Weak oil price puts pressure on African markets

After strong growth, South African potato exports down 18%

South Africa is self-sufficient in potatoes. 2015 was an exceptionally good year with a harvest of 250 million 10kg bags, which fell to 214 million 10kg bags in 2016 due to drought and excessive heat. This year it appears as if the area under potatoes is somewhat less, but a better harvest than last year can be expected, says Dr André Jooste, CEO of Potatoes SA.

Approximately 50 000 to 54 000ha is annually planted with potatoes, most of this in the Eastern Free State Province under dryland conditions, followed by Limpopo Province, under irrigation. Limpopo produces the largest volume of potatoes. Domestic prices are currently slightly higher than in previous years (excluding 2016), due to supply to the market, reduced plantings and climatic conditions.

There is thus far no evidence of damage to potatoes by the infamous fall army worm, currently ravaging maize and other cereal crops in Southern Africa. Potatoes SA postulates that this might be because potato farmers already spray against potato tuber moth and that these insecticides provide protection against the fall army worm. 

About half of the national volume goes toward informal trading channels, for sale by street hawkers or small general dealers, emphasising potatoes’ increasing importance as a staple food crop. The value of the primary industry is estimated at R7 billion (€507 million) but if processing and other value-added activities are included all the way downstream to the consumer, it has a value of up to R21 billion (€1.5 billion).

Potatoes, a labour intensive industry, employs almost 10% of the South African labour force in primary agricultural activities, while using less than 1% of arable land, Jooste mentions.

According to Potatoes SA, between 6 and 8% of South Africa’s total production of potatoes is exported to neighbouring countries, with a fraction destined for the Middle East and other parts of Africa. South Africa provides potatoes (mostly fresh potatoes but also seed potatoes) to all of its neighbours. It provides 100% of the potato imports to Zimbabwe and Mozambique; 96% of Angola’s potatoes. South Africa is second to Egypt in potato exports in Africa. 

The value of exports reached a record R583 million (€42 million) in 2014, representing a 33% increase between 2013 and 2014, according to the Agricultural Business Chamber (Agbiz).

However, explains Tinashe Kapuya, head of international trade at Agbiz: “From a volume perspective, exports for 2016 will expectedly be lower. We expect a fall from 155 667 tons in 2015, to about 120 000 tons in 2016 – which is an 18% decline. We are waiting for December 2016 statistics to determine the exact fall.“

Dr Jooste of Potatoes SA ascribes the slump in exports to lower yields as well as, on the part of an oil-producing country like Angola, a weakening of the oil price. The effect of the low oil price is illustrated by the fact that Angola’s potato imports from South Africa halved between 2015 and 2016.

He mentions another factor for the export decrease: “One of our biggest problems is that countries close their borders to South African potatoes at certain times without good reason. The ‘infant industry’ argument is often put forward, but carries little substance.”

South Africa has also had to contend with imports, especially frozen French fries from the EU. There is currently an anti-dumping tariff in place for five years. According to Potatoes SA’s recent annual report: “The anti-dumping tariff specifically applies to imports from the Netherlands and Belgium. Unfortunately, notwithstanding the above measures, frozen French fries still enter the country. This is ascribable to the low European producer prices due to a massive European potato crop and the mutual sanctions between the European Union and Russia (the latter is an important buyer of potatoes and potato products produced in European Union member countries).”

For more information:
André Jooste
Potatoes SA
Tel: +27 12 349 1906

Tinashe Kapuya
Tel: +27 12 807 6686

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