South Africa

Marianne van der Laarse joins PMA as South Africa representative

Newark, Del. — Marianne van der Laarse joined the Produce Marketing Association (PMA) as PMA’s country representative in South Africa on June 1, 2010. Her addition to PMA’s expanding international team reflects a growing membership base in South Africa and the association’s commitment to connecting the produce and floral communities around the world.
 

PMA Membership

Do you currently reside in South Africa and wish to request information on becoming a PMA member?  Please contact Richard Owen PMA's Senior Director of Global Business Development.  rowen@pma.com

E-ssentials Online

PMA Members now have direct access to the retail produce training courses online at PMA.com.  This educational training is called E-ssentials and is available in both English and Spanish.

Background on South Africa

The South African economy has emerged from recession but real rates of growth will be modest in the medium term. Short-term investment and consumption related to the World Cup in 2010 is expected to add 0.7% to the overall rate of growth. Economic gains will not be sufficient to reduce the huge number of unemployed. A disproportionate number of the new black middle class lost their jobs during the recession. The economy's potential rate of growth is falling and income disparity is acute.

Agriculture accounts for only 3.0% of GDP but employs 9.3% of the work force. Good weather and improved farming practices boosted yields in 2009. Large gains for harvests of corn, sorghum and wheat are forecast for 2010. The government hopes to redistribute 30% of the white-owned commercial farms to black farmers by 2014. Unlike the practice in neighboring Zimbabwe, the transfer will depend on willing participants on both sides of the transactions.

Market Dynamics

Research completed by Euromonitor International for PMA

September 2010

Data Analysis

Africa is self-sufficient in agriculture

South Africa is self-sufficient in terms of all major agricultural products and has consistently been a net exporter of agricultural products. Agricultural production has more than doubled since the 1960s, mainly due to the increasing use of modern technology and improved farm management. Even though this sector plays an important role in the development of the South African economy, its gross domestic product has declined from an average of 10% in the 1960s to about 2% in 2009.  

In monetary terms, agriculture currently accounts for less than 3% of South Africa’s GDP. The agricultural sector’s contribution to national GDP has been declining as a result of rapid growth in other sectors such as the manufacturing and services sector. As the country’s economy develops, and the economy becomes more industrialized, the agricultural sector’s contribution to GDP also shrinks. Though the relative size of the agricultural sector has been declining, the value added by the agricultural sector showed an annual average growth rate of 1.7% over the past 10 years.

The agricultural sector in South Africa is divided into three main groups: agriculture, forestry and fisheries. The agriculture sub-sector is further composed of field crops, horticulture and animal production.

For more information on the Market Dynamics Data Analysis

Local Production

Vegetables

Vegetables are produced across several different areas in South Africa. In terms of the distribution of vegetables, 46% of production is sold through the fresh produce markets, 42% through direct sales and own consumption, 10% are processed and 2% of vegetables are exported. 

For more information on the Market Dynamics Local Production

Retail Environment

Retail industry is consolidated

Due to South Africa’s history of apartheid and allied international sanctions, retailing is dominated by several large South African holding companies, which account for the majority of the leading retailing brands in South Africa. The holding companies operate in various categories, ranging from grocery to clothing and footwear and furniture and furnishings.

Not only do these companies offer a number of brands within a certain area of retail, but they also ensure that they capture a core target market, whether lower-, middle- or upper-income consumers. The competitive environment may see a shake up when leading international players take an interest in the opportunities South Africa presents.

For more information on the Market Dynamics Retail Enviroment

Regulatory Issues

Agricultural products are regulated in several different ways

Agricultural Product Standards Act (Act No. 119 of 1990)  This act came into force on the September 1, 1991. The objective of the act was to regulate the sale locally and export of specific agricultural products by requiring that agricultural products: be graded or classed according to standardized, objectives and measurable minimum quality standards; be marked or labeled accordingly; and be packed in a certain manner.

Key specific objectives of the act included: To provide an objective approach toward establishing effective and practical quality norms; increase consumer confidence through product classification and/or grading; the trade will be able to purchase specified quality products over time and distance; allow for greater market transparency; provision of a consistent quality when purchasing a specific grade or class; competition on an equal footing with imported products.

For more information on the Market Dynamics Regulatory Issues

Assessing the Supply Chain/Retail Distribution Environment

Supply chain and distribution structure

Informal market competes with the formal market

South Africa’s national food market is characterized by a highly sophisticated formal food marketing system on one hand and a well-organized informal food marketing system on the other. The former is dominated by a small number of retail groups who distribute food through a variety of supermarket formats.

Fresh produce is distributed through a number of channels including produce markets, retailers, processing, directly to consumers and exporters. A small percentage of fresh produce is also kept back for the producers’ own consumption and seed crops. Below is the supply chain of fresh produce in the South African market. 

For more information on the Assessing the Supply Chain/Retail Distribution Environment