A PROFILE OF THE SOUTH AFRICAN CARROT MARKET VALUE CHAIN 2017

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1 A PROFILE OF THE SOUTH AFRICAN CARROT MARKET VALUE CHAIN 217 Directorate Marketing Tel: Private Bag X 15 Fax: Arcadia MogalaM@daff.gov.za 7

2 TABLE OF CONTENT 1.DESCRIPTION OF THE INDUSTRY Production areas Production Trends Production vs. Consumption of carrots 5 2. MARKET STRUCTURE Domestic market and prices South Africa s Carrots Exports Share Analysis South Africa s Carrot Imports 22 Processing Market value chain for carrots MARKET INTELLIGENCE Tariffs Non tariff barriers GENERAL DISTRIBUTION CHANNELS LOGISTICAL ISSUES Mode of transport Cold chain management Packaging COMPETITIVENESS OF SOUTH AFRICA CARROTS EXPORTS OPPORTUNITIES AND CHALLENGES Opportunities Challenges ACKNOWLEDGEMENTS 39 2

3 Value (Rand) 1. DESCRIPTION OF THE INDUSTRY Carrot is a root vegetable usually orange, white or red, white blend in colour with a crisp texture when fresh. These colours still exist, with orange-red colour being by far the most popular today. The carrot has originated in Asia. The edible part of a carrot is the tap root. Carrots are considered one of the major vegetables consumed in South Africa. It is among the top ten most economically important vegetables crops in the world in terms of both area of production and market value. Rich in Vitamin C, B1 and B2 and particularly rich in carotene (pro-vitamin A), they can be eaten raw, whole, chopped, grated or added to salads, for colour or texture. Carrot has a crisp texture when fresh. They are also often chopped and boiled, fried or steamed and cooked in soups and stews, as well as fine baby foods and selected pet foods. The greens are edible as a leaf vegetable, but are rarely eaten by humans. Some sources suggest that the greens contain toxic alkaloids. Large quantities are also processed either alone or in mixture with other vegetables, by canning, freezing or dehydration. Figure 1: Gross value of carrot production Source: Statistics and Economic Analysis, DAFF Figure 1 above illustrates the contribution of the carrot industry to the gross value of agricultural production over 1 years. In 28, the gross value has increased by 18% when compared to 27 gross value. During 29, the gross value eased marginally higher by 36% when compared to 28 gross value. This can be attributed to high production volumes which occurred while the prices were still in favourable position for producers. The higher gross value was recorded in 21, which was 11% higher when compared to 29 gross value of production. During 211, the gross value dropped by.9% when compared to the previous year. This can be attributed to a drop in producer prices in the same year. The higher gross value was recorded during 212 and the increase was 14.9%, when compared to the 211 gross value. In 213, gross value has gone up by 2.8% when compared to previous year gross value and this can be attributed to 1.3% increase in production output in the same year. Carrots gross value grew by 12.6% during 214 period in 3

4 Tons comparison to the previous year gross value and this can be ascribed to the increase in producer price during the same year. In 215, there was a sharp decrease of 26% in carrot gross value, when compared to 214 gross value, and this can be ascribed to 36.7% drop in producer price. Carrot gross value increased by 24.8% during 216 and the gross value was a record high over a ten year period.this can be ascribed to a 25% increase in the producer price during the same season. 1.1 Production areas Although carrots can endure summer heat in many areas, they grow best when planted in cooler climates. It is difficult to establish carrots in summer because heat, rain and early blights are major causes of crop failure and quality reduction. Carrot production is concentrated in the Western Cape, Gauteng, Free State, North West, Kwazulu Natal and Mpumalanga. Globally, China is the largest producer of carrots, followed by, Russian Federation, United States of America, Uzbekistan Poland, Ukraine, and Morocco is the only African countries, which is among the top ten world carrot producers. 1.2 Production Trends Figure 2 illustrates carrots production volume from 27 to Figure 2: Total production of carrot Source: Statistics and Economic Analysis, DAFF In 27, production output was just above tons per annum and the output was a record low in a ten year period. In 28, the production increased by 13.5% when compared to 27. During 29, carrot production increased by 3% compared to 28 production year. In 21, the production volumes decreased by 4% when compared to 29 production year. The high carrots production output was recorded in 211 and the production increased by 13.6% when compared to 21 production year. In 212, production output increased by 14.9% when compared to the 211 season and the production volume was the highest in a 1 year period. During 213, production output has slightly gone up by 1.3% when compared to the previous year output. Production output 4

5 Tons dropped slightly by 2% during 214 when compared to the previous year production volume. There was a notable increment of 16.9% in production output during 215, when compared to the previous year output. Production output was stable above 12 tons during the 1 year period. During 216, there was a slight decline of.5% in production output, when compared to 215 production. 1.3 Production vs. Consumption of carrot Figure 3 below depicts local consumption of carrots compared to the production over the 1 year period. The figure indicates that the production of carrot is higher than the consumption. This indicates that South Africa is self-sufficient in terms of carrot production and the surplus is also exported. South African carrot consumption was approximately tons during 216. This represents a.3% decrement in consumption compared to the 215 consumption volume. This can be attributed to a slight decline in production volumes in the same year. Figure 3: Production vs Consumption Source: Statistics and Economic Analysis, DAFF Production (tons) Consumption (tons) 2. MARKET STRUCTURE There is no regulation or restriction in the marketing of carrots. The prices of carrots are determined by the market forces of demand and supply. The industry uses local market, informal market, processor and direct selling to wholesalers and retailers. Carrots are also exported to other countries through export agents and marketing companies. South Africa also imports carrots from other countries. 5

6 Tons Rand/ton 2.1 Domestic market and prices Table 1 gives the various channels of distribution through which carrots are marketed in South Africa. Table 1: Carrots sold through different market channels National fresh produce markets (Tons) Processing (Tons) Source: Statistics and Economic Analysis, DAFF Table 1 above shows that in 216, there was a 11.7% rise in processed carrots compared to the previous year. National Fresh Produce Markets (NFPMs) remain an important channel for sale of fresh carrots in South Africa. During 216, 59% of all carrots were distributed through fresh produce markets. The remaining 41% represents direct sales from producers to wholesalers, exports, retailers, processors, informal traders and consumers. Sales at the market have slightly dropped by.1% in comparison to 215 sales Figure 4: Sales of carrots at fresh produce markets Volume (Tons) Value (Rand/ton) Source: Statistics and Economic Analysis, DAFF 6

7 Countries Figure 4 above illustrates the sales of carrots in the national fresh produce markets over the period of 1 years. Carrot volumes and prices were moderately unstable. A record low market price was recorded in 28, when the price dropped by 8.3% as volume increased by 9.5%. In 21 carrots prices increased by 21% as carrots volume dropped by 6.9% across the markets. During 211, market prices dropped by 13.7% due to a 13.3% increase in volumes supplied across the markets. In 212, carrot price dropped further by 7.5% as a result of 15.6% increase in carrots supplied across the market. During 213, market price has gone up by 2.1%, despite a 1.6% increase in carrots at the market and this can be attributed to strong demand of carrots in the same year. In 214 the volume supplied at the market has dropped by.6% and this impacted positively to the market price and the price has gone up by 14% in comparison to the 213 market price. A notable higher volume of tons were supplied at the market in 215, and this has negatively impacted the market price by 18.8%. The was a slight drop of.1% in volume supplied at the markets during 216 and this resulted in a notable 25% increase in market price. 2.2 South Africa s Carrots Exports South Africa is not a major carrot exporter. In 216, it still represented.7% of world exports, however its ranking in the world was number 17. South Africa s ranking in world carrots exporters has improved its competitiveness as in 215, it was ranked number 18. Most of carrots produced were destined for domestic markets. South Africa s carrot exports were mostly destined for Botswana, Mozambique, Angola, Namibia, United Kingdom, Lesotho and Swaziland. Globally, China, United States of America, Netherlands, Spain, Australia, Israel, Belgium and Mexico are the major carrot exporters. High carrots export by China and United States of America can be attributed to the fact that these countries are also ranked in top five in carrot production in the world. Figure 5 below illustrates South African carrot export destinations during 216. Figure 5: South Africa's carrot export destinations in 216 Other United Arab Emirates Zambia Senegal Gabon France Netherlands Zimbabwe Mauritius Swaziland Lesotho United Kingdom Namibia Angola Mozambique Botswana Share in South Africa's exports (%) Source: ITC Trade Map 7

8 Further details relating to the exports of carrots from South Africa in 216 are presented in Table 2. Table 2: South Africa carrot exports in 216 Importers Value exported in 216 (USD thousand) Trade balance 216 (USD thousand) Share in South Africa's exports (%) Quantity exported in 216 (tons) Growth in exported value between (%, p.a.) Growth in exported quantity between (%, p.a.) World Botswana Mozambique Angola Namibia United Kingdom Lesotho Swaziland Mauritius Zimbabwe Netherlands France Gabon Senegal Zambia Growth in exported value between (%, p.a.) United Arab Emirates Congo Source: ITC Trade MAP Table 2 indicates that during 216, South Africa exported higher quantities of carrots to Botswana, Mozambique, Angola, Namibia, United Kingdom, Lesotho and Swaziland. Botswana commanded a 17.3% share of South Africa s carrots export, followed by Mozambique which commanded 14.1% share and Angola has commanded 1.9% share. South African carrot exports to Angola have decreased by 12% in value and 5% in quantity during 212 to 216 period. South Africa s carrot exports to Botswana have dropped by 37% in quantity during 212 and 216 periods. South Africa s carrot export to the United Kingdom has decreased by 2% in value and 29% in quantity between 212 and 216 period. 8

9 Rand Tons Figure 6: South African carrot exports Volume (tons) Value (Rand) Source: Quantec Easydata * Quantec easy data has revised export data to include export to SACU countries from 21. Figure 6 above illustrates carrots exports from South Africa over the past 1 years. In 27, South Africa exported just about above 2 tons of carrots and this can be attributed to low production output in the same year. During 28, carrots exports increased by 17%, when compared to 27 and this can be ascribed to a 13.5% increment in production output in the same year. In 29, there was a 4.5% decrease in export volumes despite high production volumes in the same year. In 21, carrot exports were incomparably higher when compared to the previous year exports, despite a 4% decline in production output in the same year. In 211 export volume was still high, but there was a 1% drop in export and this can be attributed to the 13.6% drop in production output during the same year. During 212, carrot exports have significantly gone down by 76%, when compared to the previous year, despite a 14.9% increase in production output. Export volumes have declined further by 81% during 213, in spite a slight increase, of 1.3% in domestic carrot output. In the same year, it was more profitable to export carrots when compared to 212 export value. In 214 carrot exports increased by 9.5% in comparison to 213 exports and it was more profitable to export carrots.during 215, South Africa carrot export has significantly risen by 49%, when compared to 214 export volume and this can be attributed to 16.9% increment in the domestic output. In the same year, it was less profitable to export carrots in comparison the previous year export value. There was a 1% decrement in South African carrot exports during 216, and this can be ascribed to a slight.5% decline in the domestic production output. It was also relatively more profitable to export carrot, in comparison to 215 export value. Figure 7 below illustrates South African carrot exports to the regions. As can be seen South Africa exports high quantities of carrots to African region (Mozambique, Angola and Zimbabwe), then followed by Europe countries (United Kingdom and France). The high quantities to Africa can be contributed to the cheaper export cost to neighbouring countries. In 27 to 28, considerable 9

10 Volume (Kg) carrots were exported to Americas region. During 27, Oceania region has recorded a notable export volume. From 27 to 21 a notable fraction of South Africa carrot exports were not allocated. During 211, South Africa exported high quantities of carrots to Africa and exports to Europe have increased when compared to the previous year and unallocated export has substantially increased. From 21 to 212, there were no South African carrots exports destined to Americas region and during 213 notable volume of carrot were exported to this region. In the same year, considerable volumes of exports were exported to the Asian region while the unallocated exports have declined significantly. In 212, African region continued to be the biggest export markets for carrots originating from South Africa and more than 75% of carrots were exported to this region. In the same year and in 213, Europe was still a second preferred export market for carrots from South Africa. Considerable volumes were exported to Oceania region while export to Asian region has significantly dropped. During 213, African region was still the preferred export market for carrots from South Africa; however the carrots were also destined to Namibia, Botswana, Swaziland and Lesotho. In 214, carrots exports to Africa and Asia regions have notably increased, while the exports to Europe has dropped by 36% in comparison to the 213 exports. During 215, Africa region has by far the biggest export market for carrots originating from South Africa. At the same time, there was an increase in carrots exports for Europe, Oceania and unallocated exports, whereas the export destined to Asia region has dramatically decreased. In 216, Africa region remained the primary export market for carrots originating from South Africa. At the same time, there was a notable increase in carrot exports destined to Europe and Asia region Source: Quantec Easydata Figure 7: South Africa carrot exports to the regions Africa Americas Asia Europe Oceania Antarctica Not allocated Figure 8 below illustrates South Africa s value of carrot exports to the regions. The figure shows, that it was more profitable to export carrots to European countries since high values were recorded for less volume exported. High export value was also recorded for African countries due to high volumes exported to that region, but it was less profitable to export to this region. In 211, it was also more profitable to export to Asia and the value for unallocated exports was high. In the same 1

11 Value (Rand) year, there was no export values recorded for America and Oceania as there were no carrots exports to these regions. During 212, it was still more profitable to export carrots to European region and unallocated exports also fetched higher value. In the same year, it was still less profitable to export carrots to African region when compared to other regions. In 213, Europe was still the most profitable export market, followed by Oceania and unallocated exports also had a higher value. During the same time exports to African region were less profitable and the least profitable exports were exported to Asian region. During 214, carrot exports to Europe region have fetched high values, followed by Asia and Africa. At the same time, the Americas and Antarctica have recorded zero trade. Europe market was by far the most profitable market for South Africa s carrot export during 215, followed by Asia and Africa was the least profitable export market. In 216, Europe market remained the most profitable export market, followed by Asia, while Africa region was still the least profitable market. At the same time, Americas and Antarctica have registered insignificant export values, while the unallocated export have registered a notable export value. Figure 8: Value of carrots export to the region Africa Americas Asia Europe Oceania Antarctica Not allocated Source: Quantec Easydata Figure 9 below illustrates the value of carrot exports by provinces for the past ten years. The highlights of carrot exports were that the Western Cape, Gauteng, Free State and KwaZulu Natal to a lesser extent consistently registered exports during the past ten years. In 27, Mpumalanga province has recorded an insignificant export values. During 29, Western Cape export value has notably increased, while KwaZulu Natal and Gauteng export values have gone down. During 211, Gauteng export value has surged, Mpumalanga and Limpopo export values have notably increased. The high carrot export value was recorded in 212 and the exports were exported through Gauteng province. In the same year, Limpopo, Mpumalanga and KwaZulu Natal export value has significantly increased and Free State has contributed for the first time to South Africa s carrot exports. 11

12 Value (Rand) During 213, Western Cape, Gauteng and Free State province export values have significantly increased. The increase in Free State can be attributed to increase in carrots exports to neighbouring Lesotho. The high export values for Western Cape and Gauteng can be attributed to the export exit points and the registered exporters located in these provinces. Eastern Cape, Northern Cape and North West have contributed for the first time to South Africa s carrot exports; however Eastern Cape and North West export values were insignificant. North West export value can be ascribed to exports to neighbouring Botswana. In 215, Western Cape and Gauteng provinces have continued to contribute notably to South Africa s carrot exports. At the same time there was a significant increment in KwaZulu Natal, North West and Mpumalanga export values. During 216, Western Cape and Gauteng provinces remained the main exit point for carrot export originating from South Africa. In the same year, there was a notable increase in carrot export values recorded for Free State, North West, Mpumalanga, KwaZulu Natal and Limpopo. The following figures (figure 1-16) shows the value of carrot exports from the various districts in all provinces of South Africa Source: Quantec Easydata Figure 9: Value of carrots exports by South African Provinces Western Cape Eastern Cape Northern Cape Free State Kwazulu-Natal North West Gauteng Mpumalanga Limpopo Figure 1 below indicates that carrot exports by Western Cape province were mainly from City of Cape Town. Eden and Cape Winelands district municipalities have contributed to a lesser extent. Overberg has contributed significantly to Western Cape carrot exports during 27. High carrot exports by the City of Cape Town can be attributed to Cape Town harbour which renders export exit point. The highest export value was in 29 from the City of Cape Town municipality. In 21, carrots export value for City of Cape Town has decreased by 11% compared to export value in 29. During 211, the West Coast, Overberg and Eden districts have increased their contribution to carrots exports from Western Cape. In 212 and 213, the City of Cape Town continued to lead 12

13 Value (Rand) in terms of carrots exports from Western Cape and the export value has significantly increased when compared to the previous year s export value. At the same time, Cape Winelands export value has also increased while export value for Eden has dropped. In 213, Eden and City of Cape Town export values have substantially increased when compared to the 212 export values. During 214, City of Cape Town continued to contribute significantly to Western Cape carrot export. In during 215, a record high export value was recorded for the City of Town and there was also a significant rise in Cape Winelands and Eden district export values. City of Cape Town has continued to lead in Western Cape carrot exports in 216. Cape Winelands and Eden export values have also registered notable increments Figure 1: Value of carrot exports by Western Cape Province City of Cape Town West Coast Cape Winelands Overberg District Eden District Source: Quantec Easydata Figure 11 below shows that carrot exports by Gauteng province were mainly from City of Johannesburg. Ekurhuleni and City of Tshwane have contributed to a lesser extent. The high export values were recorded in 21 for City of Johannesburg and City of Tshwane. From 27 to 211, there was no export value recorded in West Rand district municipality. In 211, there was a 65% increase in export value from City of Johannesburg district municipality. During 211, City of Johannesburg and Ekurhuleni the export values were incomparably higher when compared to 21 figures. In 212, the City of Johannesburg was still the highest contributor to carrot exports from Gauteng province and the export value has gone up by 12%, when compared to 211 export value. In the same year, Ekurhuleni export value has significantly dropped while the West Rand export value has notably contributed to Gauteng carrot export. During 213, City of Johannesburg export value was a record high in a 1 year period. At the same time, West Rand export value has tripled, while City of Tshwane export value has dropped by 26%. In 214, City of Johannesburg export value has dropped by 25% in comparison to 213 export value, while City of Tshwane, Ekurhuleni and West Rand export value has notably increased. City of Johannesburg was still by 13

14 Value (Rand) far the main exit point of Gauteng carrot export during 215. At the same time, West Rand and City of Tshwane export values have notably increased, whereas Ekurhuleni export value has experienced a slight decrement. In 216, City of Johannesburg and City of Tshwane continued to lead in Gauteng carrot exports, Ekurhuleni and West Rand export values have notably increased whilst Sedibeng has recorded a trivial value. Year Figure 11: Value of carrots exports by Gauteng Province Sedibeng 7 West Rand Ekurhuleni City of Johannesburg City of Tshwane Source: Quantec Easydata Figure 12 below indicates that carrot exports by KwaZulu Natal province were mainly from EThekwini municipality and Durban harbour renders an export exit point. The high export value for EThekwini was recorded in 21. During 211, Ugu district municipality contributed to carrots exports for KwaZulu Natal for the first time in a 1 year period. In 212, KwaZulu Natal carrot exports were exported through EThekwini and Ugu district. Export value for EThekwini has dropped by 85.7% and Ugu export value has increased by 2.9% when compared to the 211 value. During 213, KwaZulu Natal carrots were mainly from EThekwini and the export value has increased by 187%. In the same year, export value for Ugu has dropped by 5.5%. During 214, Ugu and EThekwini export values have drastically dropped, when compared to 213 export values. In 215, KwaZulu Natal carrot was exported mainly through Ugu and EThekwini. At the same Umgungundlovu and Sisonke have contributed for the first time to the KwaZulu Natal export value, however the export value were trivial. During 216, EThekwini export value increased by 1.3% and Ugu export value has gone up by 1.7% in comparison to 215 values. 14

15 Value (Rand) Value (Rand) Source: Quantec Easydata Figure 12: Value of carrots exports by KwaZulu Natal Province Ugu UMgungundlovu 114 ILembe 699 Sisonke 15 Ethekwini Figure 13 below shows that carrot exports by Free State province were mainly from Xhariep Municipality. From 27 to 211, there was no carrot export values recorded for Free State province. During 212, Xhariep and Lejweleputswa contributed for the first time to Free State province carrot exports, however Lejweleputswa district export value was less significant. In 213, Xhariep has significantly increased its export value and this can be attributed to an increase in carrots exports to neighbouring Lesotho. In the same year, Fezile Dabi has notably contributed to Free State carrot exports. Free State exports were from the Xhariep, Thabo Mofutsanyane, Fezile Dabi and Mangaung districts during 214. Free State province has exported carrots primarily through Xhariep and Thabo Mofutsanyane during 215. There was a surge in Thabo Mofutsanyane carrot export value during 216, Mangaung, Fezile Dabi have also registered a notable increments in export values. The surge in Thabo Mofutsanyane export value can be ascribed to 26% increase in quantity of exports destined to neighbouring Lesotho Source: Quantec Easydata Figure 13 : Value of carrots exports by Free State Province Xhariep Lejweleputswa Thabo Mofutsanyane Fezile Dabi Mangaung

16 Value (Rand) Figure 14 below indicates that carrots exports by Mpumalanga province were from Ehlanzeni and Gert Sibande districts. In 27 and 21, Ehlanzeni export values were insignificant. During 211, carrot exports were recorded for both Gert Sibande and Ehlanzeni district municipalities. During 212 and 213, Mpumalanga carrot exports were exported through Ehlanzeni district and the export values have improved significantly. In 214, Mpumalanga carrots exports were from Ehlanzeni and Gert Sibande and the export values have notably increased when compared to 213 export value. Ehlanzeni carrot export value has surged during 215, and Gert Sibande export value has also experienced a slight increment. In 216, Ehlanzeni carrot export value surged, Nkangala has notably contributed to Mpumalanga carrot export, while Gert Sibande export value dropped by 77% in comparison to 215 export value. The surge in Ehlanzeni export value can be attributed to 14% increase in quantity of carrots destined to the neighbouring Mozambique Source: Quantec Easydata Figure 14: Value of carrot exports by Mpumalanga Province Gert Sibande Nkangala Ehlanzeni Figure 15 below illustrates that in 21, Limpopo province recorded carrots export for the first time in 1 year period and the exports originated from Vhembe and Capricorn district municipalities. During 211, the export value for Vhembe district increased significantly, while the export values for Capricorn was insignificant. In 212 and 213, Vhembe district continued to lead in terms of carrots exports from Limpopo province. During 214, export from Limpopo province originated from Vhembe, Capricorn and Waterberg districts and Vhembe export value has drastically dropped. In 215, Capricorn export value has drastically increased, Waterberg export value has decreased by 45% and Mopani carrot export value was insignificant. During 216, Limpopo carrot exports were sent through Capricorn, Waterberg and Vhembe districts. 16

17 Value (Rand) Source: Quantec Easydata 2.3 Share Analysis Figure 15: Value of carrots exports by Limpopo Province Mopani 325 Vhembe Capricorn Waterberg Table 3 below indicates the regional share towards South Africa s carrots exports. African countries commanded greatest share of South African carrot exports followed by European countries. Carrot exports to the Americas and Asia were less significant. In 27, Africa region has commanded 7.89% share and Europe region has recorded 22.63% share of South Africa s carrot exports. In 21, African region has commanded 99.84%, which was a notable increase when compared with 84.72% share recorded for 29. Europe commanded a.9% share of South Africa s carrots exports and this was a significant drop when compared with 11.55% share in 29. During 211, African region commanded 99.84% of South African carrot exports and European region export share was insignificant. In 212, African region continued to be the preferred export market for carrots originating from South Africa. During 213 and 214, Africa region has commanded 96.91% and 98.5%, respectively, and at the same time. Export shares for the Americas, Antarctica and Asia were insignificant. The African region has continued to command high export share and during 215, it has commanded 98.75% of South Africa s carrot export share. Africa region received 95.41% of South Africa s carrot export during 216, exports to Europe has increased to 3.8% share whilst Asia has registered 1.38% share of carrot exports. 17

18 Table 3: Share of regional carrots exports to the total South Africa carrot exports (%) Region Africa Americas Asia Europe Oceania Not allocated World Source: Calculated from Quantec Easydata Table 4 below is an illustration of provincial shares towards national carrot exports. The Western Cape and Gauteng provinces commanded the greatest share of carrots exports. Gauteng province commanded 72% and Western Cape has recorded 26.23% of carrot export shares in 27. In 29, Western Cape commanded high export share of 62.6% and Gauteng export share has dropped to 37.72% share of carrots exports. During 21, Western Cape has notably dropped its export share to 12.91%, while Gauteng export share was 81.96% and KwaZulu Natal has commanded 1.48% share which, is a significant increase when compared to the previous year. In 212, Western Cape has increased its export share to 27.96%, while Gauteng has dropped its export share to 67.66% when compared to the 211 export share. In the same year, export shares for Free State and Mpumalanga has improved. During 213, Western Cape and Gauteng continued to command a high export share of carrots exports from South Africa. The high export shares in Western Cape and Gauteng can be attributed to registered exporters and available ports based in these provinces. Free State and North West increased their export share during 213 and this can be attributed to an increase in carrots exports to neighbouring Lesotho and Botswana. Gauteng export share has notably dropped to 49.87% during 214, and in the same year Western Cape export share went up to 4.48%. In 215, Gauteng and Western Cape have continued to dominate South Africa carrot export share by commanding 48.22% and 4.11% shares respectively. During 216, Gauteng has registered 48.65% share of carrot exports, followed by Western Cape with 35.54% and Mpumalanga export share has gone upt to 8.5%. North West and Mpumalanga export share have notably increased and this can be attributed to an increment in carrot export destined to Botswana and Namibia. Table 4: Share of provincial carrot exports to the total of RSA carrot exports (%) District Western Cape Eastern Cape.2 Free State Kwazulu-Natal North West Gauteng Mpumalanga

19 District Limpopo RSA Source: Calculated from Quantec Easydata Table 5 indicates that the City of Cape Town commanded the higher share of carrot exports from Western Cape province and 27, it has recorded 96.5% share. In 28, Cape Winelands commanded a 7% share of carrot exports, this was an improvement when compared to % share in 27. Cape Town harbour renders exit point for carrot exports from these districts. During 211, City of Cape Town has slightly dropped its market share while Eden has commanded 7.8% share of Western Cape carrots exports. In 212, the City of Cape Town continued to lead in Western Cape carrots export and it has increased its export share from 91.89% to 98.23%. In the same time the export share for Eden has dropped from 7.8% to 1.16%. In 213, export share for the City of Cape Town has slightly dropped while Eden has increased its carrot export share. During 214, City of Cape Town has commanded 99.65% share of Western Cape carrot export. There was a notable decline in City of Cape Town export share in 215, while Cape Winelands and Eden export share have experienced a notable increment. During 216, City of Cape Town continued to lead in Western Cape carrot export and it has commanded 89.53%, Cape Winelands has recorded 9.91% share, whereas Eden export share has dropped to.56%. Table 5: Share of district carrots exports to total Western Cape provincial carrot exports (%) Year District City of Cape Town West Coast Cape Winelands Overberg 2.72 Eden Western Cape Source: Calculated from Quantec Easydata Table 6 below shows that City of Johannesburg commanded the greatest share of carrot exports from Gauteng province. From 27 to 29, City of Johannesburg has commanded more than 9% share of Gauteng carrot exports. During 21, City of Tshwane municipality has commanded 24.8% export share, this was an improvement when compared to.61% share in 29 while City of Johannesburg has also decreased its export share from 98.77% to 72.21%.. City of Johannesburg and Ekurhuleni are located near OR Tambo International Airport, which renders exit point for carrot exports. During 212, City of Johannesburg continued to lead in Gauteng carrot exports by commanding 86.74% share. In the same year, West Rand export has commanded its first export share, but the share was insignificant. Carrot export share for the City of Johannesburg has slightly increased to 89.56% in 213. During 214, City of Johannesburg export share has dropped to 69.52%, while City of Tshwane and Ekurhuleni export shares went up to 22.47% and 6.64% respectively. In 215, City of Johannesburg has continued to record higher export share of Gauteng provincial carrot export, followed by City of Tshwane with 25.85%, Ekurhuleni with 6.6% 19

20 and West Rand with 2.11%. During 216, City of Johannesburg export share has dropped to 62.69%, City of Tshwane export share has increased to 29.83%, whilst Ekurhuleni export share has slightly dropped to 5.37%. Table 6: Share of district carrots exports to the total Gauteng provincial carrot exports (%) Year District West Rand Ekurhuleni City of Johannesburg City of Tshwane Gauteng Source: Calculated from Quantec Easydata Table 7 below indicates that Ethekwini has mainly commanded greatest share of carrot exports from KwaZulu Natal province. From 27 to 21 Ethekwini has commanded 1% share for carrot exports. The high export share in EThekwini can be attributed to Durban harbour located in this district municipality. In 211, Ugu has commanded 28.65% share of carrots exports from KwaZulu Natal, while Ethekwini export share has drastically dropped to 71.35%. During 212, Ugu carrot export share increased significantly to 55.42%, while Ethekwini export share has dropped further to 44.58% share. During 213, Ethekwini has commanded a 7.99% share of carrots exports from KwaZulu Natal. In the same year, export shares for Ugu districts have dropped to 29.1%. Ugu has recorded the greatest share of 71.88% during 214, while Ethekwini export share has dropped from 7.99% to 28.12%. In 215, Ethekwini has commanded the greatest share of 59.17% followed by Ugu with 4.27%. At the same time Umgungundlovu and Sisonke have contributed to KwaZulu Natal carrot export share, however the export shares were trivial. During 216, Ethekwini has continued to lead in KwaZulu Natal export share by commanding 59.42% share, whilst Ugu has recorded 4.58% share. Table 7: Share of district carrots exports to the total KwaZulu Natal provincial carrot exports (%) Year District Ugu UMgungundlovu.29 ILembe.48 Sisonke.27 EThekwini KwaZulu Natal Source: Calculated from Quantec Easydata Table 8 below shows that Gert Sibande commanded a 1% share of carrots exports from Mpumalanga province in 27. In 21, Ehlanzeni has commanded 1% share of carrots exports from this province. During 211, Gert Sibande commanded a 54.5% share and Ehlanzeni commanded a 45.5% share of Mpumalanga carrots exports. In 212 and 213, Ehlanzeni 2

21 recorded a 1% share of carrots exports from Mpumalanga province. During 214, Gert Sibande has recorded 23.77% export share and Ehlanzeni district export share has dropped from 1% to 76.23%. In 215, Ehlanzeni has increased its export share to 88.31%, while Gert Sibande export share has dropped to 11.69%. Ehlanzeni continued to lead in Mpumalanga export share and during 216, it has commanded 92.6%. Gert Sibande s export share has notably dropped to 1.8%, whilst Nkangala has recorded its first export share in a 1 year period. Table 8: Share of district carrots exports to total Mpumalanga Provincial carrot exports (%) Year District Gert Sibande Nkangala 6.32 Ehlanzeni Mpumalanga Source: Calculated from Quantec Easydata Table 9 below indicates that Xhariep district commanded the greatest share of carrot exports from Free State province. From 27 to 211, the province has recorded a zero trade in carrots. In 212, Xhariep commanded a 98.93% share of carrot exports from the Free State province. During 213, Xhariep continued to record high export share by commanding 98.7% share of carrots exports. Thabo Mofutsanyane export value has drastically increased to 52.45% and Xhariep export share has notably dropped to 43.31%. In 215, Xhariep has commanded 48.29% of Free State carrot export share, followed Thabo Mofutsanyane with 44.39% and Lejweleputswa has increased its export share to 3.92%. Thabo Mofutsanyane increased its export share to 61.32% during 216, whereas Xhariep export share has gone down to 3.63%. Table 9: Share of district carrots exports to the total Free State Provincial carrot exports (%) District Xhariep Lejweleputswa Thabo Mofutsanyane Fezile Dabi Mangaung Free State Source: Calculated from Quantec Easydata Table 1 below shows that Vhembe district commanded a 9.88% share of carrot exports from Limpopo province during 21. Capricorn district has commanded 9.12 % share of carrots exports. From 26 to 29, the province has recorded a zero trade in carrots. In 211, Vhembe has commanded 99.32% carrot export share. Vhembe continued to lead in the Limpopo provincial carrot export and it has commanded 1% export share in 212 and 213. During 214, Vhembe export share has drastically dropped to 28.37%, while Capricorn and Waterberg export values has increased to 44.31% and 27.33% respectively. In 215, Capricorn has commanded 84.5% export share while Waterberg export share has dropped from 27.33% to 15.31%. Mopani and Vhembe 21

22 Volume (tons) Rand export values were trivial. During 216, Capricorn continued to lead in Limpopo carrot export share. However the export share dropped to 69.12%. Vhembe and Waterberg export shares have increased to 13.88% and 17.1% respectively. Table 1: Share of district carrots exports to the total Limpopo Provincial carrot exports (%) Year District Vhembe Capricorn Waterberg Limpopo Source: Calculated from Quantec Easydata 2.4 South Africa s Carrot Imports South Africa is not a major carrot importer and in 216, it represented % of world carrot imports and its ranking in world imports was 152. South Africa s carrot import value has dropped by 49% and 22% in quantity during 212 to 216 period. South Africa has improved its competitiveness as in 215, it was ranked number 14. In 216, South Africa imported carrots mainly from Belgium with 57.7% share of imports, United Kingdom has supplied 13.3% of carrots and 7.7% of carrots were sourced from Zambia. Globally, Germany, Canada, United States of America, France, Belgium, Russian Federation and Viet Nam are the major carrot importers. Figure 16 illustrates South Africa s carrot imports from 27 to Figure 16: Carrot imports by South Africa Volume (tons) Value (Rand) Source: Quantec Easydata 22

23 Volume (Kg) Figure 16 above illustrates South African carrot imports for the past ten years. In 27 and 28, South Africa imported low volumes of carrots. This can be attributed to sufficient domestic production output in the same years. In 29, South Africa imported high volumes of carrots and the imports were incomparably higher when compared to the 28 imports. During 21, South Africa s carrot imports dropped by 59% when compared to the previous year imports. From 26 and 29, it was cheaper to import carrots, since low values were recorded for volume imported. In 21, carrots imports dropped significantly despite a decline in domestic production output, this can be attributed to high import costs. The highest imports were recorded in 211, despite high production volumes in the same year. This can be attributed to cheaper carrots in imports in the same years. During 212, South Africa s carrot imports have dropped by 41% when compared to the 211 imports. In the same year it was relatively expensive to import carrots since higher value was recorded for volumes imported. In 213, South Africa s imports dropped by 4%, when compared to previous year imports and this can be attributed to 1.3% increase in domestic production. It was also more expensive to import carrots when compared to the previous years. South African carrot imports have drastically dropped by 54% during 214 when compared to the previous year. In 215, South Africa s carrot import has surged by 123%, in comparison to 214 import volume, despite 16.9% increment in the domestic carrot output. South Africa has imported 56% less carrots during 216, in comparison to 215 import volume. At the same time, it was also more expensive to import carrots when compared to 215 export value Africa Asia Europe Not allocated Source: Quantec Easydata Figure 17 : South Africa's carrots imports from regions Figure 17 above illustrates South Africa s carrot imports from the various regions. African countries are the main supplier of carrots imported by South Africa. In 27, Africa region has been leading source of carrots entering South Africa; however the import volume was less significant. During 29, imports from African region were significantly higher, while the imports from Asia were trivial. 23

24 Value (Rand) In 21, South Africa imported carrots from African region (Kenya) only. High import from African region can be attributed to cheaper import cost from neighbouring countries. During 211, South Africa imported higher volumes of carrots from the Asian region (China), import volume from Africa region has also risen and the imports from Europe (Poland) were less significant. In 212, South Africa s carrot imports were sourced from the African region and the import volumes from Europe were insignificant. During 213, African region was the sole supplier of carrots imported by South Africa. In 214, Africa remained the primary supplier of South Africa carrot imports, but the import volume has notably dropped. At the same time there was a considerable volume, which was not allocated to any region. During 215, Africa region was still the main supplier of South Africa s carrots imports, Europe has also contributed minimally and the unallocated carrot import has notably increased. In 216, Europe region was the primary supplier of South Africa s carrot imports, whilst imports from Africa has drastically dropped. There was also a notable drop in unallocated carrot imports. Figure 18 illustrates the value of South Africa s carrot imports from regions Figure 18 : Value of South Africa's carrot imports from regions Source: Quantec Easydata Africa Asia Europe Not allocated Figure 18 above illustrates value of South Africa s carrot imports from the various regions. Africa region has recorded higher values, as it is the primary source of South Africa carrot imports. During 211, it was by far more expensive to import carrots from the African region in comparison to Asian imports. In 213, South Africa has imported carrots in Africa and the imports were more expensive compared to 212 imports. During 213, carrot imports from Africa region were relatively cheaper, in comparison to the previous year imports. In 215, carrots sourced from Europe region were relatively more expensive compared to imports from Africa region. It was more expensive to import carrots from Africa region during 216, when compared to carrots imported from Europe region. 24

25 Volume ( Kg) Eastern Africa Rest Northern Africa 422 SADC SACU Source: Quantec Easydata Figure 19: Carrots imports from African region Figure 19 above shows that South Africa imports carrots mainly from Eastern African countries (Kenya) and SADC countries (Zimbabwe, and Zambia). In 27, South Africa imported carrots from the Eastern Africa countries, and in the following year, there was an increase in import volumes from SADC countries. In 21, South Africa carrots were imported mainly from SACU countries. In 211, South Africa imported high volumes of carrots from Eastern Africa countries. South Africa s carrots imports from SADC countries were less significant. In 212, South Africa imported carrots from Eastern Africa (Kenya), SADC region (Zambia and Zimbabwe) and for the first time in a ten year period South Africa also imported from Northern Africa (Egypt). Carrots imports from SADC and Northern Africa regions were less significant. During 213, South Africa imported carrots from Eastern Africa (Kenya) and SADC countries (Zimbabwe and Mozambique) and Northern Africa has contributed by supplying 4 579Kg of carrots. In 214, South Africa s carrots imports were sourced mainly from SACU (Swaziland) and imports from SADC were insignificant. During 215, SACU countries (Swaziland) have continued to be the primary supplier of carrots imported into South Africa. SADC (Zimbabwe) was still the main supplier of South African carrot imports. 25

26 ValueRand) 3 25 Figure 2: Value of South Africa's provincial carrot import Source: Quantec Easydata Western Cape Free State KwaZulu-Natal Gauteng Figure 2 above illustrate the entry point of South African carrot imports from 27 to 216. Gauteng province is the primary entry point for South Africa s carrot imports. A notable import value was recorded for KwaZulu Natal during 29. In 21, a notable import value was recorded for Free State and Western Cape has contributed to carrot imports in 211. There was a surge in Gauteng import value and in the following year, the import value has drastically dropped. During 215, Gauteng was still leading in carrot imports. In 216, KwaZulu Natal has notably contributed to provincial carrot imports. 2.5 Processing Carrot processing includes canning, freezing and dehydration. Carrot can be eaten raw, whole, chopped, grated or added to salads for colour or texture. They are also often chopped and boiled, fried or steamed, and cooked in soups and stews, as well as fine baby foods and select pet foods grated carrots are used in carrot cakes, as well as carrot pudding. The greens are edible as a leaf vegetable, but are rarely eaten by humans. Baby carrots have been a popular ready to eat snack food available in supermarkets. Carrot juice is also widely marketed, especially as a health drink, either stand-alone or blended with other fruits and vegetables. Carrots seed oil is an essential oil extract of the seed from the carrot plant. Carrot seed oil is used as massage oil, in creams and lotions. Figure 21 below illustrates carrot value chain explaining its uses. 26

27 Figure 21: Carrot Value Chain Tree explaining its uses Carrot salad Cream and lotions Health drinks Carrot juice Canned carrots Carrot oil seed extraction Fresh Carrot Frozen carrots Massage oil Dehydrated carrots Cooked carrots Vitamin supplements Carrot powder Soups Pet foods Baby foods Figure 21 presents the market value chain for carrots. The carrot value chain can be broken down into the following levels: the producers of carrots (farmers); pack house owners (cleans, grade and quality control); cold storage and transport facilities (store and transport carrots on behalf of farmers); traders in carrots (market and sell carrots); processors (add value to carrots and process carrots to other usable forms); and end users (consumers). 27

28 Figure 22: Market value chain for carrots Input Suppliers Farmers/Producers Harvesting Cleaning /Handling Imports Quality grade standards and packaging Fresh Produce Markets, Wholesalers, Supermarkets, Retailers and Informal Storage, transportation and distribution Export s Consumer Processors: Dehydration, Freezing and Juice extraction 28

29 3. MARKET INTELLIGENCE 3.1 Tariffs Tariffs applied by the various markets to carrots originating from South Africa during 215 and 216 are presented in Table 11. Table 11: Tariffs applied by various export markets to carrots originating from South Africa. Product description Trade regime Applied tariff Estimated total ad valorem equivalent tariff Applied tariff Estimated total ad valorem equivalent tariff Country (H761) description Angola Carrots and turnips fresh MFN duties (Applied) 5.% 5.% 5.% 5.% Botswana Carrots and turnips fresh Intra SACU rate.%.%.%.% China Carrots and turnips fresh MFN duties (Applied) 13.% 13.% 13.% 13.% Congo Carrots and turnips fresh MFN duties (Applied) 2.% 2.% 2.% 2.% Uzbekistan Carrots and turnips fresh Non MNF duties 6.% 6.% 6.% 6.% (Applied) France Carrots and turnips fresh Preferential tariff for.%.%.%.% South Africa Gabon Carrots and turnips fresh MFN duties (Applied) 3.% 3.% 3.% 3.% Italy Carrots and turnips fresh Preferential tariff for.%.%.%.% South Africa Kenya Carrots and turnips fresh MFN duties (Applied) 25% 25% 25% 25% Lesotho Carrots and turnips fresh Intra SACU rate.%.%.%.% 29

30 Product description Country (H761) Mauritius Carrots and turnips fresh Mozambique Carrots and turnips fresh Morocco Carrots and turnips fresh Namibia Carrots and turnips fresh Netherlands Carrots and turnips fresh Senegal Carrots and turnips fresh Russian Federation Carrots and turnips fresh Spain Carrots and turnips fresh Swaziland Carrots and turnips fresh United Kingdom Carrots and turnips fresh United States of Carrots and turnips fresh America Zambia Carrots and turnips fresh Zimbabwe Carrots and turnips fresh Source: Market Access Map Trade regime Applied tariff Estimated total ad valorem equivalent tariff Applied tariff Estimated total ad valorem equivalent tariff description MFN duties (Applied) 13.% 13.% 13.% 13.% Preferential tariff for South Africa 15.% 15.%.%.% Preferential tariff for 4.% 4.% 4.% 4.% South Africa Intra SACU rate.%.%.%.% Preferential tariff for.%.%.%.% South Africa MFN duties (Applied) 2.% 2.% 2.% 2.% Preferential tariff for GSP countries 9.6% 9.6% 9.% 9.% Preferential tariff for.%.%.%.% South Africa Intra SACU rate.%.%.%.% Preferential tariff for South Africa Preferential tariff to AGOA countries Preferential tariff for South Africa Preferential tariff for South Africa.%.%.%.%.%.%.%.%.%.%.%.% 1.% 1.%.%.% 3

31 In 216, Botswana, Mozambique, Angola, Namibia, United Kingdom, and Lesotho were the main export market for carrots originating from South Africa. Angola and Mozambique accounted for 25% carrot exports. Angola is still protected by 5% tariff, in spite of the existence of the SADC- FTA. Mozambique tariff has changed its tarrif from 15% to % preferential tariff. Carrot exports to SACU countries (Namibia, Botswana, Swaziland and Lesotho) accounted for 4% of South Africa s carrot exports. These countries apply % Intra SACU rate to carrot exports originating from South Africa. The most lucrative export markets for carrots from South Africa are in European markets (United Kingdom and France) since these countries apply zero tariff to exports of carrots originating from South Africa due to an EU-SA Free Trade Agreement (FTA). The African market in Zimbabwe has reduced its 4% tariff to % preferential tariff to carrots originating from South Africa. China, Russian Federation and Uzbekistan are the largest carrot producers and their domestic markets are still protected by a 13%, 9.6% and 6% tariff respectively. Morocco is the only African country which is among the top ten world carrot producers and its domestic market is highly protected by 4% tariff. 3.1 Non-tariff barriers 3.1 The European Union Non-tariff barriers can be divided into those that are mandatory and laid out in the EU Commission s legislature, and those that are as a result of consumers, retailers, importers and other distributions preferences Product legislation: quality and marketing There are a number of pieces of EU legislation that govern the quality of produce that may be imported, marketed and sold within the EU. General Food Law covers matters in procedures of food safety and hygiene (micro-biological and chemical), including provisions on the traceability of food (for example, Hazard Analysis and Critical Control Points, of HACCP). EU Marketing Standards, which govern the quality and labelling of vegetables, are laid out in the CAP framework under regulation EC 22/96. These regulations include diameter, weight and class specifications, and any produce that does not comply with these standards are not allowed to be sold on the EU markets (detailed lists of products and their standards can be found in the annexes to the directive). The legislation (under EU 1148/21) also dictates that a Certificate of Conformity must be obtained by anyone wishing to export and sell vegetables in the EU, if that particular vegetable falls under the jurisdiction on the EU marketing standards, Vegetables to be used in further processing needs a Certificate of Industrial Use, whilst another legislative directive covers the Maximum Residue Limits (MRL) of various pesticides allowed Product legislation: phytosanitary regulations The international standard for phytosanitary measures was set up by the International Plant Protection Committee (IPPC) to protect against the spreading of diseases or insects through the 31

32 importation of certain agricultural goods. The EU has its own particular rules formalized under EC 22/89, which attempts to prevent contact of EU crops with harmful organisms from elsewhere in the world. The crux of the directive is that it authorizes the Plant Protection Services to inspect a large number of vegetable products upon arrival in the EU. This inspection consists of a physical examination of a consignment deemed to have a level of phytosanitary risk, identification of any harmful organisms and certification of the validity of any phytosanitary certificate covering the consignment. If the consignment does not comply with the requirements, it may not enter the EU, although certain organisms can be fumigated at the expense of the exporter Product legislation: packaging The EU commission lays downs rules for materials that come into contact with food and which may endanger people s health or bring about an unacceptable change in the composition of the foodstuffs. The framework legislation for this EC 1935/24. Recycling packaging materials are also emphasized under 94/62/EC, whereby member states are required to recycle between 5% and 65% of packaging waste. If exporters do not ship produce in packaging which is reusable, they may be liable for the costs incurred by the importing companies. Wood packaging is subject to phytosanitary controls (see Directive EC 22/89) and may need to undergo heat treatment, fumigation, etc Non-legal market requirements: social and environmental accountability To access a market, importers must not only comply with the legal requirements set out above, but also with market requirement s and demands. For the most part, these revolve around quality and the perceptions of European consumers about the environmental, social, health and safety aspects of both the products and the production techniques. Whilst supplying vegetables that complies with these issues may not be mandatory in the legal sense, they are becoming increasingly important in Europe and cannot be ignored by existing or potential exporters. (i) Social responsibility is becoming important in the industry, not only amongst consumers, but also for retail outlets and wholesalers. The Social Accountability 8 (SA8) certification is a management system based on International Labour Organization (ILO) conventions, and deals with issues such as a child labour, health and safety, and freedom of association, and requires an on-site audit to be performed annually. The certificate is seen as necessary for accessing any European market successful. The major retailers in the EU also play an important role in tackling environmental issues, which means that exporters have to take these into account when negotiating exporting arrangements. (ii) Environmental issues are becoming increasingly important with European consumers. Consumer movements are lobbying against purchasing non-environmental friendly or nonsustainable produce. To this end, both governments and private partners have created standards (such as ISO 141 and EUREPGAP) and labels to ensure produce adhere to particular specifications. Labels are an absolute must for exporters attempting to enter the rapidly expanding organic produce market. The EU Commission has recently adopted and EU label for identifying food produced according to EU organic standards in the directive EEC 29/91 32

33 3.1.5 Consumer health and safety requirements Increasing consumer conscience about health and safety issues has prompted a number of safety initiatives in Europe, such as EUREPGAP on good agricultural practices (GAP) by the main European retailers, the international management system of HACCP, which is independently certified and required by legislation for European producers as well as food imported into Europe (EC 852/24), and the ISO 9 management standards system (for procedures and working methods), which is certified by the International Standards Organization (ISO). 3.2 The United States The USDA has quality standards for vegetables that provide a basis for domestic and international trade and promote efficiency in marketing and procurement. At the same time the USDA issues quality certificates based on these standards and a comprehensive grading system. Graders are located around the country at terminal markets. These certification services, which facilitate the ordering and purchasing of products by large-volume buyers, assure these buyers that the product they purchase will meet the terms of the contract in terms of quality, processing, size, packaging and delivery. 3.3 Asian Market Access Japan s agricultural sector is heavily protected, with calculations from the Organization for Economic Co-operation and Development (OECD) estimating that almost 6% of the value of Japan s farm production comes from trade barriers or domestic subsidies. Japan uses tariff rate quotas (TRQ) to protect its most sensitive products, and reserves the right for trading many of these products (within the quota) for one or two state trading enterprises. However, these extremely protective measures apply only to some products; others are able to compete more effectively with outside competition, often on the grounds of higher quality. Perhaps the biggest barrier to trade with Japan in vegetable markets is its strict phytosanitary requirements, which have often been challenged in the WTO as having little or no scientific justification. Other measures that are being challenged include Japan s use of fumigation on agricultural products when cosmopolitan pests (already found in Japan) are detected. Japan is also increasing its labelling requirements 4. GENERAL DISTRIBUTION CHANNELS There are roughly three distinct sales channels for exporting vegetables. One can sell directly to an importer with or without the assistance of an agent (usually larger, more established commercial farms/orchards). One can supply a vegetable combine, which will then contract out importers/marketers and try to take advantage of economies of scale and increased bargaining power. At the same time vegetable combines might also supply large retail chains. One can also be a member of a private or co-operate export organization (including marketing boards) which will find agents or importers and market the produce collectively. 33

34 Similar to a vegetable combine, an export organization can either supply wholesale markets or retail chains depending on particular circumstances. Export organizations and marketing boards will wash, sort and package the produce. 5. LOGISTICAL ISSUES 5.1 Mode of transport The transportation of vegetables falls within two categories ocean cargo and air cargo with ocean cargo taking much longer to reach the desired location but costing considerably less. Of course, the choice of transportation method depends, for the most part, on the fragility of the produce and how long it can remain relatively fresh. With the advent of technology and container improvements, the feasibility, cost and attractiveness of sea transportation have improved considerably. As more developing countries begin to export and supply major developed countries markets, so the number and regularity of maritime routes, and the container vessels travelling these routes, increase. Presently South American countries like Peru benefit from the asparagus trade, which has led to some level of economies of scale with other vegetable products, and this has enabled cheaper transport prices for their other vegetable varieties. Such economic of scale could benefit SADC countries if more producers became exporters and took advantage of the various ports which have special capabilities in handling vegetable produce (for example, the proposed terminal in Maputo). For some products, in order to reach the destination market with an acceptable degree of freshness, air transport is the only option (asparagus, for example, is flown from Peru to the sufficient to cover the transport costs, and collective agreements between farmers of different commodities with different harvest periods can become particularly important. 5.2 Cold chain management Cold chain management is crucial when handling perishable products, from the initial packing houses to the refrigerated container trucks that transport the produce to the shipping terminals, through to the storage facilities at these terminals (and their pre-cooling capability), onto the actual shipping vessels and their containers, and finally on to the importers and distributors that must clear the produce and transport it to the markets/retail outlets, etc. For every 1 o C increase above the recommended temperature, the rate of respiration and ripening of produce can increase twice or even thrice. Related to this are the increasingly important traceability standards, which require an efficiently controlled supply chain and internationally accepted business standards. 5.3 Packaging Packaging also plays a vital role in ensuring safe and efficient transport of a product and conforming to handling requirements, uniformity, recyclable materials specifications, phytosanitary requirements, proper storage needs and even attractiveness (for marketing purposes). 34

35 6. COMPETITIVENESS OF SOUTH AFRICAN CARROTS EXPORTS Figure 23 below shows that South African carrot exports are growing faster than the world imports into Congo, Mauritius, Lesotho, Gabon and France. South Africa s performance in those markets can be regarded as gains in dynamic markets. South Africa s carrots exports are growing slower than the world imports into Lesotho, Democratic Republic of Congo, Zambia, Malawi and United Kingdom. These are dynamic market and South Africa has lost market share. South African carrot exports are declining faster than the world imports into Mozambique and Swaziland. South African exports into Netherlands, Zimbabwe, Singapore and Angola are growing while world imports are declining into these countries. South Africa s performance in these countries can be regarded as a gain in a declining market. Figure 24 below, shows that the prospective export markets for carrot from South Africa. During 216, Angola holds a bigger share of South African carrot exports. Prospective markets exist in Malawi, Zambia and Saint Helena. Other African markets exist in Zambia, Congo and Senegal. However, if South Africa is to diversify its carrots exports the most lucrative markets exists in Gabon and Mauritius, which have increased their carrots imports by 91% and 59% respectively from the world between period. Carrot imports from the world to Singapore, Namibia, Lesotho, Zimbabwe and Netherlands have declined and these countries have recorded a negative growth rate between 212 and 216 period. 35

36 Figure 23: Growth in demand for carrots exported by South Africa in 216 Source: ITC calculations based on COMTRADE statistics. 36

37 Figure 24: Prospects for market diversification for carrots exported by South Africa in 216 Source: ITC calculations based on COMTRADE statistics 37

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