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Grain and Flour Market in South Africa

13 August 20147 min reading
South Africa imports approximately one third of its need for bread wheat. However, import of durum wheat for pasta is almost negligible. Durum wheat grown in the country cannot meet the need of the gradually growing industry and pasta import increases. Considered importing wheat flour with a value of 4,4 million dollars in 2012, the country meets the entire rice demand via imports. South Africa has a wide agricultural product range and food processing industry for the process of these products. Food processing industry in the country has 11 sub-industries. These are meat processing, dairy products, canned food and vegetables, canned fish, canned fruits, jams, vegetable and animal oils, grain milling, sugar, chocolate and confectionery, ready-animal products, bread and bakery. Grain mills are the largest food sub-industry in the manufacturing industry. Fresh fruit and vegetables are at the top of food consumption. Grain and bread products and protein follow them. Ready meal industry is a small but growing industry and the demand for this industry is increasing day by day. Some large company mergers have been done in the industry and many of the companies have international partnerships. These both strengthened the positions of the companies and brought the latest technology and information to South Africa. GENERAL ECONOMIC OUTLOOK IN SOUTH AFRICA Having one of the most developed economies of the African continent, South Africa has also a consumer profile scattered to extremes as rich and poor. As the most important state of South Africa’s economy, Gauteng’s share in total GDP is 40% as industrial, commercial and mining center. As the second important region in the economy, Kwazulu-Natal has an economy based on tourism, agriculture and heavy industry with its structure focused on Durban city port. Ranking third, Western Cape region shows a more consistent economic performance compared to the other states despite it has limited industrial and mining resources.Affecting neighboring countries in the region and other African continent countries, South Africa gets a significant attention from the major countries with developed economy. Medium-term plan constitutes an important place on the economy program of the country. According to the program, it is emphasized that the structure of South Africa based on market economy and the encouragement of public-private partnerships will continue. On the other hand, the privatization trend will decrease in the following years as significant public investment in the fields of transport and energy are handled with statist approach in the program. AGRICULTURE IN SOUTH AFRICA Although South Africa is a completely self-sufficient in terms of basic agricultural products, it is net exporter of agricultural products and in the food industry. Mostly exported agricultural products are citrus, sugar, grapes corn, fruit juice, apples, pears, peaches and apricots. Other important export products are meat, avocado, pineapple, peanuts, nuts and dairy products. Wheat, rice and vegetable oil constitute the most important import items in the agricultural products. Water scarcity and drought draw attention as the most important factors affecting agricultural production in the country and therefore annual product yield shows significant changes by years. 12% of the country land is suitable for cultivation. 83% of South Africa’s land, which is 122 million hectares, is used for agriculture and forestry, 10% for natural parks and 7% for settlement, industry and road. 1,3 million hectare of the land suitable for cultivation is irrigated and this figure corresponds to 1,5% of South Africa land. The average annual rainfall in South Africa with 450 mm is far behind the world average (860 mm). Decreasing to 100 mm in the westerns shores, the rainfall can reach to 2000 mm in some higher places. The contribution of the agricultural industry to the national economy decreases day by day as a result of developments in the manufacturing industry and services sector in South Africa’s economy. While agriculture, forestry and fishing industry contributed to GDP around 5% in the middle of 1980s, this industry’s contribution to GDP was recorded as 3,2% in 2008 and 3,0% in 2009. Although agricultural production in South Africa increases relatively by years, share of agriculture in the economy decreases consistently depending on the significant developments in the manufacturing and service industries. GRAIN PRODUCTION AND CONSUMPTION Corn is the most important agricultural product manufactured by South Africa. Corn production shows fluctuations by years in parallel with the climate changes and rainfall rates. Realized as 7,3 million tons in 2006/07 season, country’s corn production reached to 13,1 million tons by increasing 78% in 2007/08 season. Realizing the largest corn production of the last 25 years with 13,4 million-ton corn production in 2009/10 season, South Africa had a decrease in the corn production in the following 3 seasons. Declining to 10,9 million tons level in 2010/11 season, the production remained at 12 million tons level in 2011/12 and 2012/13 seasons. However; the production increased again in 2013/14 season and reached to 14 million tons by exceeding 13,4 million tons that was called as the highest level of the last 25 years. The projections show that the country will make corn production around 13,5 million tons in 2014/15 season. Having an important place in the agricultural production of South Africa, corn also represents one of basic foodstuffs for South African people as 8 to 11 million tons of corn is consumed in the country each year. Wheat is the second important grain product manufactured in South Africa. However, the production amount is significantly low compared to other major producers in the world. Changing according to the seasonal conditions, country’s wheat production is between 1,5 and 2 million tons. Consumption is at least twice of that amount and it generally continues to show an increase trend. FOREIGN TRADE IN SOUTH AFRICA South Africa has a relatively open economy and the foreign trade volume corresponds more than 50% of GDP. Major foreign trade partners are EU countries, U.S. and Japan. In the last 10 years, trade with other African countries has developed much. A large part of South Africa’s export goods consist of manufacturing industry products with a rate of 2/3 of total export. Mining export goods constitute 1/3 of total export alone and agricultural products represent with only small percentages. After import constrictions with strict tariff protectionism for long years, South Africa’s import is observed changing significantly by being liberalized after 1990s. A structure reflecting the demand increase for intermediate goods and capital goods in the imports is seen in the recent years. Good import costs for these items have significantly increased in parallel with the increase in the international oil prices. PLACE OF GRAIN IN FOREIGN TRADE As the largest manufacturing industry of South Africa, food industry is largely self-sufficient but some amount of import majorly for rice and wheat is made. Almost half of the wheat consumed in the country and nearly entire rice consumption is imported. According to the data of US Department of Agriculture USDA; wheat import of South Africa, which was 1,2 million tons in 2003/04 season, reached to 1,7 million tons in 2011/12 season. Remaining at 1,6 million tons level in 2013/14 season, the import is projected to reach 1,7 million tons again in 2014/15 season. In South Africa where rice production is not realized, the consumption is met with imports naturally. According to USDA data; rice import in the country is between 500 thousand tons and 1 million tons. It is not possible to mention a regular increase or decrease in the rice import. However, USDA announced the import realized in 2013/14 season as 1,1 million tons. Being an importer of wheat and rice, South Africa is an exporter for corn. According to USDA data; exporting 1,5-2 million tons of corn every year, South Africa increased its export amount, which was 2 million tons in 2012/13 season, to 2,5 million tons in 2013/14 season. The country’s corn export is projected to be 2,2 million tons in 2014/15 season.  
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