A PROFILE OF THE SOUTH AFRICAN SUNFLOWER MARKET VALUE CHAIN

A PROFILE OF THE SOUTH AFRICAN SUNFLOWER MARKET VALUE CHAIN 2015 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 CONTENTS 1. DESCRIPTION OF THE INDUSTRY... 3 1.1 Production Areas... 3 1.2 Production Trends... 4 2. MARKET STRUCTURE... 5 2.1. Domestic Market... 5 2.2. Producer prices... 7 2.3. Exports... 7 2.3.1. Share Analysis... 13 2.4. Imports... 15 2.5. Processing... 17 3. MARKET VALUE CHAIN... 19 4. MARKET INTELLIGENCE... 20 4.1. Tariffs... 20 4.2. Performance of the South African sunflower seed industry... 23 5. STRATEGIC CHALLENGES AND OPPORTUNITIES... 27 6. OTHER INFORMATION... 27 7. ACKNOWLEDGEMENTS... 28 2

Gross Value (R'000) 1. DESCRIPTION OF THE INDUSTRY Sunflower seed is primarily used for the manufacturing of sunflower oil and oilcake. In South Africa sunflower is well adapted in both hot and dry climate. The seed can be consumed after the hull has been removed as a snack or used for production of different oils. Most of the seed produced is marketed locally to expressers, animal feed manufacturers and for seed. Sunflower is the third largest grain crop produced in South Africa after maize and wheat. For the period between 2005 and 2014, an average of about 662 thousand tons sunflower seed were produced per annum while the gross value was approximated at 2.3 billion Rand per annum. The gross value of sunflower seed produced in South Africa has been relatively volatile for the past ten years. From Figure 1 below there is an indication of cyclical behavior with regard the gross value of production, which can be associated with the cycle of the producer prices received for sunflower seed. During 2014 marketing year, sunflower seed production contributed approximately 5.42% to field crops total gross value of production. Figure 1: Sunflower Seed- Gross Value of Agricultural Production 4500000 4000000 3500000 3000000 2500000 2000000 1500000 1000000 500000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Statistics and Economic Analysis Marketing Year 1.1 Production Areas Sunflower seed is produced mostly in the eight provinces out of the nine provinces. Traditionally, the North West and Free State Provinces produced a significant amount of sunflower seed. Sunflower seed can be planted from the beginning of November to the end of December, which is almost the same time for maize plantings. The general observation from Table 1 below is that during the five year period between 2010 and 2014 production of sunflower seed has experienced a downturn in almost all the major producing provinces. The Free State Province has consistently experienced a downward trend in sunflower seed production during this period except in 2011, 2013 and 2014, while another major producer the North West Province has also had a similar experience. The same trend is observed in other provinces such as the Limpopo and Mpumalanga. 3

Table 1: Sunflower seed production by provinces Province Production Production in 2010 in 2011 (tons) (tons) Production in 2012 (tons) Production in 2013 (tons) Production in 2014 (tons) Western Cape 200 0 0 0 0 Eastern Cape 160 220 0 0 800 Northern Cape 1 700 680 100 100 400 Free State 277 500 434 000 247000 296800 448000 Limpopo 67 500 98 000 85000 79500 76300 Mpumalanga 12 800 12000 135001 9900 4600 Gauteng 4 900 4 800 3 900 4700 3900 North West 175 240 310 300 172500 166000 298000 Source: Statistics and Economic Analysis The actual production of sunflower seed during the 2013/14 production season is depicted in Figure 2 and shows that the Free State and North West provinces are the major producers of sunflower seed with a share of 54% and 36% of the total production respectively, followed by Limpopo and Mpumalanga provinces. Very small quantities of sunflower seed were produced in the Western, Eastern, Gauteng and Northern Cape provinces of South Africa. Figure 2: Sunflower Seed Productionby provinces 2013/14 ( tons) Western Cape 0% Eastern Cape 0% Northern Cape 0% North West 36% Gauteng 0% Mpumalanga 1% Limpopo 9% Free State 54% Source: Statistics and Economic Analysis 1.2 Production Trends According to Figure 3, the hectares planted for sunflower seed have been volatile for the past ten years and this was followed by fluctuations in production volumes. The figure further indicates that an average of 494 thousand hectares of sunflower seed were planted per annum resulting in average production volumes of about 662 thousand tons. Both area planted and total production of 4

Area Planted (Ha) Total Production (tons) sunflower seed experienced substantial increase during the 2007/ 08 season as compared to the past four seasons, followed by a slight decline in 2008/09 and 2009/10 seasons. Both area planted and total production shows substantial increase in 2010/11 production season, followed by slight decline in 2011/12. This was then followed by a drastic increase in production of sunflower seeds in 2013/14. Generally, production of sunflower seeds has been fluctuating during the past 10 years. Figure 3: Area Planted vs Total Production 700000 600000 500000 400000 300000 200000 100000 0 1000000 900000 800000 700000 600000 500000 400000 300000 200000 100000 0 Prpduction Years Area Planted (ha) Total Production(tons) Source: Statistics and Economic Analysis 2. MARKET STRUCTURE 2.1. Domestic Market The processing of sunflower seed is highly capital intensive and requires high technology and specialized knowledge. The refining process produces sunflower oil which is used mostly for human consumption. Most of the large refineries are situated in Gauteng and Kwazulu Natal. The greatest importance of sunflower production is the extraction of oil from the seed. Figure 4 below indicates domestic producer sales and exports of sunflower seed from 2004/05 to 2013/14 marketing years. The figure indicates that exports of sunflower seed were minimal throughout the period under analysis and this explains that South Africa is not a major exporter of sunflower seed. The lower volumes of sunflower seed exports are also attributed to the fact that our processing capacity in the country is big enough to accommodate most of sunflower seed produced locally. In actual fact South Africa remains a net importer of sunflower seed over the past few years. The figure indicates that domestic producer sale of sunflower seed remained dominant throughout the period under analysis. The period under analysis closed with moderate of sunflower sales in the domestic market in 2013/14. 5

Volume (tons) Tons Figure 4: Sunflower Seed-Domestic Producer Sales vs Exports 1000000 800000 600000 400000 200000 0 Marketing Year Producer sales (tons) Source: Statistics and Economic Analysis Exports (tons) Figure 5 below shows sunflower seed processing from 2004 to 2013. The figure indicates that the quantity of sunflower seed processed into oil is generally higher than the quantities utilized for seed, animal feed manufacturing and other uses. The quantity of sunflower seed utilized for oil and oilcakes was very low during the year 2007 compared to other years mainly as a result of lower levels of local production at the time. This increased slightly during the years 2008 and 2009 as the local production increased. The period under analysis closed with high volume of sunflower seed processing. Figure 5: Sunflower seed processing 900000 800000 700000 600000 500000 400000 300000 200000 100000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Period (Years) Oil & Oilcake Seed & Feed Other Source: Statistics and Economic Analysis 6

Price (Rands/ton) 2.2. Producer prices Figure 6 below shows producer prices for sunflower seed from 2004/05 to 2013/14. The period under analysis opened with lower price of R1 579.78/ton. The producer prices for the product in question started to pick up in 2005/06 and continued to increase until a peak was reached in 2007/08. The figure further indicates that the price declined dramatically in 2008/09. This was followed by an increase from 2009/10 production season until the highest price was achieved during 2012/13.The period under review closed with a decline in the level of producer prices (R4 435.47/ton) in 2013/14. 6000 Figure 6: Sunflower Seed Producer Prices 5000 4000 3000 2000 1000 0 Source Statistics and Economic Analysis Period (Years) 2.3. Exports The major importers of sunflower seed originating from South Africa are Kenya, Pakistan France, Botswana, Uganda and Namibia. During the year 2013, Pakistan acquired about 27.2% of South Africa s total sunflower seed exports, followed by Kenya and France with 26.6% and 12.2% respectively. Figure 7 below shows value of sunflower seed exports by different province of South Africa for the period between the year 2005 and 2014. The figure indicates that exports from KwaZulu-Natal province were dominant throughout the period under analysis where Gauteng province emerged to be the largest exporter of sunflower. The figure further indicates that the exports of sunflower seed from other province remained minimal throughout the period under review. Between 2005 and 2007 exports of sunflower seed from KwaZulu-Natal Province were greater than those from any other province in the Republic with greater export values recorded during this period. Exports of sunflower seed from Gauteng were very low during the years 2009 and 2010 while those from KZN were slightly higher at the time. The figure further indicates that the period closed with Kwazulu- Natal provinces accumulating higher exports of sunflower seed in 2014. 7

Export Value (Rands) Export Value (Rands) Figure 7: Value of Sunflower seed exports by provinces 450000000 400000000 350000000 300000000 250000000 200000000 150000000 100000000 50000000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Western Cape 3757764 106072 178027 307338 292989 87561 1461295 3492972 6716704 3397544 KwaZulu-Natal 9123581 7462307 8715573 59631547 46685514 5702627 9912384 19400371 40433087 18202592 North West 0 0 1099 0 0 0 443805 428606 699 1542150 Gauteng 1117406 620344 484316 4.24E+08 590030 3460753 4938056 7032450 9305781 6533653 Others 117 1077 4000 0 40345 811 0 5783 0 933697 Source: Quantec Easy Data Period (Years) The trend for sunflower seed exports from Western Cape Province is shown in Figure 8 below. In the Western Cape Province sunflower seed exports occur mostly through the City of Cape Town Metropolitan municipality. The figure indicates that there were no exports of sunflower seed from the Eden district municipality from 2007 and 2011. It is also clear from the figure that City of Cape Town was the largest contributor to the Western Cape s total value of sunflower exports in 2014 followed by Eden District. Figure 8: Value of sunflower exports from Western Cape 5000000 4500000 4000000 3500000 3000000 2500000 2000000 1500000 1000000 500000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 City of Cape Town 30572 92778 178027 307338 292989 87550 1461295 2708803 4448500 3331981 Cape Winelands 18542 0 0 0 0 11 0 0 0 0 Eden 3708650 13294 0 0 0 0 0 784169 2268204 28133 Source: Quantec Easy Data Perid (Years) 8

Export Value (Rands) Figure 9 below indicates value of sunflower seed exports from North West province from 2005 to 2014. It is also clear that there were no exports of sunflower seed from Ngaka Modiri Molema district municipality between the years 2005 and 2013. The figure indicates that Bojanala District s exports of sunflower seed were minimal from 2005 to 2010 and this was followed by substantial increase in 2011 and 2012. The period under analysis closed with the high exports values in both districts in North West Province. Figure 9: Value of sunflower seed exports from North West Province 1800000 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Bojanala 0 0 1099 0 0 0 443805 428446 699 2567 Ngaka Modiri Molema 0 0 0 0 0 0 0 0 0 1539583 Period (Years) Source: Quantec Easy Data. The values of sunflower seed exports from various districts in Mpumalanga Province are depicted in Figure 10 below. In spite of the fact that the Mpumalanga province is the third largest producer of sunflower seed in the country, its contribution to exports has been very minimal and erratic over the period under analysis. This is mainly due to lack of logistics necessary for successful exportation of grains in the province and also due to the fact that the major producing districts are situated closer to Gauteng province which is well equipped with facilities for handling of grains. For the period under analysis, Mpumalanga exported minimal volumes in 2009 and 2012, no exports of sunflower were recorded in this province in 2013. The period under analysis closed with a huge export value from Mpumalanga in 2014. 9

Export Value (Rands) Export Value (Rands) Figure 10: Value of sunflower seed from Mpumalanga Province 1000000 900000 800000 700000 600000 500000 400000 300000 200000 100000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Gert Sibande 0 0 0 0 0 0 0 0 0 908750 Ehlanzeni 0 0 0 0 5863 0 0 160 0 568 Source: Quantec Easy Data Period (Years) Figure 11 below, indicates the value of sunflower seed exports from KwaZulu-Natal province form 2005 to 2014. The figure indicates that the value of sunflower seed exports from the Kwazulu-Natal province fluctuated considerably between the year 2005 and 2014 with the lowest levels having occurred during the year 2006. Sunflower seed exports from the UMzinyathi district started increasing in 2005 and this continued until a peak was reached in 2008 which was about 60 million Rand. The figure further reveals that the period under analysis closed with very low values of sunflower seed from KwaZulu-Natal, particularly those from UMzinyathi and ethekwini. Figure 11: Value of sunflower seed Exports from Kwazulu-Natal Province 70000000 60000000 50000000 40000000 30000000 20000000 10000000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Uthungulu 0 0 0 0 0 38 0 0 161 0 UMgungundlovu 0 4200 0 0 0 320 0 495470 0 0 Umzinyathi 7806149 7458107 8685914 5963154746685514 5700901 9912384 189021514042005218186599 ethekwini 1317432 0 29659 0 0 1368 0 2750 12874 15993 Source: Quantec Easy Data Period (Years) Figure 12 below indicate the value of sunflower seed exports from Gauteng province from 2005 to 2014. The figure indicates that City of Johannesburg Metro and Ekurhuleni metro opened with 10

Export Value (Rands) moderate value of exports of sunflower seed while the other district opened with lower levels of sunflower seed exports. The figure further indicates that sunflower seed exports arise mainly from the City of Johannesburg Metropolitan Municipality while those from the other three districts namely, Sedibeng, West Rand and Metsweding have been very low and irregular over the period between 2005 and 2014. The value of sunflower seed exports originating from the City of Johannesburg municipality peaked during the year 2008 and then declined substantially between 2009 and 2014. Exports from the other three districts have been considerably lower during the period under review. Gauteng Province, in spite of not being a major producer of sunflower seed is an exporter of sunflower oil because of larger number of traders who are situated in the province as well as the availability of Randfontein Grain Market in the Province. Figure 12: Value of sunflower seed expoerts from Gauteng Province 450000000 400000000 350000000 300000000 250000000 200000000 150000000 100000000 50000000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Sedibeng 0 2018 7158 1848 0 2477 2719 5665 1894 4126 West Rand 1060727 511429 446363 1119 16475 243121 0 1506037 3836502 5627431 Ekurhuleni 10192 12197 6440 4076 552293 20417 108716 102122 63875 121815 City of Johannesburg 46487 94700 24355 4.24E+08 19503 3167331 4812121 5285462 5314282 477553 City of Tshwane 0 0 0 0 1759 27407 14500 133164 89228 302728 Source: Quantec Easy Data Period (Years) Figure 13 shows volume of sunflower exports to various regions in the world from 2005 to 2014. The period under analysis opened with moderate volumes of sunflower exports from South Africa to various regions. The figure further indicates that sunflower seed exports from South Africa to various regions/continents were very low and unreliable over the period under analysis, mainly due to relatively lower levels of local production. Sunflower seed from South Africa is exported mainly to Africa, Asia and Europe and intermittently to the Americas and Oceania. The exports to these regions fluctuated considerably over the past ten years with a peak in exports destined to Europe and Asia in the year 2008. The period under review closed with lower volumes of sunflower seed exports. 11

Export Volumes(tons) Figure 13: Volume of Sunflower seed export to various regions 70000.00 60000.00 50000.00 40000.00 30000.00 20000.00 10000.00 0.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Africa 496.11 333.15 335.62 1305.1 1187.2 313.76 538.37 1037.1 1578.8 1766.8 Americas 75.62 4.19 23.77 81.44 21.21 0.64 70.12 20.55 1.78 0.15 Asia 214.46 172.29 146.76 18005. 0.03 10.55 63.67 118.18 172.95 144.36 Europe 39.87 2.94 3.15 60083. 0.17 1.99 3.68 51.26 66.58 3.88 Oceania 0.02 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 22.00 Source: Quantec Easy Data Period(Years) Figure 14 below summarizes the trend of sunflower seed exports from South Africa to other African countries. The figure indicates that SADC and Eastern Africa are the major recipients of South African sunflower seed exports. On the African continent we export our sunflower seed to Eastern Africa, Northern Africa and SADC with insignificant amounts of exports going to Northern Africa Rest and Eastern Africa. In the Eastern Africa, we export our sunflower mainly to Kenya and Uganda while Zimbabwe remains the major importer of sunflower seed originating from South Africa in the SADC region. During the years 2008 and 2009, larger amounts of sunflower seed exports from South Africa were destined to Northern Africa followed by exports to SADC and the Eastern Africa Rest respectively. Exports sunflower seed from South Africa to the African continent have also declined during the year 2010 and this was followed by a slight increase 2011. The situation with exports to Africa is very similar to the situation that was observed with regard to exports to the rest of the world. The period under review closed with higher levels of sunflower seed exports to Eastern Africa and SACU. 12

Export Quantity (tons) Figure 14: Volume of Sunflower seed exports to Africa 1600.00 1400.00 1200.00 1000.00 800.00 600.00 400.00 200.00 0.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Eastern Africa Rest 120.95 176.99 124.95 388.33 99.76 116.59 288.17 219.10 197.15 173.82 Middle Africa Rest 0.96 0.15 0.00 0.01 0.00 0.00 0.09 0.00 0.00 0.00 Northern Africa 215.62 118.00 200.00 762.03 849.21 0.03 0.03 110.44 0.03 0.03 Western Africa 4.79 4.34 0.78 1.25 0.60 1.16 0.60 1.03 1.15 1.36 SADC (excluding SACU) 153.80 33.67 9.89 153.59 237.64 39.68 19.19 24.87 53.51 90.00 SACU (Excluding RSA) 0.00 0.00 0.00 0.00 0.00 156.30 230.29 681.74 1327.0 1501.5 Source: Quantec Easy Data Period(Years) 2.3.1. Share Analysis Table 2: Contribution of various provinces to the total SA sunflower seed exports (%) Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Province Western 26.84 1.29 1.89 0.06 0.62 1.66 12.91 13.42 25.72 11.10 Cape Eastern 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Cape Free State 0.00 0.01 0.04 0.00 0.00 0.00 0.00 0.00 0.00 0.01 Kwazulu- 65.17 91.11 92.88 12.32 98.06 92.41 0.00 77.47 58.47 59.47 Natal North-West 0.00 0.00 0.01 0.00 0.00 0.00 81.55 1.63 0.00 5.04 Gauteng 7.98 7.57 5.16 87.61 1.24 5.92 3.92 7.48 15.79 21.35 Limpopo 0.00 0.00 0.00 0.00 0.072 0.01 1.62 0.00 0.00 0.00 Mpumalanga 0.00 0.00 0.00 0.00 0.012 0.00 0.00 0.00 0.00 2.97 Source: Calculated from Quantec easy data Table 2 above confirms the earlier observation that Gauteng, Kwazulu-Natal and Western Cape Provinces are the major exporters of sunflower seed in South Africa, while exports from Limpopo and Mpumalanga remained minimal throughout the period under analysis. Gauteng Province commanded the greatest share of South Africa s total sunflower seed exports during the years 2008 while KwaZulu-Natal Province became be the largest exporter of sunflower seed from 2005 to 2014 exception was in 2008 and 2011. The table further indicates that KwaZulu-Natal Province 13

accounted for 59.47% of South Africa s total sunflower seed exports in 2014 while the contribution of other provinces remained minimal. Table 3: Contribution of various districts in Gauteng Province to the provincial sunflower seed exports (%) Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 District Sedibeng 0.00 0.32 1.47 0.00 0.00 0.68 1.47 0.32 0.02 0.06 West Rand 94.92 82.44 92.16 0.00 2.79 66.78 0.38 93.1 86.1 78.00 7 3 Ekurhuleni 0.91 1.96 2.30 0.00 93.60 5.63 59.11 5.21 1.54 1.86 City of 4.16 15.26 4.05 100 3.31 25.68 31.15 3.12 7.31 Johannesburg 16.15 City of 0.00 0.00 0.00 0.00 0.29 1.22 7.89 2.18 4.63 Tshwane 0.31 Source: Calculated from Quantec easy data Table 3 indicates contribution of different districts to Gauteng province s total value of groundnuts exports. The figure indicates that the West Rand district, City of Johannesburg and Ekurhuleni are the major exporters of sunflower seed in Gauteng province while contribution in City of Tshwane and Sedibeng district are minimal. On average, West Rand is the major contributor to Gauteng s total sunflower seed exports followed by City of Johannesburg. City of Tshwane Metropolitan District only recorded sunflower seed exports between the years 2009 and 2014. The table further indicates that West Rand accumulated higher share between 2005 and 2007 whereas City of Tshwane accumulated zero percent during this period. The table further indicates that West Rand district was responsible for about 86.13% of Gauteng s total value of exports in 2014. Table 4: Contribution of various districts in KwaZulu-Natal Province to the provincial sunflower seed exports (%) Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 District UMgungundlov 0.00 0.06 0.00 0.00 0.00 0.01 0.01 0.00 0.00 u 2.48 UMzinyathi 85.56 99.94 99.66 0.00 100 99.99 99.99 97.51 99.9 99.91 ILembe 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 EThekwini 14.43 0.00 0.34 0.00 0.00 0.00 0.00 0.012 0.01 0.09 Source: Calculated from Quantec easy data Table 4 indicates contribution of various districts in KwaZulu-Natal province to the provincial sunflower seed exports from 2005 to 2014. The figure indicates that in Kwazulu-Natal province, the UMzinyathi district commanded the greatest share of sunflower seed exports throughout the period under analysis with very fractional exports recorded for the EThekwini district in 2007, 2012, 2013 and 2014. During the 2014 season UMzinyathi district accounted for 99.91% of sunflower seed exports from the KwaZulu-Natal, with the remaining 0.09% originating from EThekwini district. 14

Import Volume (tons) 2.4. Imports South Africa imports sunflower seed from the following regions: Europe, Asia, the Americas and Africa particularly from the SADC region. Figure 15 indicates that over the past ten years South Africa has been importing sunflower seed consistently from Africa, the Americas, Europe and Oceania. The major sunflower seed import market for South Africa is Europe followed by Africa and the Americas. On average, South Africa imports about 29 016 tons of sunflower seed annually from Europe while imports from Africa and Asia are about 5166 tons and 323 tons per annum, respectively. Figure 15 shows that, during the year 2014, South Africa s imports of sunflower seed originated mainly from Europe followed by those from Africa and the Americas. However, imports from all five regions have been insignificant over the period under review, until imports from Europe peaked in 2009. The period under analysis closed with high volumes of sunflower seed from Europe. Figure 15: Volume of sunflower seed imports from various region 140000.00 120000.00 100000.00 80000.00 60000.00 40000.00 20000.00 0.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Africa 399.32 559.64 3968.0 680.82 510.00 13337. 11513. 12563. 1833.1 6297.0 Americas 0.59 27.55 235.42 289.96 486.05 80.14 176.59 83.07 174.83 81.32 Asia 464.10 409.36 686.55 307.15 396.81 430.53 252.38 92.45 114.38 79.77 Europe 1.39 17.52 45.48 52.09 87627. 23183. 25502. 776.64 32341. 120618 Oceania 11.28 13.61 42.11 32.56 176.04 0.58 0.00 0.00 0.84 0.12 Source: Quantec Easy data Period(Years) Figure 16 below indicates volume of sunflower seed imports from Africa for the period ranging from 2005 to 2014. The figure indicates that the period under analysis opened with moderate volumes of sunflower seed imports. The figure further indicates that on the African continent South Africa imports its sunflower seed mainly from SADC region which might be attributed to the SADC Free Trade Agreement which facilitates flow of commodities among SADC countries at no tariff charges. In the SADC region, sunflower seed imports originate mainly from countries such as Malawi and Mozambique, with fractional and erratic quantities originating from DRC, Angola and Zimbabwe. The highest volumes of imports from SADC were experienced during the year 2007 when about 4000 tons were imported by South Africa from the region. The figure furthers indicates that more was imported from SACU between 2010 and 2014. The period under analysis closed with more imports from the SACU region in 2014. 15

Impoprt Volume (tons) Import Volume (tons) Figure 16: Volume of sunflower seed imports from Africa 14000 12000 10000 8000 6000 4000 2000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Northern Africa 0 0 0 0 0 0 0 0 0 69 SADC (excluding SACU) 399 560 3968 681 510 1818 504 1587 1176 946 SACU (Excluding RSA) 0 0 0 0 0 11519 11010 10976 657 5282 Source: Quantec Easy data Period(Years) Figure 17 below shows volume of sunflower seed imports originating from Oceania from 2005 to 2014. The period under review opened with lower imports of sunflower from Oceania. The figure further indicates that sunflower seed imports originating from Oceania are mainly from Australia. However, the volume of sunflower seed imports from this region was very low in 2005, while on the other hand the local production was also relatively higher. The figure furthers indicates that less was imported from New Zealand throughout the period under analysis. Figure 17: Volume of sunflower seed imports from Oceania 200.00 180.00 160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Australia 11.28 13.61 41.97 32.56 176.04 0.03 0.00 0.00 0.84 0.12 New Zealand 0.00 0.00 0.00 0.00 0.00 0.55 0.00 0.00 0.00 0.00 Source: Quantec Easy Data Period(Years) Figure 18 indicates volume of sunflower seed imports originating from Europe 2005 to 2014. The principal exporters of sunflower seed to South Africa in Europe are Eastern Europe and European 16

Import Volume(tons) Union respectively. Figure 18 shows that the highest volume of sunflower seed imports from Europe originated from Eastern Europe in 2009. The figure further shows that sunflower seed imports from the European Union were dominant throughout the period under analysis. It is also clear that that there were no imports of sunflower seed from Eastern Europe between 2005 and 2008. 140000 120000 100000 80000 60000 40000 20000 0 Figure 18: Volume of sunflower seed imports from Europe 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Period(Years) Eastern Europe Western Europe Rest European Union Source: Quantec Easy Data 2.5. Processing Sunflower seed provides 40-50% of oil, which is mostly processed to cooking oil. The oil is used on a daily basis in households, restaurants and various food industries. Sunflower is the basic raw material for the preparation of margarine and spreads, used daily by millions of people. Some pet food also contains oilseed raw material. In desperate times sunflower oil can also be converted to diesel for use in diesel engines as bio-fuel. Figure 19: The production of oil Production of Sunflower Press Crude oil Refining Sunflower Oil Source: Grain SA Hexane Oilcake of Sunflower During pressing there are two different methods of extracting oil from the oilseeds i.e. production of crude oil and production of oil cakes from hexane. Sunflower seed provides 40 50% of oil and 17

about 40% of oilcake, which is processed to cooking oil and for animal feed respectively, see the (Figure 19) above. Other oil products include margarine, fuel in diesel engines and other foods. The sunflower seed also produces oil cake, which is widely used for animal feeds (as sunflower oilcake meal) because of its high protein content. Sunflower oil is marketed in the form of refined oil for domestic and industrial cooking as well as baking processes. In South Africa, the main crushers of sunflower seed are Nola Industries, Epic and Epko. Pressing plants with relatively smaller crushing capacity in the country are Sealake Industries, Elangeni Oil & cake Mills and Capital Oil Mills. According to the South African Oil Processors Association there are thirteen oil refineries in South Africa, namely Capital Oil Mills, Continental Oil Mills, Elangeni Oil & Cake Mills, Epic Foods, Epko Oil Seed Crushing, Hentiq 1320, Nedan Oil Mills, Nola Industries, Sealake Industries, Sun Oil Refineries, Sunola Oil Mills, UBR and Willowton Oil Mills. Figure 20 below indicates that when sunflower seed is crushed the oil is extracted from the seed and the oilcake that remains is then used to manufacture animal feeds in the form of sunflower oilcake meal. The oil can be used as cooking oil or if hydrogenated it becomes margarine that is used by households. The oil can also find its usage in the biofuel industry to manufacture biodiesel that is used in automotive engines or it can be blended with other vegetable oils to manufacture other foods. Figure 20: The uses of sunflower seed. FUEL IN DIESEL ENGINES OIL COOKING OIL MARGARINE Sunflower Seed OTHER FOODS: Massage blends with Vegetable oils OILCAKE ANIMAL FEEDS Source: Adapted from Grain SA 18

3. MARKET VALUE CHAIN There are five main levels that can be identified in the sunflower seed-to-sunflower oil value chain: sunflower seed producers, crushers of seed, refineries of crude oil, the wholesalers and retailers, and finally the consumers as shown in Figure 22 below: Sunflower seed Producers Imports of Crude Oil Crushers/Expressers of Seed Refineries of Crude Oil Wholesalers & Retailers Animal feed Manufacture rs Consumers Figure 21: Sunflower Seed market value chain. Producers of sunflower seed usually deliver their produce to seed expressers who crush the seed to produce crude oil and oilcake. The crude oil can then be used by refineries to produce various products as explained in Figure 22 while the oilcake is used by animal feed manufacturers to manufacture a concentrate in the form of sunflower oilcake meal. Refineries may also import crude oil from the international market and, their products and those of the animal feed manufacturers are packaged, labeled and sent to wholesalers and retails who in turn will sell to consumers. 19

4. MARKET INTELLIGENCE 4.1. Tariffs South Africa applies the following tariffs to the imports of sunflower seed arising from the following trading partners: Table 5: Tariffs applied to South African sunflower imports, 2014 APPLIED REGIME TARIFF EXPORTING COUNTRY TRADE DESCRIPTION Slovakia MFN duties (Applied 9.40% 9.40% Preferential tariff for 0.00% 0.00% European Union Countries Argentina MFN duties (Applied) 9.40% 9.40% Bulgaria MFN duties (Applied 9.40% 9.40% Preferential tariff for 0.00% 0.00% European Union Countries China MFN duties (Applied) 9.40% 9.40% Belgium MFN duties (Applied) 9.40% 9.40% Preferential tariff for 0.00% 0.00% European Union Countries India MFN duties (Applied) 9.40% 9.40% Netherlands MFN duties (Applied) 9.40% 9.40% Preferential tariff for 0.00% 0.00% European Union Countries Malawi Preferential tariff for 0.00% 0.00% SADC countries Israel MFN duties (Applied) 9.40% 9.40% United States of MFN duties (Applied) 9.40% 9.40% America Source: ITC Market Access Map ESTIMATED TOTAL AD VALOREM EQUIVALENT TARIFF 2014 Table 5 indicates that South Africa charges 9.40% tariff on imports of sunflower seed from other countries, but all the European Union Countries (such as Belgium, Slovakia, Bulgaria and Netherlands) and SADC countries receive preferential treatment of not having to pay any tariff when they export sunflower seed to South Africa. This is because of SADC Free Trade Agreement and the EU-SA Trade, Development and Cooperation Agreement that exist between South Africa and EU. 20

The following countries apply the following tariffs to the exports of sunflower seed originating from South Africa: Table 6: Tariffs faced by South African sunflower exports, 2014 Importers Selected product Product Trade codes description regime description France 1206001000 Sunflower seeds, whether or not broken Kenya 12060000 Sunflower seeds, whether or not broken Sudan 12060000 Sunflower seeds, whether or not broken Republic of Korea 1206000000 Sunflower seeds, whether or not broken Netherlands 1206001000 Sunflower seeds, whether or not broken Pakistan 12060000 Sunflower seeds, whether or not broken Argentina 12060010 Sunflower seeds, whether or not broken Zimbabwe 12060000 Sunflower seeds, whether or not broken Denmark 1206009100 Sunflower seeds, whether or not broken Sunflower 21 MFN duties (Applied) MFN duties (Applied) Applied Total ad tariffs valorem equivalent tariff (estimated) 0.00% 0.00% 10.00% 10.00% General tariff 25.00% 25.00% MFN duties (Applied) MFN duties (Applied) MFN duties (Applied) MFN duties (Applied) MFN duties (Applied) MFN duties (Applied) 25.00% 25.00% 0.00% 0.00% 1.00% 1.00% 0.00% 0.00% 5.00% 5.00% 0.00% 0.00%

Importers Selected product codes Product description seeds Trade regime description Applied tariffs Total ad valorem equivalent tariff (estimated) Mozambique 12060010 Sunflower seeds, whether or not broken Source: ITC Market Access Map MFN duties (Applied) Preferential Tariff for South Africa 2.50% 2.50% 0.00% 0.00% Table 6 indicates that countries such as France, Netherlands, Argentina and Denmark charge no tariffs on imports of sunflower seed from the rest of the world. South African sunflower seed exports face tariff barriers in countries such as Kenya, Sudan, Republic of Korea, Pakistan, Argentina, and Zimbabwe. Pakistan charges lower tariffs at the level of 1.00% on the imports of sunflower seed originating from South Africa. In Kenya there is an import duty of 10.00% ad valorem on the imports of sunflower seed originating from South Africa. Republic of Korea and Sudan charge much higher tariffs at the level of 25.00% on their imports sunflower seed originating from South Africa. 22

4.2. Performance of the South African sunflower seed industry Figure 22: Competitiveness of supplying countries for sunflower imported by South Africa, 2014 Source: ITC Trade Map 23

Figure 22 above shows that South Africa s sunflower seed imports from Romania,, Turkey and Israel increased significantly between the years 2010 and 2014. South Africa increased its imports of sunflower seed from USA, Netherlands and Israel at a faster pace than these countries groundnuts export growth to the rest of the world. Over the same period, imports of sunflower from China, Argentina, India and Botswana declined significantly. Table 7 below and the figure on the next page (Figure 23) show the major export destinations of sunflower seed produced in South Africa. On average South Africa s sunflower seed exports to the world have grown by 29% in value terms and 58% in volume terms between 2010 and 2014. During 2014 South Africa exported sunflower seed mainly to Kenya, Pakistan, France and Botswana. A total of 1 938 tons of sunflower seed originating from South Africa were exported to the world during 2014, of which 144 tons went to Pakistan. Table 7: Importing markets for sunflower seed (120600) exported by SA in 2014 Importers Trade Indicators Exported value 2014 (USD thousand) Share in South Africa's exports (%) Exported quantity 2014 Unit value (USD/unit) Exported growth in value between 2009-2014 (%, p.a.) Exported growth in quantity between 2010-2014 (%, p.a.) World 2822 100 1938 1456 29 58-52 Pakistan 767 27.2 144 5326 122 107-10 Kenya 750 26.6 160 4688 36 10-78 France 345 12.2 3 115000 32 64-37 Botswana 304 10.8 1323 230-5 130-11 Malawi 145 5.1 41 3537 55 153 Swaziland 115 4.1 158 728 37 54 31 Mozambique 100 3.5 23 4348 94 52 12 Tanzania 93 3.3 11 8455 169 82 343 Uganda 72 2.6 14 5143 39-25 -63 Source: ITC Trade Map Exported growth in value between 2013-2014 (%, p.a.) During 2014 Kenya and Pakistan commanded the greatest share of sunflower seed exports originating from South Africa. During the same year, Pakistan alone absorbed 27.2% of South Africa s total sunflower seed exports followed by Kenya with 26.6%. 24

Figure 23: Prospects for market diversification for South African sunflower exports, 2014 Source: ITC Trade Map 25

Table 8: Supplying markets for sunflower seed (120600) imported by SA in 2014 Trade Indicators Exporters Imported value 2014 (USD thousand) Share in South Africa's imports (%) Imported quantity 2014 Unit value (USD/unit ) Importe d growth in value between 2010-2014 (%, p.a.) Importe d growth in quantity between 2010-2014 (%, p.a.) Importe d growth in value between 2013-2014 (%, p.a.) World 58241 100 127108 458 24 27 232 Romania 51361 88.2 116913 439 37 50 264 Bulgaria 3649 6.3 3704 985 147 271 Botswana 2067 3.5 5282 391-40 -35 819 Malawi 367 0.6 946 388 0-3 -29 China 239 0.4 69 3464-25 -35 27 Argentina 225 0.4 49 4592-15 -9-52 Chile 197 0.3 33 5970 838 Egypt 48 0.1 69 696 Israel 32 0.1 0 135 7 Turkey 24 0 4 6000 98 7-69 Source: ITC Trade Map During the year 2014 South Africa imported a total of 127 108 tons of sunflower seed from the world. These imports originated mainly from Romania, Bulgaria, Botswana and Malawi. Romania commanded the greatest share in South Africa s sunflower seed imports followed by Bulgaria, Botswana and Malawi respectively. Imports of sunflower seed from Botswana increased by 819% in value between the years 2013 and 2014. Sunflower seed imports from Bulgaria to South Africa increased by 271% in value over the same period. 26

The figure on the previous page shows that if South Africa is to diversify its sunflower seed imports, the biggest markets exist in Turkey, Russian Federation, republic of Moldova Slovakia, Ukraine and Egypt. Other markets exist in countries such as China, Argentina and India since these countries recorded a positive growth in exports to the rest of the world between 2010 and 2014. 5. STRATEGIC CHALLENGES AND OPPORTUNITIES As mentioned in the description sunflower seed production is very suitable for South African climatic conditions and is performing well for income generation to the rest of the agricultural sector. According to the FPMC report in 2003 the crushing capacity is not fully utilized by the companies therefore, there is an opportunity for any role player in the industry to crush seed, sell the crude oil at a lower price than the import parity price and still manage to realize profit. The challenge is how to get new role players in the industry as it is highly capitalized and requires sophisticated technology. There is a lack of black economic empowerment in this industry and also in the seed trade industry in general. Lack of funding to purchase equipment to get projects off the ground is often cited as one of the major obstacles to transformation. The fact that the growth season of sunflower is short, added to its drought tolerance; it can serve as an ideal alternative crop on low-potential soils when it is late to plant maize. 6. OTHER INFORMATION In the agricultural sector, food safety is very important. As result the oilseed industry is also expected to adhere to o several regulations in this regard. The regulations include: Foodstuffs, Cosmetics and Disinfectants Act of 1972 (Act 54 of 1972) Health Act of 1977 (Act 63 of 1977) Fertilizers, Farm Feeds Agricultural Remedies A of 1947 (Act 31 of 1947) Agricultural Products Standards Act of 1990 (Act 119 of 1990) 27

7. ACKNOWLEDGEMENTS The following organizations and references are acknowledged: Animal Feed Manufacturers Association Tel: (012) 663 9097 www.afma.co.za Grains South Africa Tel: (056) 515 0918 Fax: (056) 515 1517 www.grainsa.co.za Directorate Statistics and Economic Analysis, DAFF Tel: (012) 319 8453 Fax: (012) 319 8031 www.nda.agric.za Quantec Easydata www.quantec.co.za ITC Market Access Map http://www.macmap.org/southafrica ITC Trade Map http://www.trademap.org. Disclaimer: This document and its contents have been compiled by the Department of Agriculture, Forestry and Fisheries for the purpose of detailing the sunflower seed industry. Anyone who uses the information as contained in this document does so at his/her own risk. The views expressed in this document are those of the Department with regard to the industry, unless otherwise stated. The Department therefore accepts no liability that may be incurred resulting from the use of this information. 28