Supreme weather conditions and entry to irrigation have helped to propel South Africa’s raisin business to ever-greater heights. However poor logistics infrastructure and a scarcity of processing capability are hampering additional enlargement, says Pieter Botha, Nedbank Enterprise Banking’s space shopper supervisor for the Northern Cape.
Raisin manufacturing contributes R2 billion yearly and about 30 000 jobs to South Africa’s economic system, making it a comparatively small business within the nation. Nonetheless, it’s a rising one.
South Africa is the world’s fifth-largest producer after Turkey and at the moment produces 6% of the world’s raisins, however manufacturing has nearly doubled for the reason that 2006/07 season, with notably sturdy progress over the previous 5 years. Are raisins one other success story for South African agriculture?
There are roughly 1 100 raisin producers and 7 main raisin processors
and packers within the nation. Manufacturing is concentrated alongside the Orange River within the Northern Cape, accounting for a minimum of 90% of South Africa’s whole annual raisin output, with the Olifants River area within the Western Cape making up the remaining 10%.
Raisin manufacturing is prolific within the Northern Cape due to the province’s year-round availability of irrigation water from the Orange River and its comparatively steady scorching and dry local weather, making it best for rising and sun-drying grapes. Solar-drying is the commonest methodology utilized in South Africa, as it’s faster and cheaper.
Raisins South Africa’s (Raisins SA) revised forecast for the 2021/22 season is 65 000t of marketable product, however annual yields are anticipated to extend to 100 000t by 2025 because of new plantings and the alternative of vineyards that had been began in 2014.
At about the identical time (eight years in the past), the Northern Cape provincial authorities, in partnership with Raisins SA, launched a 200ha growth in Eksteenskuil within the Orange River area to assist the expansion of small-sector farmers.
In consequence, these producers’ volumes have grown from 800t to greater than 2 000t each year, and growers’ annual earnings have elevated from R15 million to R45 million for the reason that 2013/14 rising season.
Nonetheless, the main raisin processors and packers at the moment have an annual capability of 90 000t to 100 000t, so enlargement of present amenities or the event of latest ones is urgently required. That is notably so given the expansion in raisin manufacturing and the truth that some processors are already approaching full capability.
As well as, there may be rising concern in regards to the substantial impression that South Africa’s failing logistics infrastructure might have on all exports. Within the World Financial institution and IHS Markit’s report titled ‘A comparable evaluation of container port efficiency’, South Africa’s ports of Cape City, Gqeberha, Durban and Coega had been on the backside of 351 ports in varied nations.
Our ports function at round 30% of worldwide norms, which suggests they’re processing a 3rd of what they might in a day when it comes to loading and offloading containers.
Export markets rising, regardless of provide chain woes
Nearly 90% of South Africa’s raisins are exported, with the main markets being Europe, the US, Canada, the UK and Africa. Germany is the most important export marketplace for South African raisins due to that nation’s strict requirements on most residue limits, and South Africa’s sun-dried raisins comprise much less residue.
The development in the direction of more healthy snacking has seen exports to the UK improve 25% over the previous two seasons, and whereas exports to the US and Canada are barely down, South African raisin exports get pleasure from duty-free entry to the US beneath the African Development and Alternative Act, which make them competitively priced.
One other plus for South African producers is that they’re turning into accredited by SA-GAP, an offshoot of the GlobalGAP certification, which requires excessive product high quality, traceability, chemical controls and consistency of provide, and places the nation in good standing in worldwide markets.
South African producer costs for raisins are delicate to provide and demand elements, and the overseas change price. Manufacturing is contracted primarily to processors, and each events agree on value and provide contracts prematurely of every season.
With this association in place, inventory is taken into account bought on the finish of every season, which suggests there may be minimal or no closing inventory by the tip of every advertising 12 months. This can be a good place for the producers to be in.
Nonetheless, when international commerce is affected, because it has been lately, the nation might carry inventory over into the following advertising 12 months, which was the case final 12 months. The COVID-19 pandemic introduced a number of challenges to international commerce, together with a scarcity of labour and transport delays. Sadly, these points look set to proceed with the continuing Russia-Ukraine battle.
Impact of battle on native raisin business
Russia imports roughly 20 000t of raisins, or 1,6% of whole international raisin manufacturing, yearly, so the direct commerce risk is predicted to be restricted, notably as Russia represents lower than 0,2% of South Africa’s whole raisin exports. Nonetheless, the oblique impression is prone to be extra substantial via the rising prices of inputs comparable to gas and fertiliser.
Market uncertainty might also see the strengthening of the US greenback, which would supply a profit over the brief time period, as raisins are traded in the identical forex. Nonetheless, this could be offset in opposition to greater inflationary strain over the medium time period, as many inputs are imported.
Weighing up the naturally beneficial surroundings that South Africa provides this crop, and the truth that rising enter prices and international provide chain disruptions are prone to be momentary, we consider that the native raisin business has the potential to develop significantly and will increase from its present place of largest raisin producer within the Southern Hemisphere to one of many high three on the earth.
Nonetheless, it is important to deal with areas that want enchancment and have interaction with key logistics and infrastructure position gamers and authorities to seek out options.
The views expressed in our weekly opinion piece don’t essentially mirror these of Farmer’s Weekly.
That is an edited excerpt from an article initially printed on Nedbank’s web site.