figure 23 below shows South Africa’s potato seed imports in the period of 10 years. South Africa is generally not a major potato seed importer, which shows that South Africa is self-sufficient in producing its own potato seeds. This is attested by low import volumes. However, in 2011, South Africa’s potato seed imports surged higher when compared to other years. In 2010, South Africa imported seeds from Germany and Netherlands. During 2013, South Africa’s seed imports represented 0% of world imports and it is ranked number 142. In 2011, South African seed imports were sourced from Zimbabwe and Netherlands. During 2012, South Africa imported potato seeds from Netherlands, Germany and Japan. Netherlands supplied 54.5% and United States of America supplied 45.5% of South Africa’s potato seed imports in 2013. South Africa has imported 5 tons of

0

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Figure 22: Potato imports by South Africa

Volume (tons) Value (Rand)

30

potato seeds during 2014. During 2015, South Africa’s potato has surged to 76% and the imports were cheaper when compared to 2014 imports. Netherlands with 77.1% share is the leading supplier of South Africa’s potato seeds, followed by China with 14.3%. Globally, Egypt, Algeria, Belgium, Germany, Spain and Italy were still the top countries importing potato seeds during 2015.


Figure 25 below, illustrates South Africa’s provincial potato imports in a ten year period. South Africa imported potato primarily through Gauteng province. Free State province has recorded an import value during 2010 but the value was insignificant. Kwazulu Natal province has imported potatoes from 2006 to 2009, however the import values were less significant. During 2008, a notable import value was recorded for Western Cape Province. High import value for Gauteng was recorded in 2013. In 2014, high import values were registered for Kwazulu Natal and Mpumalanga however Gauteng import value has drastically dropped in comparison to 2013 import value. In 2015, South Africa has imported potatoes mainly Mpumalanga and Free State. Other municipalities have recorded trivial values.

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Figure 24: South Africa's potato seed import

31


Figure 26 below illustrates the value of South Africa’s provincial potato seed imports from 2006 to 2015.


2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Western Cape 0 0 48331 0 0 0 0 260 0 195

Free State 0 0 0 0 83 0 0 0 0 2000

KwaZulu-Natal 9274 9507 6619 4120 0 0 0 0 371083 12

Gauteng 298577 10792 806541 131369 264879 227875 446109 1486310 381395 167

Mpumalanga 0 0 0 0 0 0 0 0 550441 4940

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Figure 25 : Value of South Africa's provincial potato imports

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Western Cape 0 30541 6480 12659 10960 8625 25407 38064 0 16822

Northern Cape 0 0 0 32823 0 10087 5250 19535 0 0

Free State 0 0 0 0 0 0 0 0 1850 0

KwaZulu-Natal 0 0 0 0 0 0 0 269 0 330291

North West 0 0 0 0 248 0 0 0 0 0

Gauteng 11024 0 12505 250 73461 53896 9077 48587 0 81204

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Figure 26: Value of South Africa's provincial potato seed imports

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Figure 26 shows the value of South Africa’s potato seed imports in a ten year period. South Africa potato seeds were mainly imported through Gauteng and Western Cape provinces. In 2009, high import value was recorded for Northern Cape province. High import value for Gauteng was recorded in 2010, 2011 and 2013. Western Cape has recorded a high seed import value during 2013. Seed import values for North West and Kwazulu Natal were insignificant. During 2014, seed import value was recorded only for Free State province but the import value was less significant. A notable import value was recorded for Kwazulu Natal and Gauteng provinces during 2015. At the same time, Western Cape import value was less significant, 2.5 Processing Apart from being consumed fresh, potatoes are processed into a number of products. According to Potatoes South Africa, 20% of South Africa’s total table potatoes production was processed in 2014. The industry development comes mainly from frozen fries, dry crisp and fresh chips. The manufacturing of dry, frozen and fresh chips comprise 98% of processed potato products while the remaining 2% was used for canned and mixed Vegetables. As depicted in Figure 27, the quantity of potatoes taken in for processing has been stable in the past decade. In 2009 there was a 3.5% increase in quantity taken for processing. This growth was mainly due to the expansion in the fast-food industry; the higher average income of the population, rapid rate of urbanization and the influx of international processing companies. A major shift in the value of processed potatoes was a 60% increase in 2009. In 2010, processed volumes increased by 9.9%, while the value of processed potatoes increased by 7.5%. There was a 5.6% drop in potatoes volumes that were processed during 2011. In 2012, the processed volume dropped by 3.6% when compared to 2011 processed potatoes. During 2013, volumes that were processed declined further by 4.3% and the value of processed potatoes has dropped by 15% when compared to 2012. There was a 14% increase in the volumes that were processed during 2014 in comparison to the previous year. In 2015, processed volume went up by 11% in comparison to 2014 processed volume and at the same time the value of processed potatoes has also increased by 11.5%.

Source: Statistics, and Economic Analysis, DAFF

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Figure 27: Total processed potatoes

Volume (Tons) Value (Rands)

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3. MARKET INTELIGENCE 3.1 Competitiveness of South African potato exports Competitiveness is described as an industry’s capacity to create superior value for its customers and improved profits for the stakeholders in the value chain. The driving force in sustaining a competitive position is productivity that is output efficiency in relation to specific inputs with regard to human, capital and natural resources. In 2015, South African potato exports represented 1.5% of world exports and its ranking in the world export was still number 17. South Africa competitiveness in terms of potato exports has not improved as in 2014, South Africa’s exports accounted for 1.54% of the world exports. In 2015, South African potato seed exports represented 1.06% of world exports and it was ranked number 8. South Africa has gained its competitiveness as in 2014, there was no ranking for South Africa’s potato seed exports As depicted in Figure 28 below, South African potato exports are growing faster than the world imports into Gabon, and Zambia and Democratic Republic of Congo markets. South Africa’s performance in these markets can be regarded as gains in dynamic markets. South African potato exports are growing slower than the world imports into Botswana, Malawi, Lesotho, Tanzania and Saint Helena. These markets are dynamic and South Africa’s performance should be regarded as an underachievement. South African potato exports are growing while the world imports are declining in Mozambique market. South Africa’s performance in those markets can be regarded as gains in declining markets and should be viewed as an achievement in adversity. At the same time South African potato exports have declined faster than the world imports into Swaziland, Togo, Angola and Zimbabwe market. South Africa’s performance in those markets can be regarded as a loss in declining markets

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Figure 28: Growth in demand for potatoes exported by South Africa in 2015

Source: ITC Trade Map

35

Figure 29: Growth in demand for potato seed exported by South Africa in 2015


36

As depicted in Figure 29 above South African potato seed exports are growing faster than the world imports in Zambia market. South Africa’s performance in these markets can be regarded as gains in dynamic markets. South African potato exports are growing slower than the world imports into Botswana, Zimbabwe, Angola and Democratic Republic of the Congo markets. These markets are dynamic and South Africa’s performance should be regarded as an underachievement. South African potato seed exports are declining faster than the world imports into United States of America, Lesotho, Swaziland, Mozambique and Saint Helena . South Africa’s performance in those markets can be regarded as a loss in declining markets. South Africa’s potato exports are growing while the world imports are declining in China market. South Africa’s performance in those markets can be regarded as gains in declining markets and should be viewed as an achievement in adversity. Figure 30 below illustrates prospects for market diversification by South African exporters of potatoes. In 2015, Mozambique and Namibia held a bigger market share of South African potato exports. In terms of the market size Belgium, Russian Federation, Netherlands, Germany, Spain, United States of America and Italy are the leading markets/importers of potatoes. Whilst seven countries dominate world fresh potato imports, it is interesting to note that countries like Tanzania, Lesotho and Malawi have experienced higher annual growth rate in value from 2011 – 2015. Tanzania has experienced an annual growth rate of 108%. Second was Lesotho with 41% annual growth rate. These countries represent possible lucrative markets for South African potato producers. Potatoes imports from the world to Qatar and Zimbabwe have declined between 2011 – 2015 and as a result, these countries have recorded a negative growth rate of 44% and 53% respectively. Figure 31 below illustrates prospects for market diversification by South African exporters of potato seed. In 2015, Zimbabwe and Zambia held a bigger market share of South African potato seed exports. In terms of market size Egypt, Algeria, Belgium, Germany, Spain and Italy are the leading markets/importers of potato seed. Whilst six countries dominate world potato imports, it is interesting to note that countries like Qatar has experienced higher annual growth rate in value from 2011 to 2015. Qatar has experienced an annual growth rate of 283%. This country represents possible lucrative market for South African potato seed producers. Potato seed imports from the world to Swaziland and China have declined from 2011 to 2015 and as a result, those countries have recorded a negative growth rate of 22% and 52% respectively.

37

Figure 30: Prospects for market diversification for potatoes exported by South Africa in 2015


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Figure 31: Prospects for market diversification for potato seeds exported by South Africa in 2015


39

4. MARKET ACCESS Barriers to trade can be divided into tariff barriers (including quotas, ad valorem tariffs, specific tariffs and entry price systems) and non-tariff barriers (sanitary and phytosanitary measures, labels, etc.). The main markets for vegetables (including potatoes) employ various measures, both tariff and non-tariff to protect the domestic industries. Whilst many of the non-tariff measures can be justified under the auspices of issues such as health and standards, the tariff measures are increasingly under the scrutiny of the World Trade Organization (WTO), and as such are gradually being phased out. Nevertheless, exporters need to be aware of all the barriers that they may encounter when trying to get their produce on foreign shelves. 4.1 Tariff, quotas and the price entry system Tariffs are either designed to earn government revenue from products being imported or to raise the price of imports so as to render local produce more competitive and protect domestic industries. Quotas can be used to protect domestic industries from excessive imports originating from areas with some form of competitive advantage (which can therefore produce lower cost produce). Tariffs and quotas are often combined, allowing the imports to enter at a certain tariff rate up to a specified quantity. Thereafter, imports from that particular region will attract higher tariffs, or will not be allowed at all. The entry price system, which is used in many northern hemisphere markets, makes use of multiple tariff rates during different periods when domestic producers are trying to sell their produce, and lower the tariffs during their off-season. Alternatively, the tariff rate can be a function of a market price – if the produce enters at a price which is too low (and therefore likely to be too competitive), it qualifies for a higher tariff schedule. Whilst tariff regulations can be prohibitive and result in inferior market access, it is often the non-tariff barriers that restrict countries like South from successfully entering the large developed markets. Many of these barriers revolve around different types of standards, including sanitary and phytosanitary standards (SPS), food health and safety issues, food labelling and packaging, organic produce certification, quality assurance and other standards and grades. Tariffs applied by various markets to potatoes originating from South Africa during 2014 and 2015 are presented in Table 13.

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Table 13: Tariffs applied by various export markets to potatoes from South Africa

COUNTRY PRODUCT DESCRIPTION ( H070190)

TRADE REGIME APPLIED TARIFFS

TOTAL AD VALOREM EQUIVALENT TARIFF

APPLIED TARIFFS


2014 2015

Angola Potatoes fresh or chilled MFN duties (Applied) 50.00% 50.00% 50.00% 50.00%

Botswana Potatoes fresh or chilled Intra SACU rate 0.00% 0.00% 0.00% 0.00%

Canada Fresh or chilled potatoes (excluding seed) MFN duties (Applied) 4.31$/Ton 1.05% 4.08$/Ton 0.97%

Congo Potatoes fresh or chilled MFN duties (Applied) 30.00% 30.00% 35.00% 35.00%

China Fresh or chilled potatoes (excluding seed) MFN duties (Applied) 13.00% 13.00% 13.00% 13.00%

DRC Potatoes fresh or chilled MFN duties (Applied) 10.00% 10.00% 10.00% 10.00%

EU Potatoes for manufacture of starch, fresh or chilled

Preferential tariff for South Africa 0.00% 0.00% 0.00% 0.00%

Egypt Potatoes fresh or chilled MFN duties (Applied) 5.00% 5.00% 5.00% 5.00%

EU Fresh or chilled potatoes from 1 January to 30 June


Ghana Potatoes fresh or chilled MFN duties (Applied) 20.00% 20.00% 35.00% 35.00%

India Potatoes fresh or chilled MFN duties (Applied) 30.00% 30.00% 30.00% 30.00%

Israel Potatoes fresh or chilled MFN duties (Applied) 474.67$/Ton 113.96% 10.00% 10.00%

Malawi Potatoes fresh or chilled Preferential tariff for South Africa 0.00% 0.00% 0.00% 0.00%

Swaziland Fresh or chilled potatoes Intra SACU rate 0.00% 0.00% 0.00% 0.00%

Mauritius Potatoes fresh or chilled MFN duties (Applied) 0.00% 0.00% 0.00% 0.00%

Mozambique Potatoes fresh or chilled Preferential tariff for South Africa 0.00% 0.00% 0.00% 0.00%

Lebanon Potatoes fresh or chilled General tariff 70.00% 70.00% 70.00% 70.00%

Namibia Potatoes fresh or chilled Intra SACU rate 0.00% 0.00% 0.00% 0.00%

Ukraine Fresh or chilled potatoes (excluding seed) MFN duties (Applied) 10.00% 10.00% 10.00% 10.00%

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COUNTRY PRODUCT DESCRIPTION ( H070190)

TRADE REGIME APPLIED TARIFFS


APPLIED TARIFFS


2014 2015

Lesotho Potatoes fresh or chilled Intra SACU rate 0.00% 0.00% 0.00% 0.00%

Zimbabwe Potatoes fresh or chilled

Preferential tariff for

South Africa 0.00% 0.00% 0.00% 0.00%

United Arab Emirates Potatoes fresh or chilled MFN duties (Applied) 0.00% 0.00% 0.00% 0.00%

USA

Fresh potatoes, other than yellow (Solano) potatoes or seed potatoes

Preferential tariff for AGOA countries 0.00% 0.00% 0.00% 0.00%

Zambia Potatoes fresh or chilled: other


Source: Market Access Map

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South Africa has a preferential trading agreement (PTA) with the EU and they apply zero tariffs to potatoes originating from South Africa. Furthermore, South Africa has access to the US market under the AGOA, which significantly lowers the tariff barriers for South African potatoes. In reality, the tariffs are likely to be far lower for South Africa when considering the preferential agreements, but at the same time, most tariff structures are particularly complex, with quotas, seasonal tariffs and specific tariffs (an amount per unit than rather than a percentage of value) all contributing to many different tariff lines and often higher duties payable than one might have anticipated initially. One must also bear in mind that most tariffs are designed to protect domestic industries, and as such are likely to discriminate against those attempting to compete with the domestic producers of that country. One can also see that certain countries wishing to protect their local industries (presumably in which they feel vulnerable or where a large number of farmers are employed) will raise prohibitive levels. China is the largest potato producer and it applies 13% tariff for potatoes originating from South Africa. India is the second largest potato producer and it applies a high tariff of 30% to potatoes originating from South Africa. During 2015, 27.8% of South Africa’s potato exports were exported to Mozambique, 19.2% to Namibia, 17.3% to Botswana and 16.5% to Angola. Namibia, and Botswana apply 0.00% Intra-SACU tariff, to potatoes originating from South Africa. Angola is still highly protected by a tariff of 50%, despite SADC- Free Trade Agreement (FTA). Mozambique and Zimbabwe have reduced their tariff to 0%, thereby complying with SADC- Free Trade Agreement (FTA). Tariffs applied by various markets to potato seeds originating from South Africa during 2014 and 2015 are presented in Table 14. South Africa has a preferential trade agreement (PTA) with the EU and no tariff is applied for potato seeds from South Africa. Furthermore, South Africa has access to the US market under the AGOA, which significantly lowers the tariff barriers for South African potato seed. During 2015, South Africa exported potato seeds mainly to Zimbabwe (30.8%), Zambia (23.3%), Mozambique (13%) and Namibia (12.1%). Zambia and Zimbabwe apply 0.00% preferential tariff due to SADC- Free Trade Agreement (FTA). Namibia and Zimbabwe apply 0.00% tariff, to seed potatoes originating from South Africa. Mozambique has reduced its tariff from 2.50% tariff to 0.00% tariff to potato seed originating from South Africa. In reality, the tariffs are likely to be far lower for South Africa when considering the preferential agreements, but at the same time, most tariff structures are particularly complex, with quotas, seasonal tariffs and specific tariffs (an amount per unit rather than a percentage of value) all contributing to many different tariff lines and often higher duties payable than one might have anticipated initially. One must also bear in mind that most tariffs are designed to protect domestic industries, and as such are likely to discriminate against those attempting to compete with the domestic producers of that country. One can also see that certain countries wishing to protect their local industries (presumably in which they feel vulnerable or where a large number of farmers are employed) will raise prohibitive levels Angola have reasonably high tariffs of 50% for potato seed originating from South Africa.

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Table 14: Tariffs applied by various export markets to potato seed from South Africa

COUNTRY PRODUCT DESCRIPTION (070110)

TRADE REGIME

APPLIED TARIFFS


APPLIED TARIFFS


2014 2015 Algeria Seed potatoes: fresh or chilled General tariff 5.00% 5.00% 5.00% 5.00%

Angola Seed potatoes: fresh or chilled MFN duties (Applied) 50.00% 50.00% 50.00% 50.00%

Canada Seed potatoes: fresh or chilled MFN duties (Applied) 4.08$/ton 1.67% 4..08$/ton 1.67%

Botswana Seed potatoes Intra SACU rate 0.00% 0.00% 0.00% 0.00%

DRC Seed potatoes: fresh or chilled MFN duties (Applied) 5.00% 5.00% 5.00% 5.00%

EU Seed potatoes Preferential tariff for South Africa 0.00% 0.00% 0.00% 0.00%

Ghana Seed potatoes MFN duties (Applied) 0.00% 0.00% 5.00% 5.00%

Iran Seed potatoes General tariff 4.00% 4.00% 4.00% 4.00%

Malawi Seed potatoes Preferential tariff for South Africa 0.00% 0.00% 0.00% 0.00%

Kenya Seed potatoes MFN duties (Applied) 25.00% 25.00% 25.00% 25.00%

Egypt Seed potatoes MFN duties (Applied) 2.00% 2.00% 2.00% 2.00%

Malaysia Seed potatoes MFN duties (Applied) 0.00% 0.00% 0.00% 0.00%

Mexico Seed potatoes MFN duties (Applied) 0.00% 0.00% 0.00% 0.00%

Lesotho Seed potatoes Intra SACU rate 0.00% 0.00% 0.00% 0.00%

Mozambique Seed potatoes Preferential tariff for South Africa 2.50% 2.50% 0.00% 0.00%

China Seed potatoes MFN duties (Applied) 13.00% 13.00% 13.00% 13.00%

Namibia Seed potatoes Intra SACU rate 0.00% 0.00% 0.00% 0.00%

Swaziland Seed potatoes Intra SACU rate 0.00% 0.00% 0.00% 0.00%

Turkey Seed potatoes MFN duties (Applied) 19.30% 19.30% 19.30% 19.30%

USA Seed potatoes: fresh or chilled Preferential tariff for AGOA countries 0.00% 0.00% 0.00% 0.00%

Zambia Seed Potatoes Preferential tariff for South Africa 0.00% 0.00% 0.00% 0.00%

Zimbabwe Seed Potatoes Preferential tariff for South Africa 0.00% 0.00% 0.00% 0.00%

Source: Market Access Map

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5. DISTRIBUTION CHANNELS There are roughly three distinct sales channels for exporting vegetables. One can sell directly to an importer with or without the assistance of an agent. One can supply vegetables combined, which will then contract out importers/marketers and try to take advantage of economies of scale and increased bargaining power. At the same time combined vegetables might also supply large retail chains. One can also be a member of a private or cooperative export organization which will find agents or importers and market the produce collectively. Similar to combined vegetables, an export organization can either supply wholesale market or retail chains, depending on particular circumstances. Export organizations will wash, sort and package the produce. They will also market the goods under their own name or on behalf of the member, which includes taking care of labelling, bar-coding, etc. Most of the time, export organizations will enter into a collective agreements with freight forwarders, negotiating better prices and services (more regular transport, lower peak season prices, etc.). Some countries have institutions that handle all the produce (membership compulsory) and sell only to a restricted number of selected importers. Agents will establish contacts between producers/export organizations and buyers in the importing country, and will usually take between 2% and 3% commission. In contrast, an importer will buy and sell his/her own capacity, assuming the full risk (unless on consignment). They will also be responsible for clearing the produce through customs, packaging and assuring label/quality compliance and distribution of the produce. Their margins lie between 5% and 10%. The contract importers of fruit combines market and distribute the produce of the combines, clear it through customs and in some cases treat and package it. Only few exporters have long term contracts with wholesale grocers who deliver directly to retail shops, but with the increasing importance of standards (EurepGap, Global Gap, etc.) and the year round availability of fruit, the planning of long term contractual relationship is expected to increase. 6. LOGISTICS

6.1 Mode of transport The transport of vegetables falls into two categories, namely ocean cargo and air cargo. Ocean cargo takes much longer to reach the desired, location but costing considerably less. The choice of transportation method depends, for most parts on the fragility of the produce and how long it can remain relatively fresh. With the advent of technology and container improvements, the feasibility, cost and attractiveness of sea transport have improved considerably. With the increased exports by South Africa, the number and the regularity of maritime routes have increased. These economies of scale could benefit South Africa if more producers were to become exporters and take advantage of the various ports which have special capabilities in handling fruit produce (Durban new fruit terminal). Potato South Africa has held several transformation Symposiums, with an aim to create a platform for emerging Black potato producers and community project leaders to meet, discuss challenges, find solutions and to plan ahead. It also create a platform for industry role players in the potato value chain to meet and be part of the solution in assisting emerging Black potato producers to progress to fully fledged commercial potato producers.

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6.2 Cold chain management

Cold chain management is crucial when handling perishable products, from the initial packing houses to the refrigerated container trucks that transport the produce to the shipping terminals, through to the storage facilities at these terminals, onto actual shipping vessels and containers, and finally on to the importers and distributors that must clear the produce and transport it to the markets/retail outlets. For every 10 Degree Celsius increase above the recommended temperature, the rate of respiration and ripening of produce can increase twice or even thrice. Related to this are increasing important traceability standards which require an efficient controlled supply chain and internationally accepted business standards. 6.3 Packaging Packaging can also play an important role in ensuring safe and efficient transport of a product and conforming to handling requirements, uniformity recyclable material specifications, phytosanitary requirements, proper storage needs and even attractiveness for marketing purposes. The potato industry currently relies on two suppliers of paper for packaging of potatoes. The local producer of paper namely Sappi, supplies the bulk of the paper with Gerber Paper Products importing the balance mostly from Scandinavian countries and from Brazil. All the paper complies with the strict specifications of the Department of Agriculture, Forestry and Fisheries. The Packaging Forum takes care of the supply of paper and packaging to the industry and also ensures that the packaging is manufactures according to the specifications prescribed by Department of Agriculture, Forestry and Fisheries. 6.4 Quality control The potato industry is one the few fresh produce industries currently in South Africa, which has a full quality assurance service at all the fresh produce markets in the country. The potato industry acknowledges the importance of this service and recognizes the added benefit that results from this, such as traceability of the product. The quality assurance is provided to the potato industry by PROKON (Product Control for Agriculture) an article 21 company. PROKON is charged with establishing and maintaining product quality for the benefit of all, from farmers to the potato consumer. 7. TRANSFORMATION Potatoes South Africa has been involved in transformation projects over the years and the results are slowly beginning to bear fruits. The number of hectares of potatoes planted by black farmers is on the rise and there are farmers who have potential to farm commercially and they are currently receiving support from Potatoes South Africa. During the past years, Potatoes South Africa focused on the following projects in contribution to potato industry transformation: Enterprise development, small grower development program, tertiary skills pipeline, farm based training and Black Economic Empowerment (BEE) Baseline study. 8 BUSINESS OPPORTUNITIES AND CHALLENGES

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8.1 Business opportunities Two major shifts in production and processing of potatoes are expected to have a significant impact on the South African potato industry in the future. The first is the continuation of the shift from the dry land production to the irrigated production. Over and under production during good and poor seasons will be eliminated, a more and constant supply and, therefore, greater price stability within the subsector are anticipated. The second shift is that over the years, the demand for potatoes locally has grown and manifested by the increase in the sales of potatoes on the fresh produce markets, as well as the increase in the volume of potatoes taken in for processing. This growth could imply a move away from traditional staple food such as maize, especially in the urban areas. An increasing number of countries in sub-Saharan Africa are reportedly also turning to South Africa as a reliable source of food. This may therefore considerably increase the possible market size for South African potatoes. 8.2 Challenges The constraints and market failures hinders investment, growth and employment in the industry. The main challenge facing the industry is to maintain the quality of the produce for exports so that quantities reach destinations in a desired form. It is also very expensive to keep fresh potatoes on refrigerated transport especially where the distance is very long. Other challenges for the industry include:

Increased production for the supply of international markets while at the same time to decrease production cost and to make profit.

Protection of the local potato industry against dumping practices and protection against imports from subsidized countries.

Phyto-sanitary requirements for the European markets.

Climatic conditions that affect production.

Packaging paper price on the world market.

Rapid escalation in production costs especially fuel.

Lack of infrastructure in remote rural areas in accessing markets, especially for small-scale producers.

Water for agriculture. South Africa is located in semi-arid part of the world with an average rainfall of 450mm per annum – well below the world average of approximately 860mm per year. As a result, South Africa’s water resources are, in global terms, extremely limited. This is of special importance to the potato sector, which is heavily dependent on water for irrigation given that 70% to 80% of all potatoes are produced under irrigation.

Cheap imports have the potential to jeopardize domestic processing industry.

Frequent labour unrest.

New exotic pest (Tomato Leaf Miner and Fall Army Worm)

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Figure 32: South Africa potato value chain

Source: Potatoes South Africa

48

9. SOUTH AFRICAN POTATO MARKET VALUE CHAIN The following discussion will focus on the main segments of the potato value chain (see Figure 32) which are the informal sector and the formal sector. 9.1 Informal sector According to Potatoes South Africa, during 2014 informal traders were responsible for the distribution of 53% of all fresh potatoes sold on the fresh produce markets and for 28% of all potatoes sold, including informal trade from fresh produce markets, urban and rural sales. Currently an unknown number of informal traders purchase 10kg pockets from fresh produce markets, or directly from producers, repackage them into 1kg or 2kg plastic bags and sell these (or just sell the potatoes loose) in a number of settings in both rural and urban areas. This form of trading in urban areas has reportedly emerged as a direct result of changes in urban eating habits and urbanization. 9.2 Formal sector The formal sector consists primarily of the large retailers in South Africa, such as Fruit and Veg City; Pick ‘n Pay, Shoprite-Checkers, Spar and Woolworths, and small retailers such as greengrocers and independent stores. It consumes an estimated 31% of all fresh potatoes produced, excluding any processed potatoes products that also go through normal trading channels. The formal trade in potatoes generally concentrates on the sale of high quality fresh potatoes, either loose or in smaller packaging. Some of the formal traders undertake their own packaging, branding, advertising and sometimes even semi-processing of fresh potatoes through direct purchases from producers, through dedicated wholesalers and from fresh produce markets. 10. ACKNOWLEDGEMENTS 10.1 The following industries are acknowledged: 10.1.1 Potato South Africa Private Bag X 135

Pretoria 0001 Tel (012) 349 1906/7 Fax: (012)349 2641/7 www.potatoes.co.za

10.1.2 National Department of Agriculture, Forestry and Fisheries

Directorate: Statistics and Economic Analysis Private X 246 Pretoria 0001 Tel (012) 319 8454 Fax (012) 319 8031 www.daff.gov.za

http://www.potatoes.co.za/

http://www.daff.gov.za/

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10.1.3 Perishable Export Control Board

P. O. Box 15289 Panorama 7506 Tel (021) 930 1134 Fax (021) 930 6868 www.ppecb.com

10.1.4 Trade and Industrial Policy Strategies (TIPS)

P. O. Box 11214 Hatfield 0028 Tel (012) 431 7900 Fax (012) 431 7910 www.tips.org.za

10.1.5 National Agricultural Marketing Council (NAMC)

Private Bag X 935 Pretoria 0001 Tel (012) 341 1115 Fax: (086) 626 4769 www.namc.co.za

10.1.6 International Trade Centre (ITC)

www.trademap.org 10.1.7 Product Control for Agriculture

P.O. Box 24026 Gezina 0031 Tel (012) 325 4579 Fax (012) 325 4585 www.prokonsa.co.za

10.2 The main mixed vegetable manufacturers. 10.2.1 Dimpho Fresh Food

P. O. Box 3746 Vereeniging 1930 Tel (016) 421 3840 Fax (021) 422 1400

10.2.2 Golden Harvest

http://www.ppecb.com/

http://www.tips.org.za/

http://www.namc.co.za/

http://www.trademap.org/

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P. O. Box 1206 George 6530 Tel (044) 873 3716 Fax (044) 873 3917

10.2.3 McCains

P. O. Box 231 Springs 1560 Tel (011) 365 3000 Fax (044) 818 4096

10.3 The main French fries (fresh) manufacturers. 10.3.1 Dimpho Fresh Food

P. O. Box 3746 Vereeniging 1930 Tel (016) 421 3840 Fax (021) 422 1400

10.3.2 Errol Veg (direct)

P. O. Box 44294 Jeppes Town Tel (011) 365 3000 Fax (044) 818 4096

10.3.3 Mannic Chips

Edenvale Tel (011) 452 6894

10.3.4 Rooipoort Fresh Products

P. O. Box 25212 Monument Park 0181 Tel (012) 326 1388 Fax (021) 326 3724

10.3.5 Super Chip

P. O. Box 150 Kraaifontein 7569 Tel (021) 884 4708 Fax (021) 884 4102

10.4 The main French fries (frozen) manufacturers.

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10.4.1 McCains

P. O. Box 231 Delmas 2210 Tel (013) 665 1690 Fax (013) 665 1275

10.4.2 Lamberts Bay Canning Co.

P. O. Box 1 Lambertsbay 8130 Tel (027) 432 1101 Fax (027) 432 2002

10.4.3 Mine Corp Services

P. O. Box 69 Kliprivier 1871 Tel (011) 903 8963 Fax (011) 903 8910

10.5 The main canned food manufacturers. 10.5.1 Langeberg Koop

P. O. Box 1460 Boksburg 1460 Tel (011) 914 221 Fax (011) 899 8498

10.5.2 Giants Foods

P. O. Box 2007 Makhado 0920 Fax (015) 894 8261

10.6 The main crisps manufacturers. 10.6.1 Dowmont Foods

P. O. Box 1386 New Germany 3620 Tel (031) 700 5129 Fax (031) 700 4749

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10.6.2 Frimax

P. O. Box 1047 Pietermaritzburg 3209 Tel (032) 233 8616 Fax (032) 233 8622

10.6.3 Kavalier Foods

P. O. Box 1627 Germiston 1400 Tel (011) 873 2113 Fax (011) 825 2932

10.6.4 L & C Messaris

P. O. Box 105 Elsiesrivier 7480 Tel (021) 592 5300 Fax (021) 591 4018

10.6.5 Willards

P. O. Box 251 Rosslyn 0200 Tel (012) 529 5300 Fax (012) 541 1928

10.6.6 Poco Foods

P. O. Box 251 Bethal 2310 Tel (017) 647 1081 Fax (017) 647 6107

10.6.7 Simba Quix

P. O. Box 99 Isando 1600 Tel (011) 974 5435 Fax (011) 392 1294

Disclaimer: This document and its contents have been compiled by the Department of Agriculture, Forestry and Fisheries for the purpose of detailing the potato industry. Anyone who uses this information does so at his/her own risk.

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The views expressed in this document are those of the Department of Agriculture, Forestry and Fisheries with regard to agricultural industry, unless otherwise stated. The Department of Agriculture, Forestry and Fisheries therefore, accepts no liability that can be incurred resulting from the use of this information.

a profile of the south african potato market value … · in 2015, potato industry contributed...

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