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South African Business 2022

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Welcome to the 10th edition of the South African Business journal. First published in 2011, the publication has established itself as the premier business and investment guide to South Africa, supported by the website Regular pages cover all the main economic sectors of the South African economy and give a snapshot of each of the country’s provinces. This issue has a focus on Special Economic Zones which are being rolled out across the country with specific economic areas of focus. The importance of the revival of minerals exploration and the significance of onshore and offshore gas discoveries is the subject of another special feature.

OVERVIEW Agriculture

OVERVIEW Agriculture Rooibos has won the battle for unique regional status SECTOR INSIGHT Mohair is making a comeback via the Responsible Mohair Standard. Blueberries are a good investment. Credit: Primocane Capital. South Africa has a number of unique agricultural products but winning the right to exclude other global producers from using the name of the product is a tough task. In June 2021 rooibos became the first South African crop to win from the EU the status of protected designation of origin (PDO). Champagne or Port wine are the best-known products that fall into the protected category. The PDO identifies and links a product to a region, making sure that the consumer will get “the real thing” that is specific to that area. Products that are included in the Geographical Indication Register of the EU currently generate about R1.24-trillion annually. The Western Cape Provincial Government is investigating ways in which other products such as Aloe Ferox, Buchu and various types of flora unique to the province can be added to the list. Karoo lamb is another sought-after delicacy with its own distinct flavour. With about 350 commercial farmers cultivating 70 000ha (and a further 100 small-scale farmers), the industry produces about 15 000 tons of rooibos, about half of which is exported, mostly to Europe and Japan. The EU designation could lead to higher prices being available to producers. Another product of the Karoo is mohair. Although more than half the world’s mohair is produced in a relatively small geographical area north of the small Karoo town of Jansenville, there is no chance of getting a PDO for the fleece of the Angora goat because the first animals were imported into South Africa. However, a certificate of another kind has had a big effect in recent months in helping to revive the sector. The mohair industry took strain after a television documentary claimed that animals were routinely abused. This was denied at the time but the introduction of the Responsible Mohair Standard allows consumers to have peace of mind that animals have been well treated. The RST was set to confirm with standards established by a non-profit organisation, Textile Exchange. A unique product that is generating a lot of interest is the marula fruit, found in large quantities in Mpumalanga and Limpopo. A Marula Industrial Hub is envisaged for the Palaborwa area which will provide a platform to further exploit the tasty marula fruit, which has a high vitamin C content and is already produced as a beer and a liqueur. The Limpopo Department of Economic Development and SOUTH AFRICAN BUSINESS 2022 40

OVERVIEW Tourism (LEDET) is encouraging research into the uses of marula and the development of commercial products such as cosmetics and jams. The University of Limpopo is making good progress with a marula wine. Horticulture is growing Wandile Sihlobo of Agbiz promotes the idea of South Africa focussing on horticulture, partly because it is so labour intensive. He cites blueberries, which need 2.64 workers for every hectare planted. Signs are promising; gross value rose from R15.8-million in 2008 to R1.25- billion in 2018 with the total area planted expanding four times. More than 70% of the blueberry crop is exported as blueberries are growing in popularity globally as a “superfood”. In Mpumalanga an agri-focussed private equity firm, Primocane Capital, manages a large blueberry farm near Barberton on behalf of a mining company, Pan African Resources, which has set up the farm as part of its corporate social responsibility programme. Another subsector to experience rapid export growth is oranges. As a source of vitamin C, oranges grew in popularity as the Covid-19 pandemic spread. South Africa is the world’s second-largest citrus exporter, after Spain, and the number 11 in the world in terms of production. Citrus exports earned South Africa about R20-billion in 2019. By contrast, flower growers were badly hit by the effects of the global shutdown. Normally, Europe accounts for 80% of exports with the Americas and Japan accounting for the balance. Wool exports suffered too, although this was mostly related to China stopping imports due to a foot-and-mouth disease scare. About 70% of South Africa’s export of this commodity are to China in a normal year. Avocado exports were worth about R4.3-billion in 2019, with more than 1 000ha of new plantings taking place every year to try to meet growing demand. South Africa is among the top three countries exporting to Europe and the Chinese market is growing at a rapid rate. Total South African agricultural exports reached R175-billion in 2019 with about 40% going to other African countries and 25% to Europe. The grain and fruit harvests in 2020 were good with the maize return of 15.5-million tons the second-largest ever and 38% better than the previous year’s figure. ONLINE RESOURCES Agricultural Research Council: Grain SA: National Department of Agriculture, Forestry and Fisheries: SA Table Grape Industry: South African Berry Producers’ Association: Rice and palm oil are 100% dependent on imports and half of the maize that South Africans consume comes from abroad. South Africa imports 80% of its fertiliser and 98% of its agri-chemicals. While agriculture’s contribution to national GDP is variously given in the range of 2.0%-2.5%, the upstream and downstream links to agriculture through processing and logistics mean that the real contribution is more like 15%. AgriSA states that the amount of agricultural land in South Africa in 2016 stood at 93.5-million hectares. This represents 76.3% of South Africa’s total land mass of 122.5-million hectares and about 3% less than in 1994. A total of 70% of South Africa’s grain production is maize, which covers 60% of the cropping area of the country. KwaZulu-Natal and Mpumalanga produce sugar, but volumes are down. The Free State Province supplies significant proportions of the nation’s sorghum, sunflower, potatoes, groundnuts, dry beans, and almost all of its cherries. South Africa is famous for its fruit, of which 35% is citrus, 23% subtropical and nuts, 26% pome fruit, 11% stone fruit and 9% table grapes. Most of South Africa’s citrus and subtropical fruit comes from the eastern part of Limpopo. There are about 3 500 wine producers in South Africa, with the majority located in the Western Cape. The Eastern Cape is the largest livestock province. South Africa has a beef herd of 14-million. South Africa’s milk producers normally produce about 3.3-billion litres of milk every year (Milk Producers Association). ■ 41 SOUTH AFRICAN BUSINESS 2022

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