South Africa has become an important player in the African production of potatoes and onions. They are crucial crops for both the local market and elsewhere in Africa. Although these markets are largely self-sufficient, they offer opportunities for European cooperation and trade, especially with the Netherlands.
The country is also known as the 'Rainbow Nation' because of its cultural diversity. It has the largest economy on the African continent. The population has doubled from 30 million in 1980 to 60 million today. By producing relatively inexpensive agricultural products, it has become a major exporter on the African continent. The proximity to major ports and export markets strengthens its regional hub function. Drought in neighboring countries such as Namibia and Botswana also increases demand for South African products.
Potatoes: A Growing Industry
South Africa produces 2.5 million tons of potatoes annually, ranking 39th among the largest producers worldwide. With an average yield of 38 tons per hectare, the potato industry in the country is robust. The harvest season peaks in May, with most potatoes being consumed locally as fresh produce. The market for processing potatoes is growing thanks to companies like McCain and PepsiCo. They stimulate the demand for fries and chips potatoes by introducing local brands such as Simba chips. Specific varieties: Sound (from Meijer Potatoes), Mondial (from HZPC), and El Mundo (from STET) are the main varieties for local consumption.
In the past two decades, the potato acreage has grown by 25% to meet the rising domestic demand and support modest export growth. Currently, 8% of the total production is destined for export. The local potato market is characterized by strong price fluctuations. Recently, the price level peaked at €540 per ton (10,149 rand), whereas it is now €250 per ton (4,700 rand). Potatoes for export fetch an average of €270 per ton, while imports are minimal. This is due to high transport costs, which increase the final costs to €500 per ton.
The significant price fluctuation in the current season is partly caused by a severe drought in the northern cultivation region of Limpopo. Despite good local potato production, the South African market for frozen potatoes still faces a considerable shortage. Recent figures show that €30 million worth of fries and other frozen potato products have been imported into the country. That is twice as much as the €15.8 million export value.
Onions: A Stable Crop with Export Potential
South Africa produces more than 600,000 tons of onions annually. The predominantly sandy soils, dry climate, and efficient irrigation systems contribute to this. The growth conditions minimize the risks of fungal diseases, making onions a relatively low-maintenance crop. Most of the production is consumed locally. Approximately 120,000 tons are exported annually to neighboring countries such as Mozambique, Angola, and Botswana.
Unlike potatoes, the South African onion market experiences less price volatility. The opposite of Dutch markets. Local market prices fluctuate around €265 per ton (5,000 rand). Export prices to neighboring countries are slightly higher due to transportation costs. Tariff barriers, such as an import duty of over 50% in Angola, pose a challenge for exporters. Especially countries severely affected by drought remain demand markets. Onion imports from Europe are rare for South Africa. Only during the seasonal transition, between the old and new harvest in May, onions are sourced from Spain and Egypt.
Trade Relations
The agricultural ties between the Netherlands and South Africa are deeply rooted, especially in the field of seed potatoes and innovations in cultivation. Dutch varieties dominate the South African potato market. Disputes have been ongoing for several years regarding the European export of frozen fries. The ITAC (International Trade Administration Commission of South Africa) has imposed anti-dumping duties to maintain high prices on local products. Originally, the plan was to maintain the high import duties until 2024.
Due to pressure from the South African potato organization and local industrial players, an extension of the tariffs has been set for the next five years. Currently, the import tariffs for Dutch products are 239% (instead of 104% previously), 67% for Belgium, and 181% for Germany. Nevertheless, European exports peaked at almost 4,000 tons of fries in August 2024. The highest level in over a year. In the months before, exports were only a few hundred tons.
Challenges and Opportunities
South Africa's regional dominance in supplying potatoes and onions stems from its ability to meet the needs of drought-affected neighboring countries, such as Namibia and Botswana. In some parts of Namibia, less than 80 mm of rain fell in a year, making local agriculture unsustainable. However, high transport costs and tariff barriers limit South Africa's export potential to these countries.
For European exporters, South Africa can serve as a gateway to access more regional African markets. For example, with seed potatoes, seeds, and agricultural machinery. South Africa can be considered the gateway to the southern part of the continent. Labor is readily available and relatively inexpensive, while the unemployment rate remains high at 32%. Trade agreements have been established with European institutions, such as the Dutch embassy, which focus strongly on agriculture. The local currency, the rand, is relatively strong and stable compared to other African currencies. The proximity of deep-sea ports and an efficient supply chain, such as from Durban and Cape Town, is favorable for import and export. Corruption remains a concern, but the impact is limited. By collaborating with established institutions and companies, risks are minimized.
Conclusion
The South African potato and onion markets are examples of resilience and growth, driven by local and pan-African demand. These sectors offer opportunities for Dutch companies. The import of frozen potato products is still hindered by high import duties and anti-dumping laws. However, it is important to consider that the population has limited financial resources for their food provision. Protecting a local market by maintaining high prices is beneficial for local producers. For those who need to feed themselves at low costs, it is at least controversial.
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