A PROFILE OF THE SOUTH AFRICAN CABBAGE MARKET VALUE CHAIN 2016 Directorate Marketing Tel: 012 319 8455 Private Bag X 15 Fax: 012 319 8131 Arcadia E-mail:MogalaM@daff.gov.za 0007 www.daff.gov.za 1
TABLE OF CONTENT 1. DESCRIPTION OF THE INDUSTRY 3 1.1 Production areas 4 1.2 Production trends 4 2. MARKET STRUCTURE 5 2.1 Domestic market and prices 5 2.2 South Africa Cabbage Exports 6 2.3 Share Analysis 16 2.4 South African Cabbage Imports 20 2.5 Processing 23 3. MARKET INTELLIGENCE 26 3.1 Tariffs 26 3.2 Non tariff barriers 28 3.3 The United States 30 3.4 Asian Market Access 30 4. GENERAL DISTRIBUTION CHANNELS 30 5. LOGISTICAL ISSUES 31 5.1 Mode of transport 31 5.2 Cold chain management 31 5.3 Packaging 31 6. COMPETITIVENESS OF SOUTH AFRICAN CABBAGE EXPORTS 32 7. CHALLENGES 35 8. ACKNOWLEDGEMENTS 35 2
Value (Rand) 1. DESCRIPTION OF THE INDUSTRY Cabbage is a leafy green biennial, grown as an annual vegetable for its dense-leaved heads. Cabbage belongs to a class of vegetables called Brassica, also known as cruciferous vegetables because their flowers are cross-shaped. Other crucifers are broccoli, kale, cauliflower and Brussels sprouts. Cabbage can be green, purple and white. Green cabbages are the most common, with smooth leafed red and crinkle-leafed savoy cabbage of both colours are rarely seen. As with most vegetable crops, cabbages are mostly produced for and marketed through the national fresh produce markets, the informal market and chain stores. Cabbage is used raw in salads, such as coleslaw, as a cooked vegetable, or preserved in pickles or sauerkraut. Cabbage is 90% water and an excellent source of minerals, Vitamin A and C and the B vitamins. Fresh cabbage juice has been shown to promote rapid healing of peptic ulcers. Cooked cabbage is often criticized for its pungent, unpleasant odour and taste. These develop when cabbage is overcooked and hydrogen gas is produced. Figure 1: Gross value of cabbage production 350000000 300000000 250000000 200000000 150000000 100000000 50000000 0 Source: Statistics and Economic Analysis, DAFF Figure 1 above illustrates the contribution of the cabbage industry to the gross value of agricultural production over a 10 year period. In 2006, the industry contribution was the lowest recorded in a 10 year period, which can be ascribed to the low producer price recorded in the same year. During 2007, cabbage gross value has sharply increased by 43.6% and in 2008 there was a 10% decline in contribution due to decline in producer price in the same year. In 2009, the contribution increased significantly by 46% compared to 2008, this can be attributed to higher producer prices. There was a 5.3% decrease in cabbage gross value in 2010 when compared to the previous year. This can be attributed to a decline in prices in the same year. In 2011 and 2012, the industry gross value experienced a steady growth. These can be attributed to a steady increase in production output, which occurred while the producer prices were also favourable. In 2013, cabbage gross value increased by 22.9%, when compared to the previous year value and this can be ascribed to 3
Tons a slight increase in production output and good producer price. The highest industry contribution was recorded in 2014 and this represents a growth of 15% in gross value in comparison to 2013 value. The growth in gross value can be assigned to 1.5% increase in production output and 13.4% increase in producer price. There was a 16.5% drop in cabbage gross value during 2015, when compared to the previous year value and this can be attributed to a 17% drop in producer price. 1.1 Production areas Cabbage grows best under cool conditions cabbage. Cabbages are produced in all provinces of South Africa, but the production is concentrated in Western Cape, Kwazulu Natal, Eastern Cape, Gauteng, Free State and North West provinces. Globally, China followed by India, Russia, South Korea, Japan, Ukraine and Indonesia are the top countries in cabbage production. Top African countries producing cabbage are Angola, Egypt, Kenya, Ethiopia, South Africa and Rwanda. 1.2 Production trends Figure 2 below illustrates the production volumes for cabbages over the past ten years. 155000 150000 145000 140000 135000 130000 125000 120000 Figure 2: Total production of cabbage Source: Statistics and Economic Analysis, DAFF During 2006, cabbage production volume was just above 140 000 tons and in 2007, production volumes dropped by 7.3% and this was the lowest production output recorded in a ten year period. There was a 6% increase in production volumes in 2008, when compared to the 2007 production volume. In 2009 the production volumes fell by 1% compared to 2008 production year. The decline in production can be attributed to increasing high production input costs and unfavourable climatic conditions. Total production of cabbage increased by 8.9% during 2010. In 2011, production output increased by 1.3%, when compared to the previous year output. During 2012, production dropped by 8.4% when compared to the 2011 production season. In 2013, production volume slightly increased by 2.3% when compared to the previous year output. Production output grew further by 4
Tons 1.5% in 2014, when compared to the previous year output. During 2015, production volume has increased by 17.4% in comparison to 2014 production output. 155000 150000 145000 140000 135000 130000 125000 120000 115000 Figure 3: Cabbage production vs consumption Source: Statistics and Economic Analysis, DAFF Figure 3 above depicts local consumption of cabbages compared to the production over the 10 year period. In 2015, South African average cabbage consumption was approximately 139 650 tons per annum. Consumption volumes have gone down by 1.1% compared to 2014 consumption volumes. The figure illustrates that the production of cabbage is slightly higher than the consumption. Most of the cabbages are produced for domestic consumption. South Africa is selfsufficient in terms of cabbage production and the surplus is also exported. 2. MARKET STRUCTURE Production (Tons) Consumption (Tons) The cabbage industry operates in the deregulated environment where the prices are determined by the forces of demand and supply. Fresh cabbages are sold through the fresh produce market, processors, restaurants, hawkers, retailers and chain stores. Cabbages are also exported to other countries through export agents and marketing companies. South Africa also imports from other countries. 2.1 Domestic market and prices National Fresh Produce Markets remain an important channel for the sale of fresh cabbage in South Africa. In 2015, approximately 73.1% of cabbages were distributed through fresh produce markets. The remaining 26.9% represent a direct sale from producer to wholesalers, retailers, processors, informal traders, exports and consumers. 5
Tons Rand/ton 120000 115000 110000 105000 100000 95000 90000 Figure 4: Sales of cabbage at national fresh produce markets R 2 500 R 2 000 R 1 500 R 1 000 R 500 R 0 Source: Statistics and Economic Analysis, DAFF Volume (tons) Price (Rand/ton) Figure 4 above illustrates the sales of cabbage in the national fresh produce market over the period of 10 years. In 2006, cabbages were sold at the lower price of R815.05/ton, due to high volumes of cabbage supplied in the same period. During 2007, price has sharply increased by 56.6%, as the volume supplied dropped across the markets. In 2008, the volume grew by 6.5%, which impacted negatively to the market price by 16% when compared to 2007. During 2009, the prices eased marginally higher by 51% due to 11% decline in volume across the market. Market prices dropped by 13.5% in 2010 due to 8.9% increase in cabbage volumes and in 2011, the price increased by 5.9% as volumes supplied across the markets dropped by 2.2%. During 2012, market price eased higher by 17% due to 6.3% drop in cabbage volume supplied at the markets. In 2013, market price has gone up by 19.7% despite a 2.8% increase in cabbage volume supplied at the market and this can be attributed to strong cabbage uptake during the same year. In 2014, the market price has gone up by 11.6% a despite a 0.8% increase in volume supplied at the markets and this can be ascribed to strong cabbage uptake. During 2015, there was a slight increase of 0.6% in cabbage volume supplied at the market and this has negatively impacted the market price by 17.7%, when compared to 2014 figures. 2.2 South Africa Cabbage Exports South Africa is not a major cabbage exporter; more than 70% of cabbage produced is absorbed by the domestic fresh market. In 2015, it represented 0.15% of world exports and it ranked number 36 in the world. South Africa has lost its export share in the world, and its competitiveness in the world, as it was ranked number 31 in world cabbage exports during 2014. South African cabbage exports were mainly destined for Botswana, Lesotho and a notable share was exported to Mozambique and Namibia. China, United States of America, Netherlands, Spain, Italy and Mexico are top countries exporting cabbage. Figure 5 below illustrates South Africa cabbage export destinations during 2015. 6
Countries Figure 5: South Africa cabbage export destinations in 2015 Other Zimbabwe Netherlands Congo France Angola Mauritius Zambia Swaziland Namibia Mozambique Lesotho Botswana 0 10 20 30 40 50 Share in South Africa's exports (%) Source: Trade Map Further details relating to the exports of cabbage in 2015 are presented in Table 2. Table 2: South Africa s major cabbage export destinations in 2015 Exported Importers Exported value 2015 (USD thousand) Share in South Africa's exports (%) Exported quantity 2015 (tons) growth in value between 2011-2015 (%, p.a.) Exported growth in quantity between 2011-2015 (%, p.a.) World 2107 100 9490 4 11-29 Botswana 815 38.7 3126 2-15 11 Lesotho 661 31.4 4195 30 86-61 Mozambique 165 7.8 1216 13 24 70 Namibia 154 7.3 393 1 2 22 Swaziland 86 4.1 231-32 -10 1 Zambia 71 3.4 93 37 27 689 Mauritius 52 2.5 95 3 18 148 Angola 49 2.3 66-3 10-55 France 21 1 39 14 18 91 Congo 9 0.4 12 18 15-36 Netherlands 4 0.2 1-59 -64 100 Zimbabwe 4 0.2 0-2 0 Source: Trade Map Exported growth in value between 2014-2015 (%, p.a.) 7
Rand Tons Table 2 indicates that during 2013, the export share to Lesotho was 46.3%. This was a significant diversity in exports as in 2012, 42.6% of South Africa s exports were destined to the Seychelles. Botswana commanded 31.4% export share, Swaziland commanded 6.5% and Namibia has commanded 5% share of South African cabbage exports. In 2014, exports to Lesotho increased to 57.9% and export to Botswana has dropped to 24.9%. During 2015, Botswana has commanded 38.7% share and Lesotho has commanded 31.4% share of South Africa s cabbage exports. South African cabbage exports to the world have increased by 11% in quantity and the export value has dropped by 29% between 2014 and 2015 period. South African exports to the Mozambique have increased by 13% in value and 24% in quantity between 2011 and 2015 period. South African cabbage exports to Swaziland have decreased by 32% in value and 10% quantity between 2011 and 2015 period. Figure 6 below illustrates cabbage exports from South Africa over the past 10 years. In 2006 cabbage export volumes were over 750 tons per annum. In 2007 and 2008, exports increased steadily despite a drop in domestic production output in the same years. In 2009, the cabbage export dropped by 34% compared to 2008 exports. This can be attributed to the decline in production volume in the same year. In 2010, the exports were incomparably higher when to 2009 compared to the previous year. In 2012, cabbage exports fell by 6.3% when compared to the 2011 exports and this can be ascribed to 8.4% drop in domestic production. During 2013, South Africa s cabbage export has significantly gone up by 42.4%, when compared to the previous year exports and this can be ascribed to 2.3% increase in domestic production output. South Africa grew by 11.3% during 2014, in comparison to 2013 exports. During 2015, cabbage export has dropped by 1.5% in comparison to 2014 export volume. It was generally more profitable to export cabbage, from 2006 to 2009, since higher export values were recorded for volumes exported. In From 2010 to 2015, it was less profitable to export cabbage since low export value was recorded for volume exported. 12000 10000 8000 6000 4000 2000 0 Figure 6: South Africa's cabbage exports 35000000 30000000 25000000 20000000 15000000 10000000 5000000 0 Volume (Tons) Value (Rand) Source: Quantec Easydata * Quantec Easy data has revised its export data to reflect SACU export from 2010 8
Volume (Kg) Figure 7 below illustrates the South Africa cabbage exports to the regions. South Africa exported cabbages mainly to Africa and Europe. From 2006 to 2010, a considerable amount of cabbage exports were not allocated to any region. A small quantity of cabbage was exported to Asian, Americas and Oceania regions. From 2010 to 2014, there were no cabbage exports destined for the Americas region. From 2006 to 2008, 2011 and 2014, there were no cabbage exports to Oceania region. Small exports to these regions can be attributed to Asian and United States countries being among top cabbage producers in the world. During 2011, African region remained the major market for cabbage exports originating from South Africa. In the same year, the unallocated cabbage exports have notably increased. In 2012, there was an increase in export volumes destined for Asia and Oceania regions. During 2013, African region continued to be the main export market for cabbage exports from South Africa. In the same year, there was an increase in volumes exported to Asia and Oceania while the export to Europe has dropped by 51.3%. In 2014, cabbage exports increased by 10% and the export volume was the highest in a 10 year period. At the same time exports to Asia were insignificant and export to Europe notably dropped. Unallocated export has slightly dropped when compared to 2013 export volume. During 2015, Africa region was still the primary export market for cabbage originating from South Africa, followed by Europe region. Unallocated volume as notable increased, when compared to 2014 export volume. 12000000 Figure 7: Cabbage exports to the regions 10000000 8000000 6000000 4000000 2000000 0 Source: Quantec Easydata Africa 369072 499151 581724 288267 3550075 7146700 6699727 9607822 10725256 10537539 Americas 819 2810 99 39 0 0 0 0 0 0 Asia 432 4288 1779 1914 472 742 1430 7649 52 23 Europe 223094 279302 241044 188752 98296 86036 74682 37093 19018 30544 Oceania 0 0 0 2000 1631 0 690 2200 0 0 Antartica 99 226 132 86 5 0 0 0 0 0 Not allocated 159453 218425 207223 198548 109781 1878 3730 3555 3101 18949 Figure 8 below illustrates the value of South African cabbage exports. The figure shows that it was generally more profitable to export cabbage to European region, this is illustrated by high export value. Export to African countries earned less value despite high volumes to the region. From 2009 to 2010, cabbage exports from Europe have been declining due to drop in volumes exported to that region. The highest export value was recorded in 2005 for Europe and in 2014 for the African region. During 2011 and 2012, it was more profitable to export cabbage to Asian and European regions and at the same time the value of unallocated cabbage exports have also dropped. In 9
Value (Rand) 2013, Europe continued to be more a profitable market for exports from South Africa, and unallocated exported had recorded a higher value. Africa, Oceania and Asia regions were the least profitable export markets. During 2014, Europe, followed by Asia were the most profitable export markets, while exports to Africa region remained the least profitable market. In 2015, Europe was still the most profitable export market for cabbage from South Africa and the unallocated exports had a higher value. 35000000 30000000 25000000 20000000 15000000 10000000 5000000 0 Source: Quantec Easydata Figure 8: Value of cabbage export from the regions Africa 755136 1495865 1842210 1479834 10591007 12291867 21733798 28718588 31931484 29019640 Americas 2840 25324 684 272 0 0 0 0 0 0 Asia 14708 55407 65218 68751 4719 18622 14703 7847 393 549 Europe 2512364 2816549 2806685 1914543 743989 896878 730593 394614 151250 264183 Oceania 0 0 0 12000 14024 0 1200 2200 0 0 Antarctica 355 864 1499 1015 130 0 0 0 0 0 Not allocated 568953 1026761 837086 1029790 589458 18614 27135 29941 5860 55796 Figure 9 below illustrates South Africa s cabbage export destined to Africa region. Volume (Kg) Figure 9: Cabbage export to Africa region 12000000 10000000 8000000 6000000 4000000 2000000 0 Eastern Africa Rest 0 728 1 6126 3360 7362 9718 4283 1795 8549 Middle Africa Rest 1814 6448 6493 16874 26922 9503 7177 18818 32645 30267 Western Africa 889 2750 1488 1957 1439 2350 12411 2930 5560 5071 SADC (excluding SACU) 366369 489225 573742 263310 484932 652546 680254 886590 589298 1204510 SACU (Excluding RSA) 0 0 0 0 3033423 6474940 5990165 8695200 10095958 9289142 Source: Quantec Easydata 10
Volume ( Kg) Figure 9 above shows South Africa cabbage export to Africa region. During the period under review, South Africa exported cabbage mainly to the SACU countries, followed by SADC countries. During 2010, a sizeable volume of cabbage was exported to Middle Africa. Notable export volume was exported to Eastern Africa in 2012. During 2012 and 2013, there was a significant growth in export volume destined for Middle Africa and SACU countries. In 2015, there was a notable increase in export volume to Eastern Africa and export volume to SADC region has doubled when compared to the 2014 export volume. 300000 250000 200000 150000 100000 50000 Eastern Europe 417 0 0 0 0 0 0 0 0 10 Northern Europe 0 491 0 0 0 0 0 0 0 0 Southern Europe 0 1000 0 0 0 0 0 0 0 0 Western Europe Rest 10515 24345 23933 19842 15153 24681 22113 10147 1392 0 European Union 212162 253466 217111 168910 83143 61355 52569 26946 17626 30534 Source: Quantec Easydata 0 Figure 10: Cabbage exports to Europe region Figure 10 above illustrates South Africa s cabbage exports to European region in a period of 10 years. In Europe region, South Africa cabbage exports are primary destined to European Union countries and West European. Cabbage exports to Eastern Europe and northern Europe were insignificant. A record high volume destined to European Union was recorded in 2007 and from 2008 to 2014, there was a steady decline in export volume to European Union. During 2015, there was a notable increase in volume exported to the European Union. Figure 11 below is the illustration of cabbage exports by South African provinces during ten years period. South African cabbages were mainly exported through Western Cape, Gauteng, Kwazulu Natal, and Mpumalanga to a lesser extent. There was a slight decline in value of cabbage exports compared to 2010. In 2011, Limpopo Province has recorded a cabbage export value for the first time in a ten year period. During 2012, cabbage export recorded for Kwazulu Natal has considerably increased while the cabbage exports for North West, Gauteng, Mpumalanga and Limpopo have dropped. Free State has contributed to South Africa exports after seven years of zero cabbage exports trade. In 2013, Western Cape and Gauteng continued to lead in cabbage 11
Value(Rand) exports originating from South Africa. In the same year Free State and Mpumalanga, have increased their export value while Kwazulu Natal export value has significantly dropped. Limpopo, North West and Free State provinces have significantly increased their export values during 2014. At the same time Gauteng export has significantly dropped and Western Cape export has notably increased. The high export values for Western Cape, Gauteng, and KwaZulu Natal can be attributed to the export exit points, Cape Town harbour, OR Tambo International Airport and Durban harbour. In 2015, Gauteng province continued to be the preferred cabbage export exit point and the export value has notably increased in comparison to 2014 export value. At the same time, Free State export value has drastically dropped, while Western Cape, Eastern Cape, Kwazulu Natal and Limpopo provinces have experienced increments in export values. The following figures (figure 10-14) show the value of cabbage exports from the various districts in all Provinces in South Africa. 30000000 25000000 20000000 15000000 10000000 Year 5000000 0 Source: Quantec Easydata Figure 11 : Value of cabbage exports by South African provinces Western Cape 368296 850059 1329487 928609 884060 670121 718785 1462068 4690010 5381257 Eastern Cape 0 0 0 0 0 0 0 3600 27498 34256 Free State 0 0 0 0 0 0 43993 85280 16080973 9953918 Kwazulu-Natal 55596 106194 20635 103928 608624 499242 1965983 80109 52411 66227 North West 0 0 0 0 388 0 0 0 144920 377296 Gauteng 3274293 4464516 4203261 3473668 10448332 11950008 19746159 27394481 10074335 12261120 Mpumalanga 156172 0 0 0 0 100859 30797 127252 307051 263416 Limpopo 0 0 0 0 1923 5750 1712 400 711789 1002678 Figure 12 below indicates that cabbage exports from Western Cape province were mainly from the City of Cape Town. Eden district municipality contributed notably to Western Cape cabbage export in 2011. Cape Winelands contributed considerably to Western Cape provincial cabbage export in 2011 and 2014. In 2012, value of the City of Cape Town export has considerably increased while the value for Cape Winelands has significantly dropped. During 2013, City of Cape Town continued to lead in cabbage export from the Western Cape Province and the value has substantially increased, when compared to 2012 export value. In 2014, City of Cape export value has surged and in the same year, West Coast has also contributed notably to Western Cape cabbage exports. During 2015, City of Cape Town has recorded the highest export value and it represents a 9.7% increase in comparison to the 2014 value. In the same year, Eden and Cape Winelands have significantly contributed to Western Cape cabbage export. 12
Value (Rand) Value (Rand) 6000000 Figure 12: Value of cabbage exports by Western Cape Province 5000000 4000000 3000000 2000000 1000000 0 City of Cape Town 368296 850010 1329487 921553 877896 639439 716970 1458728 4500669 4937302 West Coast 0 0 0 0 0 0 0 1965 44718 19626 Cape Winelands 0 0 0 0 0 10000 1815 1375 142159 236359 Eden 0 49 0 7056 6164 20682 0 0 2464 187970 Source: Quantec Easydata Figure 13 is the illustration of cabbage exports by Kwazulu Natal province. 2500000 Figure 13: Value of cabbage exports by Kwazulu Natal Province 2000000 1500000 1000000 500000 0 UMgungundlovu 0 0 0 0 0 0 0 0 0 1650 Zululand 0 0 0 0 0 0 0 0 1600 60 Sisonke 0 0 0 0 0 0 21187 0 0 0 Ethekwini 55596 106194 20635 103928 608624 499242 1944796 80109 50811 64517 Source: Quantec Easydata 13
Value (Rand) Figure 13 above indicates that cabbage exports from Kwazulu Natal province were from EThekwini district municipality. In 2008, the export value dropped significantly and from 2009 to 2010, the export value continued to increase. During 2012, EThekwini cabbage export value surged and the export value was a record high in a 10 year period. In the same year Sisonke, contributed for the first time to cabbage export from Kwazulu Natal province. During 2013, Kwazulu Natal cabbage exports were from EThekwini and the export value for this municipality has dropped by 95.8% when compared to 2012 export value. In 2014, EThekwini export value dropped further by 36.5% and at the same year Zululand contributed for the first time to Kwazulu Natal cabbage exports. During 2015, EThekwini export value has slightly increased, Umgungundlovu and Zululand export values were insignificant. 30000000 Figure 14: Value of cabbage export from Gauteng Province 25000000 20000000 15000000 10000000 5000000 0 Sedibeng 138 0 0 0 46 0 0 0 0 0 West Rand 0 0 0 0 0 0 0 3000 128865 478297 Ekurhuleni 24353 27556 354753 0 14506 16085 12776 91005 1325374 1589837 City of Johannesburg 3248116 4375403 3840820 3469674 10002646 11293419 19205784 26803852 3064148 4768123 City of Tshwane 1686 61557 7688 3994 431134 640505 527600 496624 5555947 5424863 Source: Quantec Easydata As can be seen from Figure 14 above, cabbage exports from Gauteng province were mostly from the City of Johannesburg Ekurhuleni and City of Tshwane. During 2008, Ekurhuleni has recorded a notable export value and the following year it recorded a zero trade. In 2008 and 2019, exports value for the City of Johannesburg municipality has been declining and from 2010 to 2013, the export value for City of Johannesburg has been increasing. Sedibeng cabbage export values were recorded in 2006 and 2010, but the values were insignificant. In 2013, West Rand has contributed to Gauteng cabbage exports, for the first time in a ten year period. In the same year, Ekurhuleni export value has notably increased and the City of Johannesburg recorded the highest export value in a 10 year period, while City of Tshwane export value has decreased. During 2014, West Rand, Ekurhuleni and the City of Tshwane cabbage export values have significantly improved while the values for City of Johannesburg have drastically dropped. In 2015, there was an increase in the City of Johannesburg, Ekurhuleni and West Rand export value, while City of Tshwane has experienced a slight decline in export value. 14
Value (Rand) Value (Rand) 12000000 10000000 8000000 6000000 4000000 2000000 Source: Quantec Easydata 0 Figure 15: Value of cabbage exports from Free State Province Xhariep 0 0 0 0 0 0 43993 77280 47266 86429 Lejweleputswa 0 0 0 0 0 0 0 0 2602954 2687147 Thabo Mofutsanyane 0 0 0 0 0 0 0 0 11032760 5280486 Fezile Dabi 0 0 0 0 0 0 0 8000 1092 16320 Mangaung 0 0 0 0 0 0 0 0 2396900 1883536 Figure 15 above shows that cabbage exports from Free State province during a 10 year period. From 2006 to 2011, there were no cabbage exports from the Free State province. During 2012, Free State province recorded cabbage exports from Xhariep district municipality after seven years of zero trade in cabbage. In 2013, Free State exported cabbage through Fezile Dabi and Xhariep districts and the increase in cabbage exports can be attributed to cabbage export to neighbouring Lesotho. During 2014, Free State exported cabbage through Thabo Mofutsanyane and Mangaung and the export values recorded for these municipalities were significantly high. There was a notable increment in Xhariep and Fezile Dabi district in 2015. In the same year, Thabo Mofutsanyane and Mangaung export values have sharply decreased in comparison to 2014 values. 350000 300000 250000 200000 150000 100000 50000 0 Figure 16: Value of cabbage exports by Mpumalanga Province Ehlanzeni 0 156172 0 0 0 0 100859 30797 127252 307051 Gert Sibande 0 0 0 0 0 0 0 0 0 6053 Source: Quantec Easydata 15
Value (Rands) Figure 16 above, shows that the cabbage exports from Mpumalanga province was mainly from Ehlanzeni municipality. A notable cabbage export value was recorded in 2007. During 2006, 2008 to 2011, there were no cabbage exports from Mpumalanga province. In 2012, Ehlanzeni has recorded a notably higher cabbage export value and the export value dropped drastically during the following year. Ehlanzeni export value has surged during 2014 in comparison to 2013 export value. A record high export value was recorded during 2015 for Ehlanzeni district. At the same time Gert Sibande has recorded its first export value in a ten year period but the export value was insignificant. 300000 250000 Figure 17: Value of cabbage exports by North West province 200000 Bojanala 0 0 0 0 388 0 0 0 9661 277377 150000 100000 50000 Ngaka Modiri Molema 0 0 0 0 0 0 0 0 135258 93557 Dr Kenneth Kaunda 0 0 0 0 0 0 0 0 0 6362 Source: Quantec Easydata 0 Figure 17 above illustrates that North West province recorded its first cabbage export value in 2010 and the value was insignificant. During 2014, North West cabbage was exported through Ngaka Modiri Molema district and Bojanala. In 2015, Bojanala export value has surged and Dr Kenneth Kaunda has recorded its first export value, but the value was insignificant. At the same time Ngaka Modiri Molema export value has slightly dropped when compared to the 2014 value. High export values during the period under review and this can be ascribed to an increase cabbage export to neighbouring Botswana. Figure 18 below illustrates that cabbage export started in 2010 and the province has recorded exports from Vhembe and Capricorn districts but the values were insignificant. In 2011, notable export value was recorded for Vhembe district and during 2012 the value has significantly dropped. In 2013, Limpopo province exported cabbage from Waterberg district, but the value was insignificant. During 2014, Limpopo province exported cabbages through Waterberg, Capricorn and Mopani, which contributed for the first time in a 10 year period. In 2015, there was a sharp increase in Capricorn export value, while Mopani and Waterberg has experienced decrement in export values. 16
Value ( Rands) 600000 500000 400000 300000 200000 100000 0 Source: Quantec Easydata Mopani 0 0 0 0 0 0 0 0 20703 12675 Vhembe 0 0 0 0 390 5620 1712 0 0 0 Capricorn 0 0 0 0 1533 130 0 0 154439 513351 Waterberg 0 0 0 0 0 0 0 400 536647 476087 Greater Sekhukhune Figure 18: Value of cabbage exports by Limpopo Province 0 0 0 0 0 0 0 0 0 565 2.3 Share Analysis Table 3 illustrates the provincial share towards national cabbage exports. Gauteng has commanded the greatest share of provincial cabbage export. In 2006, Mpumalanga province commanded a 4.05% share while the city of Cape Town has commanded 9.56% share. Western Cape export share has increased to 23.94% during 2008. In 2011, Gauteng province commanded 87.48% and Western Cape 5.07% share of South Africa cabbage exports. The KwaZulu Natal province has lost export share, compared to 2010, which was 5.10%. During 2012, Gauteng continued to lead in cabbage exports by recording 87.73% of exports and Kwazulu Natal has increased its share from 3.77% to 8.73%. At the same time, Western Cape export share has gone down further to 30.19%. Free State province commanded a 2.29% share during 2012 and in 2013 the share has gone up to 3.22%. During 2013, Western Cape and Gauteng notably increased their cabbage export shares to 46.78% and 42.53% respectively. In the same year, Kwazulu Natal export share has dropped from 45.17% to 2.50%. Free State province has commanded the highest export share of 50.16% in 2013 and Gauteng export share dropped from 93.97% to 31.42%. High export share by Free State province can be attributed to an increase in cabbage export destined to neighbouring Lesotho. At the same time Western Cape provincial export share has improved and Limpopo has also commanded 2.22% of South Africa s cabbage export share. During 2015, Gauteng export share has increased and Western Cape has commanded 18.34% share, while Free State export share has dropped from 50.16% to 33.93%.The high export share in the Western Cape and Gauteng can be attributed to registered exporters and exports exit points based in these provinces. 17
Table 3: Share of provincial cabbage exports to the RSA cabbage exports (%) Year Province Western Cape 9.56 13.59 23.94 20.61 7.40 5.07 3.19 5.02 14.63 18.34 Eastern Cape 0 0 0 0 0 0 0 0.01 0 0.12 Free State 0 0 0 0 0 0 0.20 0.29 50.16 33.93 Kwazulu-Natal 1.44 1.96 0.37 2.31 5.10 3.77 8.73 0.27 0.16 0.23 North West 0 0 0 0 0 0 0 0 0.45 1.29 Gauteng 84.95 84.45 75.69 77.09 87.48 90.35 87.73 93.97 31.39 41.79 Mpumalanga 4.05 0 0 0 0 0.76 0.14 0.44 0.96 0.90 Limpopo 0 0 0 0 0.02 0.04 0.01 0 2.22 3.42 South Africa 100 100 100 100 100 100 100 100 100 100 Source: Calculated from Quantec Easydata Table 4: Share of district cabbage exports to the total Western Cape provincial cabbage exports (%) Year District City of Cape Town 100 100 100 99.24 99.30 95.42 99.75 99.77 95.96 91.75 West Coast 0 0 0 0 0 0 0 0.13 0.95 0.36 Eden 0 0 0 0.76 0.70 3.09 0 0 0.05 4.39 Cape Winelands 0 0 0 0 0 1.49 0.25 0.09 3.03 3.49 Western Cape 100 100 100 100 100 100 100 100 100 100 Source: Calculated from Quantec Easydata Table 4 above indicates that the City of Cape Town commanded the greatest share of cabbage exports from Western Cape province during the period under review. Other municipalities export shares were all insignificant. From 2006 to 2009, City of Cape Town has commanded 100% share of Western Cape provincial cabbage export. During 2012, City of Cape Town continued to lead in Western Cape cabbage exports and it has commanded 99.61% share. In 2013, City of Cape Town increased its export share from 99.61% to 99.78%, West Coast and Cape Winelands export shares were insignificant. In 2014, Cape Winelands recorded 3.03% cabbage share and export share for City of Cape Town has slightly dropped to 95.96%. City of Cape export share has dropped slightly to 91.75% and Eden export share has increased to 4.39% during 2015. Table 5: Share of district cabbage exports to Kwazulu Natal provincial cabbage exports (%) Year District UMgungundlovu 0 0 0 0 0 0 0 0 0 2.49 Zululand 0 0 0 0 0 0 0 0 3.05 0.09 Sisonke 0 0 0 0 0 0 1.08 0 0 0 18
Year District EThekwini 100 100 100 100 100 100 98.92 100 96.95 97.42 Kwazulu Natal 100 100 100 100 100 100 100 100 100 100 Source: Calculated from Quantec Easydata Table 5 above, shows that, from 2006 to 2011, EThekwini has commanded 100% share of cabbage exports from Kwazulu Natal the province. During 2012, continued to lead in the Kwazulu Natal cabbage export and it has commanded 98.92% share of cabbage exports. In 2013, EThekwini commanded a 100% share of cabbage export from the Kwazulu Natal province. EThekwini export share dropped slightly from 100% to 96.95% and 3.05% share was recorded for Zululand district. During 2015, EThekwini continued to command the greatest share of Kwazulu Natal export and UMgungundlovu has commanded 2.49% share of the exports. The greatest share by EThekwini can be attributed to Durban harbour which renders exports exit point. Table 6: Share of district cabbage exports to the Gauteng provincial cabbage exports (%) District West Rand 0 0 0 0 0 0 0 0.01 1.28 3.90 Ekurhuleni 0.74 0.60 8.44 0 0.14 0.13 0.065 0.33 13.16 12.97 City of Johannesburg 99.20 98.05 91.38 99.89 95.73 94.51 97.26 97.84 30.42 38.89 City of Tshwane 0.05 1.34 0.18 0.11 4.13 5.36 2.67 1.81 55.14 44.24 Gauteng 100 100 100 100 100 100 100 100 100 100 Source: Calculated from Quantec Easydata Table 6 above, illustrates that, the City of Johannesburg commanded the greatest share of cabbage exports by Gauteng province. In 2008, City of Johannesburg cabbage export share has slightly declined; these can be attributed to increase in export share for Ekurhuleni. During 2012, the export share of the City of Johannesburg has slightly increased to 97.26%. In 2013, City of Johannesburg continued to be the preferred exit point for Gauteng exports and City of Tshwane export share dropped further from 2.67% to 1.18%. In 2014, City of Tshwane was a lead municipality in cabbage exports from Gauteng and it has commanded 55.15% share. In the same year Ekurhuleni export share has increased to 13.12%, while the City of Johannesburg export share has dropped from 97.84% to 30.53%. In 2015, City of Tshwane has recorded 44.24%, followed by the City of Johannesburg with 38.89% share of Gauteng cabbage export. At the same time, West Rand has increased its export share from 1.28% to 3.90%. OR Tambo International Airport renders the exit point of cabbages exports from Gauteng province. Table 7: Share of district cabbage exports to the Free State provincial cabbage exports (%) Year District Xhariep 0 0 0 0 0 0 100 90.62 0.29 0.87 Lejweleputswa 0 0 0 0 0 0 0 0 16.19 27.00 19
Year District Thabo Mofutsanyane 0 0 0 0 0 0 0 0 68.61 53.05 Fezile Dabi 0 0 0 0 0 0 0 9.38 0.01 0.16 Mangaung 0 0 0 0 0 0 0 0 14.91 18.92 Free State 0 0 0 0 0 0 100 100 100 100 Source: Calculated from Quantec Easydata Table 7 above, indicates that, from 2006 to 2011, Free State province has recorded a zero trade for cabbage. In 2012, Xhariep commanded a 100% share of cabbage exports from Free State province. During 2013, Xhariep commanded 90.62% and Thabo Mofutsanyane has commanded 9.38% share of cabbage exports from Free State province. In 2014, Thabo Mofutsanyane has recorded 68.61% export share and Lejweleputswa has commanded 16.19% export share. During 2015, Lejweleputswa export share has increased to 27%, Mangaung export share has gone up to 18.92%, while Thabo Mofutsanyane export share has dropped from 68.61% to 53.05%. Table 8: Share of district cabbage exports to the Limpopo provincial cabbage exports (%) Year District Mopani 0 0 0 0 0 0 0 0 2.91 1.26 Vhembe 0 0 0 0 20.28 97.74 100 0 0 0 Capricorn 0 0 0 0 79.72 2.26 0 0 21.70 51.23 Waterberg 0 0 0 0 0 0 0 100 75.39 47.51 Greater Sekhukhune 0 0 0 0 0 0 0 0 0 0.06 Limpopo 0 0 0 0 100 100 100 100 100 100 Source: Calculated from Quantec Easy data Table 8 illustrates that, from 2005 to 2009, Limpopo province has recorded a zero trade for cabbage. In 2010 Capricorn has recorded the greatest share of 79.72% and Vhembe has commanded 20.28% share of Limpopo cabbage export. In 2011 and 2012, Vhembe commanded the greatest share of cabbage exports. During 2013, Waterberg has commanded 100% share of cabbage exports from Limpopo. In 2014, Waterberg export share has dropped from 100% to 75.39% and Capricorn has improved its export share by recording 21.70% share. Capricorn export share has notably increased from 21.70% to 51.23% during 2015, while Waterberg export share has dropped from 75.39% to 47.51%. 2.4 South African Cabbage Imports South Africa is not a major cabbage importer and its cabbage imports represent approximately 0% of the world imports. During 2015, South Africa s imports were ranked 167 in world imports. In 2015, South Africa has decreased its cabbage imports as it was ranked 113 in 2014. South Africa is self-sufficient in terms of cabbage production, hence the low cabbage import except for a record high import in 2010. United States of America, Canada, Hong Kong (China), Germany, Russian Federation, Malaysia and Viet Nam were top countries importing cabbage during 2015. 20
Volume (Tons) Value (Rand) 120 100 80 60 40 20 0 Figure 19: Cabbage imports by South Africa 900000 800000 700000 600000 500000 400000 300000 200000 100000 0 Volume (Tons) Value (Rand) Source: Quantec Easydata Figure 19 above shows that cabbage imports were relatively unstable for the past 10 years. In 2006, South Africa cabbage import was just above 11 tons. From 2007 to 2009, South Africa imported low volumes of cabbage despite the drop in production output during 2007. In 2010 cabbage imports surged incomparably despite an 8.9% increase in domestic production volumes. In 2011, cabbage exports decreased by 61.5%, which can be attributed to increase in domestic production output, it was also expensive to import cabbage. During 2012, South Africa cabbage imports were incomparably higher when compared to the 2011 imports. The increase in imports can be attributed to an 8.4% drop in domestic cabbage output in the same year. South Africa s cabbage imports increased steadily during 2013 and 2014. The increase in 2014 was 4.7% despite 1.5% growth in domestic cabbage output. It was more expensive to import cabbage from 2009 to 2013, as high import values were recorded for volume imported. During 2015, South Africa cabbage import has dropped by 65% when compared to 2014 imports and this can be attributed to 17.4% increase in the domestic production output. Figure 20 below illustrates the South Africa cabbage imports from the regions. In 2006, South Africa imported high quantities of cabbage from African countries (Zimbabwe and Zambia). South Africa also imported considerable volumes of cabbage from Asia (Sri Lanka, China and Lebanon) during 2007 and 2008. South Africa s cabbage imports from European region were in 2010 and 2013, but the import volume was insignificant. In 2010, South Africa imported highest import volume from African region (Botswana, Namibia and Swaziland). In 2011, cabbage imports were sourced from Africa (Zimbabwe) and Asia (Lebanon). In 2012, South Africa imported cabbages only from the African region (Kenya and Ghana). During 2013, African region (Kenya and Swaziland) remained the main source of cabbage imports by South Africa, and imports from Asia (Lebanon) were less significant. South Africa s cabbage imports were sourced solely from African countries (Namibia, Swaziland, Ghana, Kenya and Lesotho). In 2015, South Africa sourced cabbage primarily from Africa region (Swaziland) and a considerable volume of import was unallocated. At the same time cabbage imports from Europe was insignificant. 21
Value (Rand) Volume (Kg) 100000 90000 80000 70000 60000 50000 40000 30000 20000 10000 0 Source: Quantec Easydata Figure 20 : South Africa cabbage imports from the regions Africa 11877 9 998 0 90692 2133 46640 46773 55814 10743 Asia 0 330 1280 108 274 801 0 270 0 0 Europe 0 0 0 0 12 0 0 7 0 7 Not allocated 0 0 0 0 5060 0 0 1800 0 8644 Figure 20 below shows the value of South Africa cabbage imports by the regions. It was expensive to import cabbage from Europe, as high value was recorded for low cabbage volumes. In 2005, it was cheaper to import cabbage from African countries as low import value was recorded for high cabbage volumes. In 2011, it was expensive to import cabbage from the Asian region. In 2012, it was more expensive to import cabbage from the African region as more value was recorded for value imported. During 2013, cabbage imports from Asia were more expensive than imports sourced from the African region. In 2014, it was cheaper to import cabbage from African region in comparison to 2013 import value. During 2015, it was more expensive to import cabbage from Africa region when compared to 2014 imports from the same region. 800000 700000 600000 500000 400000 300000 200000 100000 0 Source: Quantec Easydata Figure 21: Value of South Africa imports from the regions Africa 21919 5 1466 0 744535 18321 749241 432990 146042 109076 Asia 0 522 5964 815 3330 16705 0 13779 0 0 Europe 0 0 0 0 2955 0 0 496 0 346 Not allocated 0 0 0 0 16243 0 0 1600 0 54809 22
Value (Rand) Figure 21 is the illustration of value of South Africa s provincial cabbage imports. 900000 800000 700000 600000 500000 400000 300000 200000 100000 0 Source: Quantec Easydata Figure 22 above illustrates the entry points of South Africa s cabbage imports during a 10 year period. Gauteng province was mostly used as a point of entry for South Africa s cabbage imports In 2006 and 2014, Western Cape has recorded notable cabbage import values and Eastern Cape imports were recorded in 2012 and 2014. Gauteng continued to be the primary point of entry for South Africa cabbage imports during 2015. At the same time, Mpumalanga has recorded its first import value in a ten year period. 2.5 Processing Figure: South Africa's provincial cabbage imports Western Cape 13509 0 0 0 2955 0 0 0 12748 0 Eastern Cape 0 0 0 0 0 0 73799 0 30464 0 Gauteng 8410 527 7430 815 764108 35026 675442 448865 102830 156641 Mpumalanga 0 0 0 0 0 0 0 0 0 7590 Fresh cut cabbage is used raw in salads such as coleslaw and as cooked vegetable (added to soups or stews). Cabbage is also dehydrated (dried, flaked or powder) for use as a flavouring agent in soups and as an ingredient in other dehydrated foods. Cabbage leaves are used to treat acute inflammation. A paste of raw cabbage may be placed in a cabbage leaf and wrapped around the affected area to reduce discomfort. Cabbage can also be canned, pickled, frozen and cabbage juice can be extracted to make ink. In 2007 and 2010 there has been a considerable increase in volumes that were canned. In 2011, there was a 13% drop in cabbage canning activities. During 2012, canning activities dropped further by 2.9%, when compared to the 2011 canning activities. During 2012, the volumes that were frozen were incomparably higher when compared to 2011 volumes. There were no cabbage dehydration activities from 2010 to 2015 production year. In 2012, there was a 9.2% increase in cabbage volumes that were processed when compared to 2011 production year. In 2013, canning activities has gone up by 32.5%, freezing activities has decreased by 91.93% and total processing volumes have gone up by 16.9%. Cabbage volumes for canning activities were 105% higher in comparison to 2013 and volume for freezing activities was also higher than the previous year volumes. In 2015, canning volume grew by 31% and freezing activities has dropped by 84%. Volumes of cabbages processed during the past ten years are presented in Table 8. 23
Table 8: Processed cabbages Year Canning Freezing Dehydration Total processing Volume Value Volume Value Volume Value Volume Value (Tons) ( Rand) (Rand) (Rand) ( Tons) (Rand) ( Tons) ( Rand) 2006 993.8 R 1,361,082 112.5 R 60,420 345.9 R 103,791 1452.2 R 1,525,294 2007 1 333 R2,120,016 186 R117,952 839 R259 928 2 357 R2,497,896 2008 1 116 R1,503,537 182 R140,688 269 R85,759 1 566 R1,729,984 2009 879 R1,862,705 50 R76,040 50 R27,500 976 R1,966,244 2010 1 029 R2,076,322 15 R28,047 0 0 1 044 R2,104,369 2011 895 R2,170,826 14 R37,661 0 0 909 R2,208,487 2012 869 R2,146,514 124 R199,528 0 0 993 R2,346,042 2013 1 152 R2,771,343 10 R27,544 0 0 1 161 R2,798,887 2014 2 361 R5,539,968 851 R2,781,848 0 0 3 212 R8,255,816 2015 3 102 R6 710 340 136 R612 735 0 0 3 238 R7 323 075 Source: Statistics and Economic Analysis, DAFF The cabbage value chain tree explaining its various uses is illustrated in Figure 23 while the market value chain for cabbage is presented in Figure 24. Figure 23: Cabbage value chain tree explaining its uses Soup Freezing Cabbage Atchaar Dehydration Fresh cabbage Canning Flaked Juice Prickled cabbage Cabbage salads Ink 24
Figure 24: Market value chain for cabbage Input suppliers Farmers/Producers Harvesting Handling/Cooling Imports Quality grade standards and packaging Storage and distribution Exporters Fresh produce markets, Wholesalers, Supermarkets, Retailers and informal markets Processors: Dehydration, Freezing and juice extraction Consumers The cabbage value chain can be broken down into the following levels: the producers of cabbage (farmers); pack house owners (cleans, grade and quality control); cold storage and transport facilities (store and transport cabbage on behalf of farmers); traders in cabbage (market and sell cabbages); processors (add value to cabbage and process cabbage to other usable forms); and end users (consumers). 25
3. MARKET INTELLIGENCE 3.1 Tariffs Tariffs applied by the various markets to cabbages originating from South Africa during 2014 and 2015 are presented in Table 9. Table 9: Tariffs applied by various exports markets to cabbage originating from South Africa. Estimated total ad Trade regime Applied tariff valorem equivalent tariff Applied tariff Estimated total ad valorem equivalent tariff Country Product description (H07490) description 2014 2015 Angola Cabbage fresh or chilled MFN duties (Applied) 50.00% 50.00% 50.00% 50.00% China Cabbage fresh or chilled MFN duties (Applied) 13.00% 13.00% 13.00% 13.00% Congo Cabbage fresh or chilled MFN duties (Applied) 20.00% 20.00% 20.00% 20.00% Botswana Cabbage fresh or chilled Intra SACU rate 0.00% 0.00% 0.00% 0.00% Canada White or red cabbage fresh or chilled Preferential tariff for GSP countries 5.00% 5.00% 6.00% 6.00% Gabon Cabbage fresh or chilled MFN duties (Applied) 30.00% 30.00% 30.00% 30.00% Malawi White or red cabbage fresh or chilled Preferential tariff for South Africa 0.00% 0.00% 0.00% 0.00% Mexico Cabbage fresh or chilled MFN duties (Applied) 10.00% 10.00% 0.00% 0.00% Namibia Cabbage fresh or chilled Intra SACU rate 0.00% 0.00% 0.00% 0.00% Mauritius Cabbage fresh or chilled MFN duties (Applied) 0.00% 0.00% 0.00% 0.00% Lesotho Cabbage fresh or chilled Intra SACU rate 0.00% 0.00% 15.00% 15.00% White or red cabbage fresh or Preferential tariff for South 25.00% 25.00% Mozambique chilled Africa 15.00% 15.00% Kenya Cabbage fresh or chilled MFN duties (Applied) 25.00% 25.00% 0.00% 0.00% Netherlands White or red cabbage fresh or Preferential tariff for South 0.00% 0.00% 30.00% 30.00% 26
Estimated total ad valorem equivalent tariff Trade regime Applied tariff Applied tariff Country Product description (H07490) description 2014 2015 chilled Africa India Cabbage fresh or chilled MFN duties (Applied) 30.00% 30.00% 15.00% 15.00% Russian Federation Cabbage fresh or chilled General tariff 15.00% 15.00% 0.00% 0.00% Swaziland Cabbage and edible brassicas Intra SACU rate 0.00% 0.00% 0.00% 0.00% Switzerland United Kingdom United States of America Zambia Cabbage fresh or chilled White or red cabbage fresh or chilled Cabbage fresh or chilled Cabbage fresh or chilled Zimbabwe Cabbage fresh or chilled Source: Market Access Map Estimated total ad valorem equivalent tariff Preferential tariff for SACU members 0.00% 0.00% 0.00% 0.00% Preferential tariff for South Africa 0.00% 0.00% 0.00% 0.00% Preferential tariff for GSP countries 0.00% 0.00% 0.00% 0.00% Preferential tariff for South Africa 0.00% 0.00% 0.00% 0.00% Preferential tariff for South Africa 40.00% 40.00% 50.00% 50.00% During 2015, South Africa has exported 81% of its cabbage exports to Lesotho, Botswana, Swaziland and Namibia. These countries apply 0% Intra SACU rate to cabbage export originating from South Africa. South Africa also exported 7.8% to Mozambique countries apply 50% tariff, in spite of the existence of the SADC-FTA. South Africa exported 3.4% of cabbage to Zambia and it applies 0% tariff,. The lucrative export markets for cabbage from South Africa exist in Mauritius since this country applies zero tariffs to cabbage exports originating from South Africa. In 2015, Zimbabwe has reduced cabbage tariff from 40% to 0% preferential tariff, thereby complying with SADC-FTA. In European markets (United Kingdom, Germany and Netherlands) preferential tariff of 0.00% is applied to cabbage exports originating from South Africa due to EU-SA Free Trade Agreement (FTA). Kenya is the second top cabbage producer in Africa and its domestic production is protected by 25% tariff. China and India are the top countries producing cabbage in the world and their domestic producers are protected by 13% and 30% tariff. 27
3.2 Non-tariff barriers 3.2.1 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. 3.2.2 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 2200/96. 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 1148/2001) 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. 3.2.3 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 importation of certain agricultural goods. The EU has its own particular rules formalized under EC 2002/89, 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. 28
3.2.4 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 1935/2004. Recycling packaging materials are also emphasized under 94/62/EC, whereby member states are required to recycle between 50% 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 2002/89) and may need to undergo heat treatment, fumigation, etc. 3.2.5 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 8000 (SA8000) 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 successfully. 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 14001 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 209/91 3.2.6 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 852/2004), and the ISO 9000 management standards system (for procedures and working methods), which is certified by the International Standards Organization (ISO). 29
3.3 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. 3.4 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 60% 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. 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. 30
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). 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 10 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). 31
6. COMPETITIVENESS OF SOUTH AFRICAN CABBAGE EXPORTS Figure 25 below, shows that South Africa cabbage exports are growing faster than the world imports into France and Botswana. South Africa s performance in these countries is regarded as gains in the dynamic market. South Africa cabbage exports to Mozambique, Mauritius, Saint Helena Lesotho and Botswana are growing slower than the world imports to these countries. South Africa performance in these countries is regarded as loss in the dynamic markets. South Africa s cabbage exports are declining faster than the world imports into Democratic Republic of Congo. South Africa s exports are growing while the world imports are declining into Swaziland, Angola, Namibia, Zambia, Congo and Malawi. South Africa has gained market share in these declining markets. Figure 26 below, shows that Lesotho and Botswana were major markets for cabbage export originating from South Africa during 2015. These countries together, they have commanded 70% of South Africa cabbage exports. Prospective exports markets for cabbage from South Africa are mainly in Canada and Mauritius. Other smaller markets exist in Angola, Switzerland, and Uganda. However, if South Africa is to diversify its cabbage exports, the most lucrative markets exist in Mozambique and Gabon as they have increased its cabbage imports from the world by 83% and 46% respectively between 2011 and 2015 period. Zambia cabbage imports have gone down by 14%, and Swaziland imports have dropped by 33%. Cabbage imports from the world to Congo and Zambia have also declined between 2011 and 2015 and as a result, these countries have recorded a negative growth rate. In 2015, there was no percentage share of South Africa cabbage exports, which were left on ship store and bunker. 32
Figure 25: Growth in demand for cabbages exported by South Africa in 2015 Source: ITC Trade Map 33