onion Commodity Profile - Minister Of Agriculture ...· Onions are the third most popular in South

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Transcript of onion Commodity Profile - Minister Of Agriculture ...· Onions are the third most popular in South

  • A PROFILE OF THE SOUTH AFRICAN ONION MARKET VALUE CHAIN

    2010

    Directorate Marketing Private Bag X 15

    ARCADIA 0007

    Tel: 012 319 8455/6 Fax: 012 319 8131

    Email: DM@daff.gov.za www.daff.gov.za

    TABLE OF CONTENTS

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    mailto:DM@daff.gov.za

  • 1. DESCRIPTION OF THE INDUSTRY 2

    1.1 Production areas 4

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    1.2 Production trend

    1.3 Consumption

    2. MARKET STRUCTURE

    2.1 Domestic markets and prices

    2.2 South Africa Onion Exports

    2.3 Share analysis

    2.4 South Africas onion imports

    2.5 Processing

    2.6 Onion value chain tree explaining its uses.

    2.7 Market value chain for onion

    3. MARKET INTELLIGENCE

    3.1 Tariffs

    3.2 Non tariff barriers

    4. GENERAL DISTRIBUTION CHANNELS

    5. LOGISTICAL ISSUES

    5.1 Mode of transport

    5.2 Cold chain management

    5.3 Packaging

    6. COMPETITIVENESS OF SOUTH AFRICAN ONION EXPORTS.

    7. OPPORTUNITIES AND CHALLENGES

    7.1 Opportunities

    7.2 Challenges

    ACKNOWLEDGEMENTS 1. DESCRIPTION OF THE INDUSTRY

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  • Onions are the third most popular in South Africa, after potatoes being first and tomatoes being second. Onion is widely used in cooking, they add flavor to dishes such as stew, soup and salads. Dry onion can be divided into two categories, which are fresh onion and storage onion. Fresh onion are available in late May or early June and can be purchased until end November. These onions have a higher water and sugar and lower pyruvate content. Consumers can recognize this onion by their lighter colour and thinner skin. The storage onion is available in the market in November just as the fresh onions are coming to an end. These onions have a darker and much thicker skin than that of fresh onion. Storage onions are firm, compact and are mush less susceptible to bruising and shipping damage. Both of these types are commercially available in three colours; red, yellow and white.

    Figure 1: Gross value of onion production

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    Source: Agricultural Statistics Figure 1 above; illustrate the contribution of the onion industry to the gross value of agricultural production over 10 years period. The contribution decreased sharply in 2001 and then from 2002 to 2003 the contribution increased steadily. In 2004 the contribution dropped by 14.6% when compared to previous year this can be attributed to due to decline in prices received by the producers. The contribution increased steadily from 2005 to 2007. The contribution declined by 13% in 2008 due to significant decline in producer prices in the same year. In 2009, the onion contribution increased sharply by 60% due to high production volume which occurred while the prices were still favorable to the producers.

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  • 1.1 Production areas Onions are produced in almost all the provinces of the RSA, mainly in the Western Cape (Ceres), Northern Cape, North West and Limpopo Province. According to the United Nations Food and Agriculture Organization, leading onion producing countries are China, India, United States, Turkey and Pakistan respectively

    1.2 Production trend

    Figure 2: Total production of onions

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    Source: Agricultural Statistics Figure 2 above, illustrate the production of onion for the past 10 years. The production of onion was very unsteady over the period under review. Production increased steadily from 2001 to 2004 then declined slightly in 2005.In 2006 the production increased by 4% and decline by 8.5% in 2007. The decline in production can be attributed to increasing input costs. In 2008, there was a 14% increase in production volumes compared to the 2007 production season. The highest production volume was recorded in 2009. 1.3 Consumption Figure 3 below, depicts local consumption of onion compared to the production over 10 years. The average onion consumption is approximately 346 953 tons per annum. This indicates that South Africa is self sufficient in terms of onion production and the surplus is also exported. From 2001 to 2006 the onion consumption per capita has been increasing steadily. In 2008 the consumption increased by 13.6% and this can be attributed to increase in production in the same year. In 2009, the consumption increased by 10% compared to the previous year. Globally, Libya has the highest consumption of onions.

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  • Figure 3: Production vs Total fresh consumption

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    Production (Tons) Consumption (Tons)

    Source: Agricultural Statistics

    2. MARKET STRUCTURE The onion industry operates in the deregulated environment where the prices are determined by the forces of demand and supply and there are no restrictions in the marketing of onions. The industry uses fresh produce markets, informal market, processors and direct selling to wholesalers and retailers as marketing channels. Onions are also exported to other countries through export agents and marketing companies. South Africa also imports onions from other countries.

    2.1 Domestic markets and prices Table 1: Onion sold through different marketing channels

    Years

    National Fresh Produce Market ( Tons) Exports (Tons)

    Total Processing (Tons)

    2000 214313 9849 3942 2001 237638 19171 3408 2002 244661 25969 3278 2003 252038 31967 3535 2004 282718 34736 4400 2005 283038 18756 4026 2006 284958 32571 4144 2007 255789 36031 3515 2008 298721 31382 5424 2009 284591 24855 4362

    Source: Agricultural Statistics

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  • Table 1 above, illustrates that National Fresh Produce Markets remains an important channel for the sale of onions in South Africa. In 2009, 62% of onions were distributed through fresh produce markets and the remaining 38% represent direct sales to wholesalers, retailers, exports, processors and informal traders. In 2009 the onion exports decreased by 20.7% compared to the previous year while the processed onion has decreased by 24%.

    Figure 4: Onions sold at the fresh produce markets

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    Volume (Tons) Price (Rand/Ton)

    Source: Agricultural statistics Figure 4 above, illustrate the sales of onions in the national fresh produce market for the past ten years. The market prices at the national fresh produce markets where relatively unstable. In 2001, the average price of onion decreased by 29% and in 2007 the onion price increased by 97%. The increase in prices can be attributed to decrease in volumes of onion supplied in the same year. In 2008 the market prices decreased by 26% compared to the previous year. This can be attributed to increase in volumes supplied across the markets. The highest price was recorded in 2009 as onion volumes declines across the market.

    2.2 South Africa Onion Exports South Africas onion exports represent 0.31% of world exports and its ranking in the world exports are 29. South Africa has improved in onion ranking as it was ranked number 32 in 2008. The South Africa onion exports were destined for Mozambique, Netherlands, Zimbabwe, France, Belgium and Mauritius. 59.1% of South African onions are exported to neighboring African countries. Figure 5 below illustrate the major onion export destinations. Globally, India, Netherlands, Mexico, United States of America and China are top countries exporting onions.

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  • Figure 5: South Africa's onion exports destinations in 2009

    Zambia2.7% Congo

    1.2%Other2.9%

    Belgium3.9%

    Mauritius3.3%

    Ship stores and bunkers 3.2%

    Angola5.2%

    France 4.0%

    United Kingdom2.9%

    Mozambique40.9%

    Zimbabwe13.0%

    Netherlands16.8%

    Source: Trade Map Table 2: South Africas onion exports in 2009

    Importer

    Exported value 2009 (USD thousand)

    Share in South Africa's exports (%)

    Exported quantity 2009 (tons)

    Unit value (USD/unit)

    Exported growth in value between 2005-2009 (%, p.a.)

    Exported growth in quantity between 2005-2009 (%, p.a.)

    Exported growth in value between 2008-2009 (%, p.a.)

    World 7200 100 24856 290 5 6 -5 Mozambique 2946 40.9 10059 293 177 154 19 Netherlands 1211 16.8 4975 243 67 78 19 Zimbabwe 939 13 2904 323 2 -8 466 Angola 371 5.2 909 408 -46 -50 -54 France 286 4 578 495 -19 -16 377 Belgium 284 3.9 1293 220 92 127 38

    Mauritius 234 3.3 401 584 485 59 Ship stores and bunkers 229 3.2 260 881 19 9 9

    UK 208 2.9 1043 199 71 81 -72 Zambia 192 2.7 1766 109 -2 -1 -18 Congo 87 1.2 141 617 120 81 -15 Brazil 55 0.8 1 55000 Saint Helena 51 0.7 68 750 8 -2 31 Ireland 41 0.6 200 205 91 39 -36 DRC 34 0.5 134 254 59 100 42

    Source: ITC Trade Map

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  • Table 2 indicates that during 2009, South Africa exported higher quantitie