A PROFILE OF THE SOUTH AFRICAN CARROT MARKET VALUE CHAIN 2017 Directorate Marketing Tel: 012 319 8455 Private Bag X 15 Fax: 012 319 8131 Arcadia E-mail:[email protected] 0007 www.daff.gov.za TABLE OF CONTENT 1.DESCRIPTION OF THE INDUSTRY 3 1.1 Production areas 4 1.2 Production Trends 4 1.3 Production vs. Consumption of carrots 5 2. MARKET STRUCTURE 5 2.1 Domestic market and prices 6 2.2 South Africa’s Carrots Exports 7 2.3 Share Analysis 17 2.4 South Africa’s Carrot Imports 22 Processing 25 2.6 Market value chain for carrots 27 3. MARKET INTELLIGENCE 29 3.1 Tariffs 29 3.1 Non tariff barriers 31 4. GENERAL DISTRIBUTION CHANNELS 33 5. LOGISTICAL ISSUES 34 5.1 Mode of transport 34 5.2 Cold chain management 34 5.3 Packaging 34 6. COMPETITIVENESS OF SOUTH AFRICA CARROTS EXPORTS 35 7. OPPORTUNITIES AND CHALLENGES 38 7.1 Opportunities 38 7.2 Challenges 38 8. ACKNOWLEDGEMENTS 39 2 1. DESCRIPTION OF THE INDUSTRY Carrot is a root vegetable usually orange, white or red, white blend in colour with a crisp texture when fresh. These colours still exist, with orange-red colour being by far the most popular today. The carrot has originated in Asia. The edible part of a carrot is the tap root. Carrots are considered one of the major vegetables consumed in South Africa. It is among the top ten most economically important vegetables crops in the world in terms of both area of production and market value. Rich in Vitamin C, B1 and B2 and particularly rich in carotene (pro-vitamin A), they can be eaten raw, whole, chopped, grated or added to salads, for colour or texture. Carrot has a crisp texture when fresh. They are also often chopped and boiled, fried or steamed and cooked in soups and stews, as well as fine baby foods and selected pet foods. The greens are edible as a leaf vegetable, but are rarely eaten by humans. Some sources suggest that the greens contain toxic alkaloids. Large quantities are also processed either alone or in mixture with other vegetables, by canning, freezing or dehydration. Figure 1: Gross value of carrot production 800000000 700000000 600000000 500000000 400000000 300000000 200000000 Value (Rand) Value 100000000 0 Years Source: Statistics and Economic Analysis, DAFF Figure 1 above illustrates the contribution of the carrot industry to the gross value of agricultural production over 10 years. In 2008, the gross value has increased by 18% when compared to 2007 gross value. During 2009, the gross value eased marginally higher by 36% when compared to 2008 gross value. This can be attributed to high production volumes which occurred while the prices were still in favourable position for producers. The higher gross value was recorded in 2010, which was 11% higher when compared to 2009 gross value of production. During 2011, the gross value dropped by 0.9% when compared to the previous year. This can be attributed to a drop in producer prices in the same year. The higher gross value was recorded during 2012 and the increase was 14.9%, when compared to the 2011 gross value. In 2013, gross value has gone up by 20.8% when compared to previous year gross value and this can be attributed to 1.3% increase in production output in the same year. Carrots gross value grew by 12.6% during 2014 period in 3 comparison to the previous year gross value and this can be ascribed to the increase in producer price during the same year. In 2015, there was a sharp decrease of 26% in carrot gross value, when compared to 2014 gross value, and this can be ascribed to 36.7% drop in producer price. Carrot gross value increased by 24.8% during 2016 and the gross value was a record high over a ten year period.This can be ascribed to a 25% increase in the producer price during the same season. 1.1 Production areas Although carrots can endure summer heat in many areas, they grow best when planted in cooler climates. It is difficult to establish carrots in summer because heat, rain and early blights are major causes of crop failure and quality reduction. Carrot production is concentrated in the Western Cape, Gauteng, Free State, North West, Kwazulu Natal and Mpumalanga. Globally, China is the largest producer of carrots, followed by, Russian Federation, United States of America, Uzbekistan Poland, Ukraine, and Morocco is the only African countries, which is among the top ten world carrot producers. 1.2 Production Trends Figure 2 illustrates carrots production volume from 2007 to 2016. Figure 2: Total production of carrot 250000 200000 150000 Tons 100000 50000 0 Years Source: Statistics and Economic Analysis, DAFF In 2007, production output was just above 126 400 tons per annum and the output was a record low in a ten year period. In 2008, the production increased by 13.5% when compared to 2007. During 2009, carrot production increased by 3% compared to 2008 production year. In 2010, the production volumes decreased by 4% when compared to 2009 production year. The high carrots production output was recorded in 2011 and the production increased by 13.6% when compared to 2010 production year. In 2012, production output increased by 14.9% when compared to the 2011 season and the production volume was the highest in a 10 year period. During 2013, production output has slightly gone up by 1.3% when compared to the previous year output. Production output 4 dropped slightly by 2% during 2014 when compared to the previous year production volume. There was a notable increment of 16.9% in production output during 2015, when compared to the previous year output. Production output was stable above 120 000 tons during the 10 year period. During 2016, there was a slight decline of 0.5% in production output, when compared to 2015 production. 1.3 Production vs. Consumption of carrot Figure 3 below depicts local consumption of carrots compared to the production over the 10 year period. The figure indicates that the production of carrot is higher than the consumption. This indicates that South Africa is self-sufficient in terms of carrot production and the surplus is also exported. South African carrot consumption was approximately 182 018 tons during 2016. This represents a 0.3% decrement in consumption compared to the 2015 consumption volume. This can be attributed to a slight decline in production volumes in the same year. Figure 3: Production vs Consumption 250000 200000 150000 Tons 100000 50000 0 Years Production (tons) Consumption (tons) Source: Statistics and Economic Analysis, DAFF 2. MARKET STRUCTURE There is no regulation or restriction in the marketing of carrots. The prices of carrots are determined by the market forces of demand and supply. The industry uses local market, informal market, processor and direct selling to wholesalers and retailers. Carrots are also exported to other countries through export agents and marketing companies. South Africa also imports carrots from other countries. 5 2.1 Domestic market and prices Table 1 gives the various channels of distribution through which carrots are marketed in South Africa. Table 1: Carrots sold through different market channels Years National fresh produce markets (Tons) Processing (Tons) 2007 86 725 21 759 2008 95 035 25 689 2009 91 369 13 337 2010 85 062 16 104 2011 96 405 16 993 2012 111 526 17 939 2013 113 355 17 680 2014 112 623 14 979 2015 127 352 19 643 2016 127 256 21 951 Source: Statistics and Economic Analysis, DAFF Table 1 above shows that in 2016, there was a 11.7% rise in processed carrots compared to the previous year. National Fresh Produce Markets (NFPMs) remain an important channel for sale of fresh carrots in South Africa. During 2016, 59% of all carrots were distributed through fresh produce markets. The remaining 41% represents direct sales from producers to wholesalers, exports, retailers, processors, informal traders and consumers. Sales at the market have slightly dropped by 0.1% in comparison to 2015 sales. Figure 4: Sales of carrots at fresh produce markets 140000 4 000 120000 3 500 100000 3 000 2 500 80000 2 000 Tons 60000 1 500 Rand/ton 40000 1 000 20000 500 0 0 Years Volume (Tons) Value (Rand/ton) Source: Statistics and Economic Analysis, DAFF 6 Figure 4 above illustrates the sales of carrots in the national fresh produce markets over the period of 10 years. Carrot volumes and prices were moderately unstable. A record low market price was recorded in 2008, when the price dropped by 8.3% as volume increased by 9.5%. In 2010 carrots prices increased by 21% as carrots volume dropped by 6.9% across the markets. During 2011, market prices dropped by 13.7% due to a 13.3% increase in volumes supplied across the markets. In 2012, carrot price dropped further by 7.5% as a result of 15.6% increase in carrots supplied across the market. During 2013, market price has gone up by 20.1%, despite a 1.6% increase in carrots at the market and this can be attributed to strong demand of carrots in the same year. In 2014 the volume supplied at the market has dropped by 0.6% and this impacted positively to the market price and the price has gone up by 14% in comparison to the 2013 market price. A notable higher volume of 127 352 tons were supplied at the market in 2015, and this has negatively impacted the market price by 18.8%.