A PROFILE OF THE SOUTH AFRICAN SWEET POTATO MARKET VALUE CHAIN 2014

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A PROFILE OF THE SOUTH AFRICAN SWEET POTATO MARKET VALUE CHAIN 214 Directorate Marketing Private Bag X 15 Arcadia 7 Tel: 12 319 8455/6 Fax: 12 319 8131 Email: MogalaM@daff.gov.za www.daff.gov.za

TABLE OF CONTENTS 1. DESCRIPTION OF THE INDUSTRY 2 1.1 Production Areas 3 1.2 Production Trends 3 1.3 Production vs. Consumption of sweet potato 4 2. MARKET STRUCTURE 4 2.1 Domestic market and prices 4 2.2 Sweet potato exports by South Africa 6 2.3 Share Analysis 13 2.4 Sweet potato imports by South Africa 16 2.5 Processing 19 3. MARKET INTELLEGENCE 21 3.1 Tariffs 21 3.2 Non tariff barriers 23 3.2.1 The European Union 23 3.2.2 The United States 24 3.2.3 Asian Market Access 25 4. GENERAL DISTRIBUTION CHANNELS 25 5. LOGISTICAL ISSUES 25 5.1 Mode of transport 25 5.2 Cold chain management 26 5.3 Packaging 26 6. COMPETIVENESS OF SOUTH AFRICA SWEET POTATO EXPORTS 26 7. ACKNOWLEDGEMENTS 29 1

Value (Rand) 1. DESCRIPTION OF THE INDUSTRY Sweet potato is native to tropical America and is commonly called a yam in parts of the United States. Sweet potato is a crop plant whose large, starchy sweet tasting tuberous roots are an important root vegetable. The edible tuberous root is long and tapered, with a smooth skin whose colour ranges from white through yellow, orange and purple. Although the leaves are also edible, the starchy tuberous roots are by far the most important product. In some tropical areas, they are a staple food crop. The roots are mostly frequently boiled, fried or baked. Besides simple starches, sweet potatoes are rich in complex carbohydrates, dietary fiber, beta carotene and Vitamin C. Industrial uses include the production of starch and industrial alcohol. Sweet potato can also be processed to make starch and a partial flour substitute. The sweet potato is only distantly related to the potato and does not belong to the nightshade family. 2 18 16 14 12 1 8 6 4 2 Figure 1: Gross value of sweet potato production Years Source: Statistics and Economic Analysis, DAFF Figure 1 above illustrates contribution of the sweet potato industry to the gross value of agricultural production over the period of 1 years. In 25, sweet potato gross value has increased by 6.4% when compared to the previous year and this can be attributed to high producer prices that occurred in the same year. From 26, the industry contribution increased steadily until 29. In 29, the contribution increased by 3%, this can be attributed to high production that occurred while the prices are still favorable to producers. In 21, gross value declined by 5.5% when compared to 29 production year. This can be attributed to drop in producer prices that occurred in the same year. During 211, the industry contribution increased significantly by 57.7% when compared to 21 industry contribution. In 212, sweet potato gross value has dropped by 7.2% due to a drop in production output and unfavorable producer prices that occurred in the same year. During 213, potato gross value has dropped by 5.9% and this can be attributed to 2.5% increase in production output. 2

Tons 1.1 Production Areas Sweet potatoes are cultivated throughout tropical and warm temperature regions wherever there is sufficient water to support their growth. Sweet potato plant does not enjoy frost. Depending on the cultivar and conditions, tuberous roots mature in two to nine months. The main producing regions are Northern Cape, Western Cape, Limpopo, Free State, Eastern Cape and Gauteng. Globally, Asia is the largest grower of sweet potatoes; providing about 8% of the world supply. China is the largest sweet potato producer, followed by Uganda, Nigeria, Indonesia, Tanzania, Vietnam and India. Half of Chinese crop is used for feeding livestock. According to FAOSTAT, Uganda, Nigeria, and Tanzania, they represent half of African sweet potato supply and they are amongst the top ten sweet potato producers in the world. 1.2 Production Trends Figure 2 below illustrates the production volumes over the past ten years. Figure 2: Total production of sweet potato 7 6 5 4 3 2 1 Source: Statistics and Economic Analysis, DAFF Years Over the past decade sweet potato production was fairly unstable. In 24, South Africa sweet potato production was 54 794 tons. During 25, the production output dropped slightly by.8% when compared to the previous year output. In 26, the production output dropped further by 14% and the production volumes was found to be the lowest in a ten year period. The drop in production can be attributed to climatic conditions and increased cost of production. In 28, there was also a 4% decline in production compared to 27. In 29, the production increased by 41% and the highest production was recorded in 21. During 211, the production output dropped by 11.7%, when compared to the 21 production season. In 212, production output dropped further by.9%, in comparison to the previous year output. Sweet potato production output increased notably by 2.5% during 213 and the volume was a record high during a 1 year period. 3

Tons 1.3 Production vs. Consumption of sweet potato Figure 3 below depicts local consumption of sweet potato compared to the production over 1 year period. South African average sweet potato consumption is approximately 5 721 tons per annum. In 213, consumption increased by 22%, which can be ascribed to 2.5% increment in production output in the same year. The figure below illustrates that the production of sweet potato is higher than the consumption. This indicates that South Africa is self sufficient in terms of sweet potato production and the surplus sweet potatoes are also exported. The Salomon Islands in the South Pacific has the world s highest per capita consumption of sweet potatoes. 7 Figure 3: Production vs Consumption 6 5 4 3 2 1 Years Production (tons) Consumption (tons) Source: Statistics and Economic Analysis, DAFF 2. MARKET STRUCTURE There is no regulation or restriction in the marketing of sweet potato. The prices of sweet potato are determined by the market forces of demand and supply. The industry uses fresh produce market, informal market, processor and direct selling to wholesalers and retailers. Sweet potatoes are also exported to other countries through export agents and marketing companies. South Africa also imports sweet potato from other countries. 2.1 Domestic market and prices Table 1 depicts quantities of sweet potatoes sold through the various marketing channels over the past ten year. 4

Tons Rand/ton Table 1: Sweet Potato sold through different marketing channels National fresh produce Years market (Tons) Exports (Tons) Total Processing 24 28 825 4 7 2 154 25 26 541 1 161 3 132 26 2 3 931 2 534 27 2 893 2 357 4 39 28 21 391 1 721 3 67 29 26 368 6 838 2 295 21 32 8 2 63 1 577 211 22 237 4 862 1 115 212 22 733 1 683 1 627 213 34 24 1 346 1 365 Source: Statistics and Economic Analysis, DAFF Table 1 above illustrates that National Fresh Produce Markets (NFPMs) remain an important channel for the sale of fresh sweet potato in South Africa, during 213, 51% of all sweet potatoes were distributed through fresh produce markets. These is a notable increase in volume sold through NFPMs. The remaining 41% represent a direct sale from producer to wholesalers, retailers, processors, exports and informal traders. In 213, processed sweet potatoes decreased by 16%, when compared to 212 processed volumes. In the same year, sweet potato export dropped by 2%, in comparison to the 212 export volumes. 4 35 3 25 2 15 1 5 Figure 4: Sales of sweet potato at national fresh produce markets 4 35 3 25 2 15 1 5 Years Volume (tons) (Rand/ton) Source: Statistics and Economic Analysis, DAFF 5

Countries Figure 4 above illustrates the sales of sweet potato in the national fresh produce markets over the period of 1 years. Sweet potato volumes were stable above 2 during the period under review. In 24 and 25 market prices were very low due to high volumes supplied across the market. From 26 to 28, the price eased marginally higher, due to notable drop in volumes supplied. Market price increased by.3% in 29, despite a 23.3% increase in volumes supplied. The increase price in 29 can be attributed to strong demand of sweet potato in the same year. In 21, market prices dropped by 14.3% due to a 21% increase in sweet potato volumes supplied across the markets in the same year. Sweet potato price increased significantly by 51% during 211, due to 31% decrease in sweet potato volume supplied across the markets. During 212, market price increased by 19.8% despite a 2.2% increase in sweet potato volumes supplied across the market and this can be attributed to a strong uptake of sweet potato in the same year. In 213, sweet potato volumes supplied across the market increased by 5.6%, which resulted in a 23% drop in market price. 2.2 Sweet potato exports by South Africa South Africa is not a major sweet potato exporter. During 213, it represented.41% of world exports and it ranked number 23 in the world. South Africa lost its competitiveness as in 212, it was ranked number 21. Most of sweet potatoes produced were destined for domestic markets. During 213, South African sweet potato exports were destined for Namibia, Netherlands, United Kingdom, France, Botswana and Angola. Globally, United States of America, Netherlands, Viet Nam, Spain, China and Egypt were major sweet potato exporters during 213. Egypt has improved its competitiveness in terms of sweet potato exports and it has realized 16% of annual growth in value between 212 to 213. Figure 5 below illustrates South African sweet potato export destinations. Figure 5: South Africa's sweet potato exports destinations in 213 Other Mozambique Singapore Lesotho Swaziland Zimbabwe Angola Botswana France United Kingdom Netherlands Namibia 5 1 15 2 25 3 Share in South Africa's exports (%) Source: ITC Trade Map 6

Table 2 below indicates that, during 213, South Africa exported higher quantities of sweet potato to Namibia, Netherlands, United Kingdom, France and Botswana. South Africa has diversified 26.4% of sweet potato export to Namibia. Netherlands commanded a 2.5% share, but export to this country has decreased by 31% and 17% in terms of value and quantity between 29 and 213 period. In the same year United Kingdom has commanded 13.6% share of South Africa s sweet potato exports. South African sweet potato exports to United Kingdom and Netherlands have decreased by 34% and 19% in terms value between 212 and 213 period. Table 2: South African sweet potato exports in 213 Share in South Africa's exports (%) Exporte d growth in value between 29-213 (%, p.a.) Exported growth in quantity between 29-213 (%, p.a.) Importers Exported value 213 (USD thousand) Exported quantity 213 (Tons) Unit value (USD/u nit) World 968 1 1979 489-2 -9-5 Namibia 256 26.4 329 778 Netherlands 198 2.5 545 363-31 -17-19 United Kingdom 132 13.6 263 52-39 -31-34 France 98 1.1 394 249-31 12 61 Botswana 86 8.9 164 524 Angola 5 5.2 64 781-11 317 Zimbabwe 41 4.2 89 461 72 54-2 Swaziland 28 2.9 31 93 Lesotho 17 1.8 32 531 Singapore 16 1.7 13 1231 51 59 45 Mozambique 14 1.4 17 824 41 29-7 Malaysia 12 1.2 9 1333 Zambia 9.9 18 5 16-25 Malawi 3.3 2 15 Saint Helena 3.3 3 1 39 5 Source: ITC Trade Map Exported growth in value between 212-213 (%, p.a.) Figure 6 below, illustrates South Africa s sweet potato exports over the past 1 years. Lowest volumes of sweet potatoes were exported in 24 despite high production output in the same year. During 25, sweet potato export surged by 131% and in 26, the exports dropped by 16% when compared to 25. This can be attributed to decline in production volumes in the same years. Export volumes increased by 153% in 27, when compared to 26 export and this can be attributed to a 7.6% increase in the domestic output. In 29, sweet potato export surged by 297% and this is attributed to high domestic production volume in the same year. In 21, sweet potato export dropped by 61% despite a.7 % increase in production volume. There was an 87% increase in exports during 211, when compared to the 21 despite a 11.7 % decrease in production output. 7

Volume (Kg) Tons Rand During 212, sweet potato exports dropped significantly by 65% and this can be attributed to a slight decline in production output in the same year. In 213, sweet potato export dropped further by 2%, in comparison to the 212 export. The export dropped despite a 2.5% increase in domestic production output and this can be attributed to 51% in volumes that were supplied at NFPMs. Generally, it was more profitable to export sweet potatoes in 28, 21 and 212 since high export values were recorded for volumes exported. 8 7 6 5 4 3 2 1 Figure 6: South Africa's sweet potato exports 24 25 26 27 28 29 21 211 212 213 Years Volume (Tons) Value (Rand) 6 5 4 3 2 1 Source: Quantec Easydata Figure 7 is an illustration of South Africa s sweet potato export to the regions 8 7 6 5 4 3 2 1 Years Source: Quantec Easydata Figure 7: South Africa sweet potato exports to the regions 24 25 26 27 28 29 21 211 212 213 Africa 6622 8422 4498 8374 245 21494 161136 68311 111335 145391 Asia 48 25 43 6754 961 2623 Europe 463191 177733 91976 2343666 181266 688849 243391 214262 132992 1174296 Oceania 2772398 239437 Not allocated 433 2246 1327 4989 4863 5299 3626 8

Value (Rand) Figure 7 above indicates that South Africa sweet potato export market in mostly in European Countries (United Kingdom, Netherlands, Belgium and France). South Africa also exports small quantities of sweet potatoes to African countries (Mozambique, Zimbabwe, Democratic Republic of Congo, Ghana, Zambia and Malawi). A small fraction of exports were exported to Asia and other exports were not allocated. The highest export volumes was recorded in 29 and it was exported to European region. In 211, South Africa exported high quantities of sweet potato to Oceania region (Australia and New Zealand). Exports to Asia have increased by 57% in 211 when compared to 21 sweet potato exports. During 212, Europe continued to be the biggest market for sweet potato exports from South Africa. In the same year, considerable volumes were also exported to Oceania and Africa regions, while the export to Asia has increased in the same year. Europe region (Netherlands, United Kingdom and France), followed by Africa region (Namibia, Botswana, Angola, Zimbabwe and Swaziland) continued to be the primary export markets for South Africa s sweet potato exports during 213. Notable volume was also exported to Asia region during the same year. 4 35 3 25 2 15 1 5 Years Figure 8 : Value of South Africa sweet potato to the regions 24 25 26 27 28 29 21 211 212 213 Africa 26874 3536 18769 45263 58274 92317 84592 324959 719229 822633 Asia 27747 23 3298 51527 9313 2717 Europe 1689644 355297 187716 554827 1269575 15681427 14547629 17872826 438478 499364 Oceania 36243568 3151812 Not allocated 1698 1165 29933 38941 43318 4723 29795 Source: Quantec Easydata Figure 8 above indicates that the exports to Europe have higher value than exports to other region. The value to Asia, Africa and the unallocated exports were insignificant due to low volume exported to those regions. In 21, it was more profitable to export sweet potato to Africa and Europe, when compared to the previous year. During 211, it was more profitable to export sweet potatoes to Oceania followed by Europe. In 212, it was more profitable to export to Oceania and Asia, while European market was the less profitable market during the same year. During 213, it was more profitable to export sweet potato to Asia and Europe was the least profitable export market. 9

Value (Rand) Volume (Kg) 6 5 4 3 2 1 Source: Quantec Easydata Figure 9: Sweet potato export to European countries 24 25 26 27 28 29 21 211 212 213 Belgium 968 1988 15 129 4534 1972 1684 22 Germany 4686 256 France 1122 121484 22 22 149633 3552 2478 162272 389312 United Kingdom 56537 2217 224 138936 665288 951812 111895 25364 3368 262536 Greece 12 36 144 Netherlands 269364 655274 65784 812594 872674 5551 89884 14672 79992 522448 Portugal 244 231 13416 157 4588 Figure 9 above, illustrates South Africa s sweet potato exports to European Countries during a ten year period. Netherlands, United Kingdom, France and Belgium were the primary market for sweet potato export originating from South Africa. The high volumes were exported to the Netherlands during 29. In 28 and 29, notable volume of sweet poatoes were exported to Portugal. Sweet potato export to Germany and Greece were insignificant. During 213, South Africa exported sweet potatoes to France, United Kingdom and Netherlands. 6 5 4 3 2 1 Years Figure 1: Value of sweet potato exports by SA Provinces 24 25 26 27 28 29 21 211 212 213 Western Cape 1142915 2368528 158636 3674649 2225937 3231481 2254978 14394 1865745 2316164 Northern Cape 5656 Kwazulu-Natal 231134 365444 4 42 133726 62898 1214 34 862 Gauteng 344167 73931 24535 35755 141524 282382 4818755 4856975 363188 335142 Mpumalanga 313 Limpopo 1329 134981 1595341 958727 9722439 8375976 4879696 2852337 2448547 North West 92352 Source: Quantec Easydata 1

Value (Rand) Figure 1 above illustrates the sweet potato exports by provinces for the past ten years. The highlights for sweet potato exports were those of Western Cape, Gauteng, Limpopo and Kwazulu Natal has contributed to a lesser extent. Export value for Mpumalanga was in 21 and Northern Cape has recorded export value only in 27. The high export values from the Western Cape and Gauteng can be attributed to the exports exit points and the registered exporters located in these provinces. In 211, Gauteng export value has increased significantly when compared to the previous years while the values for Western Cape and Limpopo provinces have dropped significantly. During 212, export by Gauteng and Limpopo have dropped significantly while export Western Cape province has considerably increased. In 213, North West has contributed for the first time to South Africa s sweet potato export. In the same year, Western Cape has notably increased its export value, while Gauteng and Limpopo export values have dropped. Kwazulu Natal export value was insignificant. The following figures (Figure 11-14) shows the value of sweet potato exports from the various districts, provinces of South Africa. 3 25 Figure 11: Value of sweet potato exports by Western Cape Province 2 Years 15 1 5 Source: Quantec Easydata 24 25 26 27 28 29 21 211 212 213 City of Cape Town 5168 215881 339527 1227774 92184 4114 694 12535 233342 657425 West Coast 286346 18 1355798 261226 2716332 15389 862857 1532273 Cape Winelands 339769 1972647 1246779 19177 1872527 47534 5363 51187 9313 165935 Eden 1766 3699 7 784 Figure 11 above indicates that sweet potato exports from Western Cape province were mainly from West Coast, Cape Winelands, and City of Cape Town. Cape Town harbor renders export exit point for exports from these municipalities. In 21, there was a significant increase in value of sweet potato exports by the City of Cape Town while the export values for West Coast and Cape Winelands have decreased. In 21, Eden contributed to sweet potato exports from Western Cape Province. In 211, export values for City of Cape Town, West Coast and Eden has decreased significantly when compared to 21 export values recorded for those municipalities. During 212, export values for the City of Cape Town, West Coast, Cape Winelands and Eden has increased significantly when compared to 211 export values recorded for these districts. In 213, City of Cape Town export value has tripled, Cape Winelands and Eden have also increased their export values. 11

Value (Rand) Value (Rand) Years 6 5 4 3 2 1 Source: Quantec Easydata Figure 12: Value of sweet potato exports by Gauteng Province 24 25 26 27 28 29 21 211 212 213 Sedibeng District 5894 384 West Rand 119 2289 25973 417 Ekurhuleni 13341 398 1325197 211279 468416 48378873 31568 67652 City of Johannesburg 33826 34923 24535 299861 76327 711112 9633 15872 426885 226794 City of Tshwane 26716 12517 2215 36142 As can be seen from Figure 12 above, sweet potato exports from Gauteng province were mainly from the City of Johannesburg and Ekurhuleni district municipality. In 21, City of Tshwane recorded its first export value in a ten year period. West Rand and City of Tshwane districts have contributed to sweet potato exports from Gauteng from 21 to 212. The highest export was recorded in 211 and the exports were exported through the Ekurhuleni municipality and in 212, export value for this municipality has dropped by 93%. In the same year, the City of Johannesburg, West Rand and City of Tshwane export values have increased when compared to the previous year. Despite a 93% drop in export value, Ekurhuleni still has the highest export value. During 213, City of Johannesburg, Ekurhuleni and West Rand export values have notable dropped and in the same year, City of Tshwane has increased its export value, in comparison to the previous year. OR Tambo international airport, serves as an export exist point for export originating from Gauteng province. Figure 13: Value of sweet potato exports by Kwazulu Natal Province 4 35 3 25 2 15 1 5 Years Source: Quantec Easydata 24 25 26 27 28 29 21 211 212 213 Ugu 862 Ethekwini 231134 365444 4 42 133726 62898 1214 34 12

Value (Rand) Figure 13 above indicates that sweet potato exports by KwaZulu-Natal province were mainly from Ethekwini and the highest export value was recorded in 25. In 26 and 27, the export values have decreased significantly. During 28, the Ethekwini export value has notably increased and the value dropped by 53% in 29. In 21 and 211, the values of sweet potato exports from Kwazulu Natal were less significant. During 212, Kwazulu Natal has recorded a zero trade for sweet potatoes. Kwazulu Natal exported sweet potato through Ugu district municipality for the first time in a ten year period, but the export value was insignificant. 1 9 8 7 6 5 4 3 2 1 Years Source: Quantec Easydata Figure 14 above illustrates that sweet potato exports from Limpopo province were mainly from the Greater Sekhukhune District. In 29 and 21, there was a significant decline in value of sweet potato exported through Greater Sekhukhune. During 29, Waterberg district recorded export value for the first time in the period under review. In 21 the export values have decreased when compared to 29. Exports values for Greater Sekhukhune and Waterberg continued to decrease during 211. Vhembe contributed to the sweet potato export from Limpopo province for the first time in ten years, but the value was insignificant. Greater Sekhukhune continued to lead in sweet potato exports while the export value for Waterberg has dropped when compared to 211 export value. During 213, Waterberg district exported sweet potato from the Greater Sekhukhune district and the export value has increased by 11.6%, when compared to 212 export value. In the same time Vhembe export value was insignificant. 2.3 Share Analysis Figure 14: Value of sweet potato exports by Limpopo Province 24 25 26 27 28 29 21 211 212 213 Waterberg 7157423 653181 365956 658516 Greater Sekhukhune 1329 134981 1595341 958727 256516 1872795 122855 2193821 2448429 Vhembe 236 118 Table 3 below is an illustration of the provincial share towards national exports. Western Cape, Gauteng and Limpopo have commanded the greatest share of sweet potato exports. The high export shares in the Western Cape and Gauteng can be attributed to registered exporters and exports exit points based in these provinces. From 28 to 21, Limpopo province has commanded marginally higher share than that of Gauteng, Kwazulu Natal and Western Cape provinces. In 21, Limpopo province commanded 54.2% of sweet potato exports. This can be attributed to high production of sweet potato in Limpopo and exports to neighboring countries like 13

Zimbabwe and Mozambique, which are situated near Limpopo province. In 211, Gauteng commanded an 89.13 % share, Limpopo commanded 8.96%, while Western Cape has commanded only 1.19% share of sweet potato exports from South Africa. During 212, Gauteng sweet potato export share has dropped significantly, while Limpopo and Western Cape export shares have gone fairly higher during the same year. Western Cape and Limpopo continued to be main role players in South Africa s sweet potato exports and during 213, Western Cape export share has increased to 44.6% and Limpopo export share has increased to 47.15%. In the same year, Gauteng province export share has significantly dropped from 43.49% to 6.45%. Table 3: Share of provincial sweet potato exports to the total RSA sweet potato exports (%) Year 24 25 26 27 28 29 21 211 212 213 Provinces Western Cape 66.52 65.88 82.37 65.24 17.36 2.4 14.59 1.91 22.35 44.6 Northern Cape 1 KwaZulu-Natal 13.45 1.17.1 1.4.4.1.2 Gauteng 2.3 2.33 1.62 5.43 1.93 17.82 31.18 89.13 43.49 6.45 Mpumalanga.2.2 Limpopo 3.62 7.1 28.32 7.66 61.36 54.2 8.96 34.16 47.5 North West 1.78 South Africa 1 1 1 1 1 1 1 1 1 1 Source: Calculated from Quantec Easydata Table 4: Share of sweet potato exports to the total Western Cape provincial sweet potato exports (%) Year 24 25 26 27 28 29 21 211 212 213 District City of Cape Town 45.22 9.11 21.4 33.41 4.14 1.24 3.6 12.2 12.51 28.38 West Coast 25.5 7.6 36.9 11.74 84.6 66.69 82.72 82.13 Cape Winelands 29.73 83.29 78.6 29.69 84.12 14.7 2.23 4.91 4.99 71.28 Overberg.48 Eden.35.38.34 Western Cape 1 1 1 1 1 1 1 1 1 1 Source: Calculated from Quantec Easydata Table 4 above indicates that the City of Cape Town, Cape Winelands and West Coast commanded the greatest share of sweet potato exports from Western Cape province during the 1 year period. In 28 and 29 there has been a significant decrease in sweet potato export value for the City of Cape Town. Cape Town Harbour renders the exit point of sweet potato exports from the Western Cape province. From 29 to 21, there was a significant increase in value of sweet potato export value for the West Coast district municipality. During 211, West Coast municipality commanded 82.72% and City of Cape Town dropped to 12.2% share of sweet potato export from the Western Cape. In 212, West Coast municipality continued to lead by commanding 82.13% shares of sweet potatoes from the Western Cape province. During the same year, the City of Cape Town, Cape Winelands and Eden have slightly increased their export shares. Cape Winelands has substantially increased its sweet potato export share from 4.99% to 71.28% in 213. In the same City of Cape Town has also increased its export share from 12.51% to 28.38%, while West Coast has dropped its export share from 82.13% to %. 14

Table 5: Share of sweet potato exports to the total Gauteng provincial sweet potato exports(%) Year 24 25 26 27 28 29 21 211 212 213 District Sedibeng 1.93.11 West Rand.25.4.72 1.24 Ekurhuleni 3.88 53.36 94.55 74.82 97.21 99.61 86.92 2.19 City of Johannesburg 96.12 46.64 1 98.7 5.45 25.18 1.99.32 11.76 67.68 City of Tshwane.55.3.61 1.78 Gauteng 1 1 1 1 1 1 1 1 1 1 Source: Calculated from Quantec Easydata Table 5 above, indicates that Ekurhuleni and City of Johannesburg commanded the greatest share of sweet potato exports from Gauteng Province. OR Tambo International Airport renders the exit point of sweet potato exports from Gauteng Province. From 28 to 21, there has been a significant increase in value of sweet potato for Ekurhuleni while the City of Johannesburg value has declined. The export share for West Rand and City of Tshwane was insignificant. In 211, Ekurhuleni commanded a 99.61 % share of Gauteng Sweet potato exports. During 212 Ekurhuleni s export share has dropped slightly while West Rand, City of Johannesburg, City of Tshwane export share have slightly increased in the same year. In 213, City of Johannesburg has substantially increased its export share from 11.76% to 67.68%, City of Tshwane has also increased its export share to 1.78%. Ekurhuleni district export share has dropped from 86.92% to 2.19% and Sedibeng recorded its second export share. Table 6: Share of sweet potato exports to the total Kwazulu Natal Provincial sweet potato exports (%) Year 24 25 26 27 28 29 21 211 212 213 District Ugu 1 Ethekwini 1 1 1 1 1 1 1 1 KwaZulu Natal 1 1 1 1 1 1 1 1 1 Source: Calculated from Quantec Easydata Table 6 above, shows that from 24 to 211, Ethekwini commanded a 1 % share of sweet potato exports from KwaZulu-Natal Province. During 212, Kwazulu Natal has recorded a zero trade in sweet potato. In 213, Ugu contributed for the first time to Kwazulu Natal provincial export and it has commanded a 1% export share. The greatest share by Ethekwini can be attributed to Durban harbour which renders exports exit point. Table 9: Share of sweet potato exports to total Limpopo provincial sweet potato exports (%) Year 24 25 26 27 28 29 21 211 212 213 District Waterberg 73.62 77.64 74.82 23.9 Greater Sekhukhune 1 1 1 1 26.38 22.36 25.18 76.91 1 Limpopo 1 1 1 1 1 1 1 1 1 Source: Calculated from Quantec Easydata 15

Volume (Kg) Rand Table 9 above indicates that Greater Sekhukhune commanded the greatest share of sweet potato exports from Limpopo province. In 29, Waterberg commanded 73.62% and in 21 commanded 77.64% of sweet potato exports from Limpopo province. From 24 to 28 and 213, Waterberg district has recorded a zero trade. In 211, Waterberg continued to command a higher share of sweet potato export from Limpopo. During 212, Greater Sekhukhune commanded 76.91%, while Waterberg has commanded 23.9% share of sweet potato export from Limpopo province. In 213, Greater Sekhukhune commanded a 1% share of sweet potato exports from Limpopo. 2.4 Sweet potato imports by South Africa South Africa is not a major sweet potato importer. In 213, it represented.4% of the world imports for this product and its ranking in world imports was 59. South Africa has gained its competitiveness as in 212, it was ranked 55 in world sweet potato imports. In 213, South Africa imported sweet potatoes from Ghana, China, Swaziland, Nigeria and Taipei, Chinese. China commanded 79.4% and Ghana has commanded 12.1% of sweet potato imports by South Africa. Sweet potato imports from China has decreased by 19% in terms of value between 212 and 213 period. Globally, United Kingdom, Canada, Netherlands, Japan, France, United States of America and Germany were major sweet potato importers during 213. Figure 15: Sweet potato imports by South Africa 35 3 25 2 15 1 5 24 25 26 27 28 29 21 211 212 213 12 1 8 6 4 2 Volume (Kg) Value (Rand) Source: Quantec Easydata Figure 15 above illustrates the sweet potato imports by South Africa. Considerable sweet potato imports volumes were recorded in 25, 27 and the highest imports were recorded in 28. The increase in import volumes can be attributed to decline in production volumes in the same years. In 29, there was a significant decline in imports and this can be attributed to high domestic production in the same year. In 21, South Africa increased its sweet potato exports by 16% when compared to 29 despite a.8 % increase in domestic production. In 21 and 211, it was more expensive to import sweet potatoes as high values were recorded for lower volumes 16

Volume (Kg) imported. South Africa sweet potato imports increased by 139% during 211, when compared to 21 imports and this can be attributed to 11.7% decrease in the domestic production. During 212, South Africa sweet potato import dropped by 7%, when compared to 211 import and it was relatively more expensive to import sweet potato at the same year. Sweet Potato imports have increased by 8.9%, when compared to the previous year imports and high value were recorded for volume imported. South Africa s imports increased despite a 2.5% increase in the domestic production output. 35 3 25 2 15 1 5 Figure 16: South Africa sweet potato imports from the regions Years 24 25 26 27 28 29 21 211 212 213 Africa 82 19 2958 1316 285863 21428 57144 136371 25719 3219 Asia 211 3 418 95 1 48 7186 17652 18977 1872 Europe 21584 Oceania 15 Source: Quantec Easydata Figure 16 above illustrates the regions supplying South Africa with sweet potato imports. South Africa imports sweet potatoes mostly from African and Asia regions. South Africa imported sweet potatoes from European region only in 25. In 211, South Africa imported sweet potato from China, Ghana, Zambia and Nigeria. In 211, South Africa also imported sweet potato from Oceania region, but the volumes were insignificant. During 212, 89% of South Africa s sweet potato imports were sourced in China and 11% of imports were sourced from Ghana. In the same year there were no sweet potato imports from European and Oceania regions. In 213, Africa (Ghana, Swaziland and Nigeria) and Asia (China and Taipei, Chinese) regions were the sole suppliers of sweet potatoes imported by South Africa. Figure 17 below indicates the value of South African sweet potato imports. The figure shows that it was mostly cheaper to import from African countries. In 25, a considerable import value for sweet potato from European region was recorded. In 21 and 211, it was more expensive to import sweet potatoes from Asia. During 212, it was still relatively more expensive to import sweet potatoes from Asia when compared to imports from the African region. In 213, it was relatively more expensive to import sweet potatoes from Asia, while the imports from Africa was fairly cheaper. 17

Value (Rand) Value (Rand) 1 9 8 7 6 5 4 3 2 1 Years Source: Quantec Easydata Figure 17: Value of sweet potato imports from the regions 24 25 26 27 28 29 21 211 212 213 Africa 22 44 6456 18879 639339 12922 126521 275785 1463 149457 Asia 821 453 2142 18 226 18188 178375 41998 861535 84346 Europe 47 Oceania 78 Figure 18 shows the value of South Africa s provincial sweet potato imports. 9 8 7 6 5 4 3 2 1 Years Source: Quantec Easydata Figure 18 : Value of SA provincial sweet potato imports 24 25 26 27 28 29 21 211 212 213 Western Cape 2792 41365 9898 58782 258 45 Kwazulu-Natal 7191 177114 42359 855559 81235 North West 7245 Gauteng 141 47893 8563 16195 52973 32939 69 25331 15539 173637 Mpumalanga 95227 Figure 18 above illustrates, the entry point of South Africa s sweet potato imports during a ten year period. In 24 to 26, Gauteng province was mainly the entry point for sweet potato imports. During 27, the Sweet potato were imported through Gauteng and Western Cape provinces. In 28, Gauteng, Mpumalanga and Western Cape provinces were the entry points of sweet potato imports. From 29 to 212, South Africa imported sweet potatoes mainly through Western Cape, Kwazulu Natal and Gauteng provinces. During 213 high volume of import were imported through Kwazulu Natal and Gauteng. In the same year, North West import has reported its first import value, but the value was less significant. 18

2.5 Processing Sweet potato leaves and shoots are also edible, but the starchy tuberous roots are far the most important product. In some tropical areas, sweet potatoes are a staple food crop. The roots are frequently boiled, fried or baked. They can also be processed to make starch, and partial flour substitute. Industrial uses include the production of starch and industrial alcohol. Baked sweet potatoes are sometimes offered in a restaurant as an alternative for potatoes. Sweet potatoes can be sliced, fried and eaten just like potato chips. Raw sweet potato can be eaten as well, mostly in chip form. Sweet potato butter can be cooked into a gourmet spread. Taiwanese companies are making alcohol fuel from sweet potato. Sweet potato leaves are also common side dish. Figure 19 presents the sweet potato value chain tree explaining its uses while Figure 2 illustrates the market value chain for sweet potatoes. Figure 19: Sweet potato value chain tree explaining its uses Industrial alcohol Sweet potato leaves Baby food Sweet Potato Butter Freezing industry Fresh sweet potato Canned sweet potato Animal Fodder Dehydrated sweet Sweet potato Condiments Sweet potato flour Sweet potato starch Noodles 19

Figure 2: Market value Chain for sweet potato Input Suppliers Farmers/Producers Harvesting Cleaning Imports Quality grade standards and packaging Fresh Produce Markets, Wholesalers, Supermarkets, Retailers and Informal Market Storage, transportation and distribution Exports Processors: Canning, freezing and dehydration Consumer The sweet potato value chain can be broken down into the following levels: the producers of sweet potato (farmers); pack house owners (cleans, grade and quality control); cold storage and transport facilities (store and transport sweet potato on behalf of farmers); traders in sweet potato (market and sell sweet potato); processors (add value to sweet potato and process sweet potato to other usable forms); and end users (consumers) 2

3. MARKET INTELLEGENCE 3.1 Tariffs Tariffs applied by the various markets to sweet potatoes originating from South African during 212 and 213 are presented in Table 1. Table 1: Tariffs applied by various exports markets to sweet potato from South Africa Country Product description (H7142) Trade regime description Estimated total ad volorem equivalent tariff Estimated total ad volorem equivalent tariff Applied tariff Applied tariff 212 213 Angola Sweet potato fresh or chilled MFN duties (Applied) 15.% 15.% 5.% 5.% Botswana Sweet potato fresh or chilled Intra SACU rate.%.%.%.% Canada Sweet potato fresh or chilled MFN duties (Applied).%.%.%.% China Sweet potato, fresh for human consumption MFN duties (Applied).%.%.%.% Egypt Sweet potato fresh or chilled MFN duties (Applied) 5.% 5.% 5.% 5.% France Sweet potato, fresh for human consumption Preferential tariff for South Africa.%.%.%.% Germany Sweet potato, fresh for human consumption Preferential tariff for South Africa.%.%.%.% Ghana Sweet potato frozen or dried MFN duties (Applied) 2.% 2.% 2.% 2.% Ireland Sweet potato, fresh for human consumption Preferential tariff for South Africa.%.%.%.% Sweet potato fresh, chilled or Japan dried MFN duties (Applied) 12.8% 12.8% 12.8% 12.8% Malawi Sweet potato fresh or chilled Preferential tariff for 1.% 1.% 1.% 1.% 21

South Africa Mozambique Sweet potato fresh or chilled Preferential tariff for South Africa.%.%.%.% Netherlands Sweet potato, fresh, whole for human consumption Preferential tariff for South Africa.%.%.%.% Namibia Sweet potato fresh or chilled Intra SACU rate.%.%.%.% Nigeria Sweet potato fresh or chilled MFN duties (Applied) 2.% 2.% 2.% 2.% Switzerland Sweet potato, fresh for human consumption MFN duties (Applied).%.%.%.% Swaziland Sweet potato fresh or chilled Intra SACU rate.%.%.%.% Lesotho Sweet potato and similar root and tuber Intra SACU rate.%.%.%.% United Kingdom Sweet potato, fresh for human consumption Preferential tariff for South Africa.%.%.%.% United States of America Sweet potato fresh or frozen MFN duties (Applied) 6.% 6.% 6.% 6.% Zambia Sweet potato fresh or chilled Preferential tariff for South Africa.%.%.%.% Zimbabwe Sweet potato frozen or dried MFN duties (Applied) 4.% 4.% 4.% 4.% Source: Market Access Map During 213, South Africa sweet potato export markets were mainly in Namibia, Netherlands, United Kingdom, France and Botswana. Namibia and Botswana apply.% Intra-SACU rate to sweet potato exports from South Africa. Netherlands and United Kingdom are lucrative export markets, as they apply preferential tariff of.% to sweet potato exports originating from South Africa, due to EU-SA Free Trade Agreement (FTA). Australia applies 5% tariff to South African sweet potato exports. China is ranked number one in the world sweet potato production and its domestic producers are protected by.% tariff respectively. In African markets, Uganda and Nigeria are amongst top ten world sweet potato producers and these countries producers are protected by 25% and 2% tariff. Egypt is ranked number six in the world sweet potato exports and its domestic market is protected by 5.% tariff. South Africa also exported sweet potato to other African market like Zimbabwe and Angola and these markets are protected by 4% and 15.% tariff despite SADC-FTA agreement. 22

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. 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 labeling 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. 3.2.1 (b) Product legislation: phytosanitary regulations The international standard for phytosanitory 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 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 phytosanitory risk, identification of any harmful organisms and certification of the validity of any phytosanitory 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. 3.2.1(c) Product legislation: packaging The EU commission lays down 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 23

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 phytosanitory controls (see Directive EC 22/89) and may need to undergo heat treatment, fumigation, etc. 3.2.1. (d) 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 requirements 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 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 to 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 3.2.1(e) 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). 3.2.2 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 24

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. 3.2.3 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 phytosanitory 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 labeling 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). 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. 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. 25

Presently South American countries like Peru benefit from the asparagus trade, which has lead 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 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 also plays a vital role in ensuring safe and efficient transport of a product and conforming to handling requirements, uniformity, recyclable materials specifications, phytosanitory requirements, proper storage needs and even attractiveness (for marketing purposes). 6. COMPETIVENESS OF SOUTH AFRICA SWEET POTATO EXPORTS Figure 21 below illustrates that South Africa s sweet potato export to Zimbabwe and Singapore are growing faster than the world sweet potato imports to these countries. South Africa s performance in these countries is regarded as a gain in a dynamic market. South Africa s sweet potato exports to Mozambique are growing slower than the world imports into this country, and this is regarded as a loss in the dynamic country. South Africa s sweet potato exports to the Netherlands, United Kingdom and France are declining while world imports are growing into these countries. Figure 22 below shows that during 213, Namibia and Netherlands were the primary markets for sweet potato exports from South Africa. Prospective markets for sweet potato exports are mainly Malawi, Mozambique, Germany and Zimbabwe. However, if SA is to diversify its sweet potato exports, the most lucrative market exists in Zambia and Angola, which has increased their sweet potato imports from the world between 29 and 213. Zambia has experienced 18% and Angola has experienced 55% of annual growth rate. Italy has recorded a negative growth of 3% between 29 and 213 period. 26

Figure 21: Growth in demand for sweet potatoes exported from South Africa in 213 Source: ITC Trade Map 27

Figure 22: Prospects for market diversification for sweet potatoes exported from South Africa in 213 Source: ITC Trade Map 28