A study of the scope and extent of the

utilisation of indigenous resources by bio-prospecting industries in South Africa

Focus on the economic impacts

Contents

• Industry description

• Markets and prices

• Macro-economic context

• Unlocking the value of the industry

Salient features

• Revenue produced from value-added products in domestic retail market, and which contained bio-resources as an ingredient = R1,470 Million in 2011 – Cosmetics (R555 million or 38% of products)

– Personal hygiene products (R585 million or 40% of products)

– Oils (R50 million or 3% of products)

– Food flavourings (R110 million or 8% of products)

– Complimentary medicines (R170 million or 11% of products).

Salient features

• Products containing bio-resources as an ingredient sells between 50%-100% more by retail value – enables bio-prospectors to adopt a variety of marketing strategies

– premium prices,

– or increased stock turn.

Salient features

• Revenue generated in bio-trading segment = R482 million in 2011

– R322 million exported

– R160 million transformed into value-added products

Salient features

• Wild harvesting and cultivation industry = 2,000 to 2,800 tons per year – Weighted average price = R50/kg.

– Revenue of R41 - R57 million per year.

Resource Estimate of the

current size of the

market for bio-

products

(Rand)

Aspalanthus linearus (Rooibos) 34%

Aloe ferox 25%

Pelargonium 11%

Apis (Honey) 10%

Other 20%

RSA Industry growth = 6%/a

-

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

RSA market size

-

100

200

300

400

500

600

700

800

900

1 000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Bioresources market

Projection (high)

Projection (low)

Driven by retail trade

RSA vs Global industry growth (20%/a)

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Global growth Index RSA Growth Index

Largest global markets

-

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000

1 600 000

1 800 000

2 000 000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

US$

10

00

United States of America

Germany

Japan

France

United Kingdom

Largest global suppliers (RSA = 0.4% of Supply)

-

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000

1 600 000

1 800 000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

US$

10

00

China

India

United States of America

Germany

Argentina

Macro-economic context

• Ideal development sector :

– It realises the economic value of indigenous species;

– It facilitates rural economic development;

– It has very high value added potential;

– It has a high potential to earn foreign currency;

– It enables the development of new product markets;

– This is a 100% renewable economy

Job creation

• Occurs throughput the whole value chain • Wild harvesting, cultivation and bio-trading holds the highest

potential • Currently generate an estimated 2,100 jobs • Largest job creation component is in the wild harvesting segment,

– However job quality is lowest, both from a wage rate and job security point of view

– Approximately 50% of bio-products species are sourced from wild harvesting with the rest being cultivated

• New job creation potential is highest in the cultivation and bio-trading segments – An additional 700 to 1,700 new jobs possible by 2018 – (1 perm. Job/ha and 10 seasonal jobs/ha. Source SEOBI)

UNLOCKING THE VALUE OF THE BIO-PROSPECTING INDUSTRY

Cultivation segment

Wild harvesting segment

Bio-prospecting segment

Cultivation segment

• Cultivation is an agricultural activity and holds the largest potential for growing the industry and creating formal jobs

• In order to realise the minimum market potential

– at least 500 hectares per year established for 5 years

• NDA and DLARD have a role to play

Wild harvesting

• Increasing demand for bio-prospecting products will place these wild resources at increasing risk

– Develop suitable resource plans for each key species

– Sustainable harvesting practices

– Consistent permitting requirements

– Effective monitoring systems

• SANBI and the provincial conservation agencies have large roles to play

Bio-prospecting

• Product quality control • Setting of product standards through certification, labelling guidelines and other

means can greatly support the development of the industry. • This would improve the value experience of both wholesale and retail customers

and lead to better prices and increased sales while protecting the brand of the industry.

• A precedent for such an arrangement exists within the wine and spirits industry in South Africa.

• The bio-prospecting industry would have to develop its own governance arrangements, and quality and scientific standards for certification.

• An important step forward for the growth and development of the industry. • The economic asset value South Africa’s unique biodiversity can be significantly

enhanced through this and a uniquely South African brand and trade-mark can be built.

• The DST and DTI would both be instrumental in supporting such an initiative

DEAs role

• DEA has the lead role to play in enabling this sector to develop and should thus be the owner of the strategy required to support this exciting sector.

Conclusion

• Amazing industry

• Market is growing

• Prices are amazing

• Macro-economic impact is still relatively small but has potential to grow

“How can we take advantage of this?”.

THANK YOU