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South African Agro-Processing Export Sector

Introduction

The South African agricultural sector provides a host of investment and export opportunities in a number of different sub sectors. As a country with different climatic regions, from semi-arid to sub-tropical, a wide variety of crops, livestock and game are to be found. A sound transport infrastructure, deep-water ports, international airports, long-established cold-chain facilities, a well-developed financial services sector that sets South Africa apart from many developing economies, and a commitment on the part of government to promoting and developing an efficient and innovative industry to complement these.

The Department of Trade and Industry (the dti) defines Agro processing as; “the subset of manufacturing that processes raw materials and intermediate products derived from the agricultural sector. This is a value adding industry that includes processes that follow harvesting, including those activities that do not necessarily change the form of the product but improves its value.”

The agro-food complex (inputs, primary production, processing) contributes approximately R124bn to South Africa’s GDP, i.e. 14% and employs 451 000 people in the formal sector, i.e. 10%.

The Agro processing sector (food, beverages and tobacco) contributes 16.4% (R131.3bn) to total manufacturing sales in 2004, making it the third largest manufacturing sector in South Africa. The food manufacturing industry is largely self-sufficient, but imports most of its rice requirements from the Far East and USA. The food processing industry has 12 downstream sub sectors. The are meat processing; dairy products; preservation of food and vegetables; canning and preserving fish; fruit canning and jams; vegetable and animal oils and fats; grain mill products; sugar mills and refineries; chocolate and sugar confectionery; prepared animal foods; bakery products and other food products, such as starch and starch products; and ready-made meals.

The industry’s the top five export destination in 2005 were United Kingdom (R3.8bn), Netherlands (R2.7bn), Zimbabwe (R1.5bn), Germany (R1.2bn) and Japan (R1.1bn).

South Africa distinguishes itself as being one of a few net processed food-exporting countries globally. It ranks as one of the top five exporters of grapes, avocadoes, citrus, and plums. There is a vibrant red meat industry and South Africa supplies 70% of the world’s Ostrich products. South Africa is additionally distinguishing itself as a producer of high-quality New World wines at competitive prices, and is the 8th largest wine producer in the world.

Wines

The Cape wine growing areas have a Mediterranean climate that is ideal for cultivating wine grapes, making the Cape the producer of some of the world’s most outstanding wines. With its rugged mountains and wide valleys, the Western cape is also one of the most beautiful areas of the country and a flourishing wine tourism industry. The industry produces both classic wines and contemporary fruit driven styles of the New World. Both red and white varietals are grown with the focus on Cabernet Sauvignon, Merlot, Chardonnay and Sauvignon Blanc and the uniquely South African red wine varietal, Pinotage. Although local vineyards account for just 1,5 % of the world’s vineyards, South Africa ranks as number eight in volume production of wine and produces 3% of the world’s wine. South African wines resort under the top ten export products of South Africa. Wine exports broke through the R 3 000 million (US$ 426 million) barrier for the first time in 2002. The main wine export destinations are the United Kingdom, The Netherlands and Germany with new markets such as the USA, Japan and Canada taking an ever-increasing slice of South African exports. The Industry showcase their excellence annually at the London Wine Trade Fair as well as biannually at Cape Wine, a local event in South Africa.

Sugar

South Africa is a cost competitive producer of high quality crystal sugar. Unfair trade practices such as farmer support and export subsidies by major sugar producers makes it impossible for South Africa to reap the benefit of its cost competitiveness in this area. Instead of exporting this natural resource, sugar value-added processors are slowly but surely starting to export more and more value added sugar products.

Fruit

South Africa is exporting a wide range of fresh fruit ranging from deciduous (apples, pears, grapes), to citrus (oranges, mandarins, grapefruit) and subtropical fruit (avocados, mangoes and litchis). Our fresh fruit industry is ranked amongst the top five in the world and we boast with well- known world brands such as Cape and Outspan. Our main export markets are the US, UK, Germany, Netherlands, France and Belgium. New markets include China. Modern farming methods, good climatic conditions and counter seasonality are but a view of our strong competitive advantages. The industry is a fore-runner in fruit farming methods, packaging and long distance air and sea transport techniques and is fortunate to have excellent air- and sea ports from where to reach the world markets. Total fruit exports total around R 8 billion.

Fruit Juices

South Africa’s premier 100% pure and natural fruit juices are on the move. Fruit juices are one of the fastest growing Agro processing sub sectors. It’s popularity, based on good quality, new flavours and stylish looks is growing internationally as inroads are made by brands such as Ceres, Appletiser and Cape Span. Flavours like apple, grape, pineapple and exotic blends form the basis of the South African range. Markets targeted by the industry are the Netherlands, USA, Canada, Singapore and Japan.

Meat

The meat sector is the biggest agricultural sector in South Africa, contributing 22,3 % to the total value of agricultural production. Apart from conventional animal production, South Africa is rich in unique, indigenous resources such as ostrich, goat, Nguni, game and crocodile that in most instances have not been optimally exploited on a commercial basis.

South Africa has a good meat infrastructure and research facilities with a good genetic pool as well as quality control and description processes.

South African beef is renowned for its high quality, tenderness and taste. As much as 70% of South Africa’s cattle are finished for slaughtering in sophisticated feedlots to produce animals which are well-fleshed, lean and of good conformation.

South Africa hosts around 4% of the world small stock. The Dorper, the second largest sheep herd in South Africa, is a South African bred sheep with excellent carcasses qualities in terms of conformation and fat distribution. South Africa also has a world-renowned genetic Boer Goat pool and is currently increasing its capacity in goat meat production.

The pig industry produces several outstanding breeds including the Large White, SA Landrace, Duroc and Hampshire. The modern housing, feeding and slaughter methods used in South Africa compare favourably with the best in the world. The health standards of the South African pig industry are acknowledged and respected by pig producing countries around the world.

South Africa is the world’s largest supplier of ostrich meat and leather, slaughtering more than 350 000 birds per year.

New investments in meat processing has now placed South Africa on the fore front of technology in terms of processed meat.

Rooibos and Honey bush tea

These are the two indigenous teas produced in South Africa. Both of them can only grow naturally in South Africa. Their exports have seen an exponential growth in the last few years resulting in increased opportunities for investments both in the cultivation of the raw materials and processing of the two teas. Their growth can be attributed mainly to the growing consumer awareness of health and environmental issues. They have many properties such as organic, herbal and decaffeinated teas.

A new range of industries in the South African agro processing sector has come to the fore as of late and it is expected that they will contribute largely to the South African export package in years to come:

  • Floriculture 
  • Aquaculture 
  • Game/Exotic meats

Key Contacts:

1. Wines of South Africa
Su Birch
Tel.: +27 21 883 3860
Fax.: +27 21 883 3861
E-mail: su@wosa.co.za  
Website: www.wosa.co.za  

2. South African Sugar Association
Quinton Hildebrand (International Marketing Director)
Tel.: +27 31 508 7101
Fax.: +27 31 508 7189
E-mail: Quinton.Hildebrand@sasa.org.za  
Website: www.sasa.co.za  

3. Fruits South Africa
Stuart Symington
Tel.: +27 21 674 3202
Fax.: +27 21 683 6280
E-mail: stuart@fpef.co.za  
Website: www.fpef.co.za  

4. The dti Agro Processing Sector
(Fresh fruit and vegetables, canned fruit and vegetables, juices, wine, indigenous teas, furniture, nuts)
Tshifhiwa Madima
Tel + 27 12 394 1149
Fax +27 12 394 2149
E-mail: tshifhiwam@thedti.gov.za  
Website: www.thedti.gov.za  

5. The dti Agro Processing Sector
(Animal products, field crops, floriculture, aquaculture, black tea, sugar and sugar value added products)

Imameleng Mothebe
Tel.: + 27 12 394 1160
Fax +27 12 394 2160 or
E-mail imamelengm@thedti.gov.za  
Website: www.thedti.gov.za  

6. The dti: Export Promotion
(Americas Region)
Nuraan Alli
Tel.: +27 12 394 1133
Fax +27 12 394 2133
E-mail nuraan@thedti.gov.za  
Website: www.thedti.gov.za