31 October 2023
By: Jasper Raats
Despite several challenges facing the South African avocado industry, an analysis by the National Agricultural Marketing Council and the Department of Agriculture, Land Reform and Rural Development indicates untapped potential.
With stiff competition from Peru for market share in the European and British avocado market, South Africa must find new markets for its growing avocado production.
According to a value chain analysis by researchers from the National Agricultural Marketing Council and the Department of Agriculture, Land Reform and Rural Development, the best countries to target for access are the US, Canada and Japan, with a strong emphasis on China for market development.
Samkelisiwe Ngwenya, an agricultural economist from the international trade promotion directorate at the department, presented the analysis results in a webinar on Wednesday. Opportunities were identified using North-West University’s decision support modelling tool.
Ngwenya said although South Africa is a significant player in the global avocado market, the country’s export markets are not diversified enough. As one of the world’s top 10 avocado exporters, 62% of the country’s fruits go to the European Union, mostly via the Netherlands, which then re-exports them. Another 18% of exports go to Britain and 5% to Russia.
In Africa, avocados are exported to Namibia and Botswana, while the United Arab Emirates is South Africa’s eighth-largest export destination.
Apart from Peru, countries in central and eastern Africa – geographically closer to the equator and capable of producing avocados throughout the year – are now competing with South Africa for market share in its traditional destinations.
Although South Africa recently gained market access for avocados to China, Ngwenya said the country imposes a 25% tariff on South African avocados. Therefore, researchers believe it is necessary to focus on tariff-free markets such as the US and Japan.
While negotiations with Japan are progressing well and there could soon be good news from Tokyo for local avocado growers, years of negotiations with the US have not yielded much in terms of market access.
There are no significant issues concerning access to the Canadian market, but South Africa has not seriously explored its potential yet.
Regarding the African continent, Ngwenya believes South Africa should focus on Egypt.
Challenges
However, local avocado producers and exporters will have to overcome serious challenges to unlock the full export potential of the industry. Ngwenya specifically mentioned crime, saying a large percentage of farmers’ harvests are stolen, constraining profitability.
She also pointed out that inefficiencies at South Africa’s ports often cancel out the benefits of the country’s ideal export location. “South Africa is well positioned to export to the Far East, Middle East and Europe. Shipping routes to Europe, for example, are much shorter from South Africa than from Peru. However, because local ports do not function optimally, shipments are sometimes delayed, affecting the fruits’ shelf life in Europe.”
South Africa’s infrastructure also does not favour exporters. Unstable power supply makes it difficult to irrigate and maintain the cold chain. Moreover, most fruits from Limpopo and Mpumalanga’s Lowveld must be transported on deteriorating roads to Cape ports.
Ngwenya predicts that climate change will pose even more problems for the local industry. However, despite risks and challenges, the avocado value chain offers many opportunities and benefits for South Africa, especially in terms of job creation and direct foreign investment in the industry.
