South African Business 2018 edition

OVERVIEW
of about four-million tons, definitive
proof that the long drought
which hit South Africa is over, at
least in the central and northern
regions. The Western Cape
drought continues.
The Land Bank intends to put
aside R1-billion in supporting
black agricultural entrepreneurs.
The hope is that by making the
sector more inclusive, long-term
food security will be ensured.
Fruit, sugar and wine make up
about 7% of the country’s total
export basket. Avocadoes, tomatoes
and macadamias are among
other important export crops.
More than 50% of agricultural
export is made up of processed
agricultural products, a promising
development for the future of agriprocessing.
National trade policy
strategies are intended to enhance
this trend. Primary agriculture
provides 5% of formal employment
in South Africa.
Several of the Special Economic
Zones around South Africa either
have or will in the future have
agri-processing facilities.
Examples include existing tomato
paste and dairy facilities at Coega
IDZ and plans to develop the SEZ
at Harrismith (Maluti-A-Phofung)
into a hub for agri-processing.
Several former farmers’ cooperatives
are now substantial
agri-businesses. Most have a
specific geographic and farming
sector focus (BKB is strong in the
eastern Free State and Eastern
Cape and concentrates on wool
and mohair) while others like Afgri
have a national presence.
Senwes has a strong grain division
and it controls 68 silos. Its operations
are run from Klerksdorp in
the centre of the country in North West Province. Other companies include
NTKLA (Limpopo), GWK (Northern Cape), Klein Karoo Agri, VKB (eastern
Free State and Limpopo), Kaap Agri (from the Boland to the Eastern Cape
and up to Namibia), SSK (Overberg) and TWK (KZN and Mpumalanga).
Crops
A total of 70% of South Africa’s grain production is maize, which
covers 60% of the cropping area of the country. The North West Province
produces one third of South Africa’s maize and about 15% of its wheat.
The Free State is the country’s largest supplier of wheat (37%) and maize
(34%). The Western Cape has 350 000ha of wheat-producing land.
Macadamia nuts is one of the fastest-growing sectors in South Africa.
Almost all of nuts produced are exported and the global market is
expanding every year: nearly 2 000ha are added to the land under
macadamias every year. Mpumalanga and Limpopo provinces are big
nut-growing provinces. Another sector enjoying a boom (mainly because
of Chinese demand) is avocadoes, with almost 1 000ha per year
of new land being planted.
The South Africa feed industry has an annual turnover of about
R50-billion with most of the raw material being soya and maize.
Two of the country’s big three sugar producers (Illovo Sugar and
Tongaat Hulett) each shut down one of their mills because of the extended
drought and the broader trend for sugar production and the
amount of land under sugar cane is downwards. The prospect of a
sugar tax will not help sales. Both of these companies have diversified
portfolios with Tongaat Hulett active in property in KwaZulu-Natal. The
other big sugar company, TSB Sugar, has been acquired by RCL Foods.
The Free State Province supplies significant proportions of the nation’s
sorghum, sunflower, potatoes, groundnuts, dry beans, and almost all of its
cherries. Barley and canola are produced in the Western Cape.
Products distinctive to South Africa, such as rooibos tea (Western
Cape) and marula berries (Limpopo) hold great potential to capture niche
markets internationally.
Fruit
South Africa is famous for its fruit, of which 35% is citrus, 23% subtropical
and nuts, 26% pome fruit, 11% stone fruit and 9% table grapes.
Export volumes, particularly in tropical fruits such as mangoes and
avocadoes, have been growing rapidly in recent years. The sector is
highly sophisticated and is skilled at the refrigeration and packing
required for European Union standards. With clarity now achieved on
refrigeration protocols in China, South Africa intends increasing table
grape exports to that country to R2.5-billion within five years.
61 SOUTH AFRICAN BUSINESS 2018