Avocado prices are 200% up over last year on the municipal markets of South Africa. The average potato price is 22% higher and the carrot price 20% lower than this time last year, according to the market intelligence produced by AMT.
AMT specialises in the analysis and forecasting of the South African fresh produce sector (as well as the grain and livestock sectors) for financial institutions, government departments, agricultural cooperatives and individuals.
It is managed by Dr Johnny van der Merwe, an agricultural economist, who is responsible for the weekly, monthly and quarterly fresh produce market reports (including price forecasts) for paid subscribers.
Reports reflect market sentiment
“I’ve developed a fondness for the fresh produce industry. In South Africa it is very closely linked to the free market system,” says Dr Van der Merwe, who took over management of AMT in 2016. “Price movements within the fresh produce system are very variable and we are also interested in the reasons behind price movements. I felt what is often lacking in market reports is a sense of the market floor, and that is why I started talking to market agents at the different markets across the country.”
Tshwane Municipal Market (copyright: City of Tshwane)
He estimates an average national price for a wide range of vegetable and fruits (32 commodities in the monthly report), weighted to reflect each market’s share of sales.
Last week’s report, for instance, indicates that good quality potatoes are scarce at the moment, as observed by market agents, hence the price rise, while the market feel for tomatoes is that average prices will come under pressure as South Africa enters the summer months.
“Market agents have a very good feel for their commodities,” he notes.
The reports focus mostly on the major vegetables and fruits.
Weekly prices strongly driven by demand
“In general, volume and price correlate negatively, as one would expect. What’s very interesting, is that in the short term, when I compare weeks within a month, it’s clear that demand plays a larger role. In the first and last weeks of the month both volumes and price are often higher, which tells you that it is driven by demand.”
By contrast, he continues, the monthly reports, which take a longer view, show that when comparing average monthly prices, higher volumes are linked to price decreases, following the conventional supply-and-demand relationship.
Market intelligence to small-scale farmers
“Distributing market information to small-scale farmers is something that’s close to my heart,” he says, noting that his Masters degree was in the field of development. “There are a large number of small-scale farmers in the Northwest Province and they’re well situated, close to Gauteng Province. We’re sending market reports to these small-scale farmers via text message, assisting them to make more informed marketing decisions. Having this information helps them not to be taken advantage of and also, if they see that their produce is obtaining lower than average prices, to improve their quality.”
The feedback they have had both from the provincial agricultural department and from the farmers has been such that they are now in talks to extend the service to small-scale farmers in other provinces.
“We have found that vegetable production has high developmental potential. Land availability is a big limiting factor to small-scale farmers, the kind of area you’d need for livestock farming for instance, while vegetables and fruit is something you can start in small areas. And it’s not enough to just survive; a small-scale farmer must be able to grow the business.”
He also makes weekly videos that gives an overview of the market that will assist these farmers and government officials to assist in the decision making process which he’d like to distribute more widely.
“I’d like to get people talking about the markets”
“I’d like to get people enthusiastic about our markets and to get them talking about the markets,” he says. He grew up on a southern Free State sheep farm, so that every day teaches him something new about the dynamic fresh produce industry.
Tshwane Municipal Market (copyright: City of Tshwane)
Upon taking over the company three years ago, he set about improving its data systems, an aspect that he clearly relishes, and now, when faced with an enquiry (what’s the highest domestic price yet for avocados?), he quickly writes a new Excel formula to tell us that the highest municipal market price yet for avocados was R38,69 (2.3 euros) per kilogram, and the highest price this year was during mid-January (R26 or 1.6 euros per kg). The current price (R22,18/kg) is already 21% higher than the previous week as supplies dwindle.
“We give an independent and an honest opinion. We’re not aligned to anyone, I don’t care if the price goes up or down. My mission is to distribute the kind of information that can add value to a producer’s marketing strategy. ”
For more information:
Dr Johnny van der Merwe
AMTrends
Tel: +27 73 140 2698
Email: johnny@amtrends.co.za
https://amtrends.co.za/