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A PROFILE OF THE SOUTH AFRICAN SUNFLOWER MARKET VALUE CHAIN

2016

Directorate Marketing Tel: 012 319 8455 Private Bag X 15 Fax: 012 319 8131 Arcadia E-mail:MogalaM@daff.gov.za 0007 www.daff.gov.za

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TABLE OF CONTENTS

1. DESCRIPTION OF THE INDUSTRY ............................................................................... 3

1.1 Production Areas ..................................................................................................... 3 1.2 Production Trends ................................................................................................... 5

2. MARKET STRUCTURE .................................................................................................. 5

2.1. Domestic Market ..................................................................................................... 5 2.2. Producer prices ....................................................................................................... 7

2.3. Exports ................................................................................................................... 8 2.3.1. Share Analysis ............................................................................................... 13

2.4. Imports ................................................................................................................. 15

2.5. Processing ............................................................................................................ 18 3. MARKET VALUE CHAIN .............................................................................................. 21

4. MARKET INTELLIGENCE ............................................................................................ 22

4.1. Tariffs ..................................................................................................................... 22 4.2. Performance of the South African sunflower seed industry.......................................... 24

5. STRATEGIC CHALLENGES AND OPPORTUNITIES ......................................................... 28

6. OTHER INFORMATION ............................................................................................... 28

7. ACKNOWLEDGEMENTS ............................................................................................. 29

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1. DESCRIPTION OF THE INDUSTRY

Sunflower seed is primarily used for the manufacturing of sunflower oil and oilcake. In South Africa sunflower is well adapted in both hot and dry climate. The seed can be consumed after the hull has been removed as a snack or used for production of different oils. Most of the seed produced is marketed locally to expressers, animal feed manufacturers and for seed. Sunflower is the third largest grain crop produced in South Africa after maize and wheat. For the period between 2006 and 2015, an average of about 667 thousand tons sunflower seed were produced per annum while the gross value was approximated at 2.5 billion Rand per annum. The gross value of sunflower seed produced in South Africa has been relatively volatile for the past ten years. From Figure 1 below there is an indication of cyclical behaviour with regard the gross value of production, which can be associated with the cycle of the producer prices received for sunflower seed. During 2015 marketing year, sunflower seed production contributed approximately 5.65% to field crops’ total gross value of production.

Source: Statistics and Economic Analysis

1.1 Production Areas

Sunflower seed is produced mostly in the eight provinces out of the nine provinces. Traditionally, the North West and Free State Provinces produced a significant amount of sunflower seed. Sunflower seed can be planted from the beginning of November to the end of December, which is almost the same time for maize plantings. The general observation from Table 1 below is that during the five year period between 2011 and 2015 production of sunflower seed has experienced a downturn in almost all the major producing provinces. The Free State Province has consistently experienced a downward trend in sunflower seed production during this period except in 2011,

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Figure 1: Sunflower Seed-Gross Value of Agricultural Production

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2013 and 2014, while another major producer the North West Province has also had a similar experience. The same trend is observed in other provinces such as the Limpopo and Mpumalanga. Table 1: Sunflower seed production by provinces

Province Production in 2011 (tons)

Production in 2012 (tons)

Production in 2013 (tons)

Production in 2014 (tons)

Production in 2015 (tons)

Western Cape 0 0 0 0 0

Eastern Cape 220 0 0 800 0

Northern Cape 680 100 100 400 500

Free State 434 000 247000 296800 448000 370500

Limpopo 98 000 85000 79500 76300 61500

Mpumalanga 12000 135001 9900 4600 3300

Gauteng 4 800 3 900 4700 3900 7200

North West 310 300 172500 166000 298000 220000

Source: Statistics and Economic Analysis The actual production of sunflower seed during the 2014/15 production season is depicted in Figure 2 below. The figure shows that the Free State and North West provinces are the major producers of sunflower seed with a share of 56% and 33% of the total production respectively, followed by Limpopo and Mpumalanga and Gauteng provinces. Very small quantities of sunflower seed were produced in the Western, Eastern and Northern Cape provinces of South Africa.

Source: Statistics and Economic Analysis

Western Cape 0%

Eastern Cape 0% Northern Cape

0%

Free State 56%

Limpopo 9%

Mpuma- langa 1%

Gauteng 1%

North West 33%

KwaZulu- Natal 0%

Figure 2: Sunflower Seed Production by Provinces 2014/15

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1.2 Production Trends

According to Figure 3, the hectares planted for sunflower seed have been volatile for the past ten years and this was followed by fluctuations in production volumes. The figure further indicates that an average of 516 thousand hectares of sunflower seed were planted per annum resulting in average production volumes of about 667 thousand tons. Both area planted and total production of sunflower seed experienced substantial increase during the 2008 season as compared to the past three seasons, followed by another slight increase in 20009 season, with total production declining. This was followed by a drastic decline in both sunflower production and area planted in 2010. However, both area planted and total production showed substantial increases in 2011 production season, followed by another slight decline in 2012. This was then followed by a drastic increase in production of sunflower seeds in 2014. Generally, production of sunflower seeds has been fluctuating during the past 10 years. The production season closed slightly lower yet moderate in 2015.

Source: Statistics and Economic Analysis

2. MARKET STRUCTURE

2.1. Domestic Market The processing of sunflower seed is highly capital intensive and requires high technology and specialized knowledge. The refining process produces sunflower oil which is used mostly for human consumption. Most of the large refineries are situated in Gauteng and Kwazulu Natal. The greatest importance of sunflower production is the extraction of oil from the seed.

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Figure 3: Sunflower Area Planted vs Total Production

Area Planted (ha) Total Production (tons)

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Figure 4 below indicates domestic producer sales and exports of sunflower seed from 2006 to 2015 marketing years. The figure indicates that exports of sunflower seed were very minimal throughout the period under analysis and this explains that South Africa is not a major exporter of sunflower seed. The lower volumes of sunflower seed exports are also attributed to the fact that our processing capacity in the country is big enough to accommodate most of sunflower seed produced locally. In actual fact South Africa remains a net importer of sunflower seed over the past few years. The figure indicates that domestic producer sale of sunflower seed remained dominant throughout the period under analysis. The period under analysis closed with moderate sunflower seed sales in the domestic market in 2015.

Source: Statistics and Economic Analysis Figure 5 below shows sunflower seed processing from 2006 to 2015. The figure indicates that the quantity of sunflower seed processed into oil is generally higher than the quantities utilized for seed, animal feed manufacturing and other uses. The quantity of sunflower seed utilized for oil and oilcakes was a bid lower during the year 2008 compared to other years mainly as a result of lower levels of local production at the time. This increased slightly during the years 2009 and 2010 as the local production increased. The period under analysis closed with the highest volumes of sunflower seed processing in 2015.

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Figure 4: Sunflower Seed Domestic Producer Sales vs Exports

Domestic Producer Sales (tons) Exports (tons)

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Source: Statistics and Economic Analysis 2.2. Producer prices Figure 6 below shows producer prices for sunflower seed from 2006 to 2015. The period under analysis opened with lower price of R1 866.65/ton in 2006. The producer prices for the product sunflower started to pick up in 2007 and 2008 up to R4 000/ton. The producer price of sunflower seed later took a sharp turn downwards declining in 2009. This was followed by an increase from 2010 production season until the highest price was achieved during 2013.The period under review closed with a declining but relatively stable levels of producer prices (R4 552.15/ton) in 2015.

Source Statistics and Economic Analysis

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Figure 5: Sunflower Seed Processing

Oil and Oilcake Seed and Feed Other

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Figure 6: Sunflower Seed Producer Price

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2.3. Exports In overall, the major importers of sunflower seed originating from South Africa are Sudan, Malawi Namibia, Swaziland, Thailand and Botswana. During the year 2015, Sudan acquired about 44.1% of South Africa’s total sunflower seed exports, followed by Malawi and Namibia with 21.3% and 11.1% respectively. Figure 7 below shows value of sunflower seed exports by different province of South Africa for the period between the year 2006 and 2015. The figure indicates that exports from KwaZulu-Natal province were dominant throughout the period under analysis where Gauteng province emerged to be the largest exporter of sunflower. The figure further indicates that the exports of sunflower seed from other provinces remained minimal throughout the season. Between 2006 and 2009 exports of sunflower seed from KwaZulu-Natal Province were greater than those from any other province in the Republic with greater export values recorded, except for 2008 were the value of sunflower seeds exports from Gauteng province recorded the highest of the season. Exports of sunflower seed from Gauteng were very low during the years 2009 and onwards, while those from KZN were slightly higher at the time. The figure further indicates that in overall, the period under review closed with Kwazulu-Natal province accumulating higher exports of sunflower seed in 2015.

Source: Quantec Easy Data The trend for sunflower seed exports from Western Cape Province is shown in Figure 8 below. In the Western Cape Province sunflower seed exports occur mostly through the City of Cape Town Metropolitan municipality. The figure indicates that there were no exports of sunflower seed from both Cape Wine-lands and West Coast district municipality from 2007 and 2013. It is also clear from the figure that City of Cape Town was the largest contributor to the Western Cape’s total value of sunflower exports in 2013 followed by Eden District. The value of sunflower exports from

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Western Cape 106072 178029 307339 292990 87561 1461295 3492902 6715964 3020158 2596133

KwaZulu-Natal 7462307 8715573 59631548 46685514 5702627 9912384 19400012 40444813 16937410 24129973

North West 0 1099 0 0 0 443805 429164 699 418397 320816

Gauteng 620343 484315 424037352 590031 3434209 4938056 7032318 9294799 10097148 4175972

Other 1077 4000 0 40345 811 0 5786 0 136523 733149

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Figure 7: Value of Suflower seed exports by Provinces

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the Western Cape closed with the declining trends in 2015, with the City of Cape Town being the highest contributor.

Source: Quantec Easy Data Figure 9 below indicates value of sunflower seed exports from North West province from 2006 to 2015. It is also clear that there were no exports of sunflower seed from Ngaka Modiri Molema district municipality between the years 2006 and 2013. The figure indicates that Bojanala District’s exports of sunflower seed were minimal from 2006 to 2010 and this was followed by substantial increase in 2011 and 2012. In 2014, the greatest value of sunflower seed exports originated mainly from Ngaka Modiri Molema, with very minimal recorded for Bojanala District. The period under analysis closed with the high and declining exports values recorded from Ngaka Modiri Molema districts in 2015.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

City of Cape Town 92778 178029 307339 292990 87550 14612952708733444776029883762530740

West Coast 0 0 0 0 0 0 0 0 3649 17331

Cape Winelands 0 0 0 0 11 0 0 0 0 48062

Eden 13294 0 0 0 0 0 784169 2268204 28133 0

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Figure 8: Value of Sunflower seed exports from Western Cape

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Source: Quantec Easy Data. The values of sunflower seed exports from various districts in Mpumalanga Province are depicted in Figure 10 below. Regardless of being the third largest producer of sunflower seed in the country, Mpumalanga Province’s contribution to exports has been very minimal and erratic over the period under analysis. This is mainly due to lack of logistics necessary for successful exportation of grains in the province and also due to the fact that the major producing districts are situated closer to Gauteng province which is well equipped with facilities for handling of grains. For the period under analysis, Mpumalanga exported minimal volumes in 2009 and 2012; no exports of sunflower were recorded in this province in 2013. The period under analysis closed with enormous export value of sunflower seed from Gert Sibande District in 2015.

Source: Quantec Easy Data

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Bojanala 0 1099 0 0 0 443805 429004 699 2567 251

Ngaka Modiri Molema 0 0 0 0 0 0 0 0 415830 318585

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Figure 9: Value of Sunflower seed exports from North West Province

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Gert Sibande 0 0 0 0 0 0 0 0 133200 323316

Ehlanzeni 0 0 0 5863 0 0 163 0 571 3817

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Figure 10: Value of Sunflower seed exports from Mpumalanga Province

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Figure 11 below, indicates the value of sunflower seed exports from KwaZulu-Natal province from 2006 to 2015. The figure indicates that the value of sunflower seed exports from the Kwazulu-Natal province fluctuated considerably between the year 2006 and 2015 with the lowest levels having occurred during the year 2006. Sunflower seed exports from the UMzinyathi district started increasing in 2007 and this continued until a peak was reached in 2008,about 60 million Rand. The picture further shows that Umzinyathi District has been the major contributor of sunflower seed exports originating from the KwaZulu Natal Province. The figure further reveals that in 2015, the period under analysis closed with very low values of sunflower seed from KwaZulu-Natal, particularly those from eThekwini and other regions.

Source: Quantec Easy Data Figure 12 below indicate the value of sunflower seed exports from Gauteng province from 2006 to 2015. The figure indicates that all Gauteng Provincial districts opened with very minimal value of sunflower seed exports in 2006. The figure further indicates that sunflower seed exports arise mainly from the City of Johannesburg Metropolitan Municipality while those from the other three districts namely, Sedibeng, West Rand and Metsweding have been very low and irregular over the period between 2006 and 2015. The value of sunflower seed exports originating from the City of Johannesburg municipality peaked during the year 2008 and then declined substantially between 2009 and 2015. Exports from the other three districts have been considerably lower during the period under review. Gauteng Province, in spite of not being a major producer of sunflower seed is an exporter of sunflower oil because of larger number of traders who are situated in the province as well as the availability of Randfontein Grain Market in the Province.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

UMgungundlovu 4200 0 0 0 320 0 495470 0 0 19890

Umzinyathi 7458107 8685914 59631548 46685514 5700901 9912384 18901830 40433221 16924309 23906714

Uthungulu 0 0 0 0 38 0 0 161 0 0

eThekwini 0 29659 0 0 1368 0 2711 11431 13101 203369

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Figure 11: Value of Sunflower seed exports from Kwazulu-Natal Province

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Source: Quantec Easy Data Figure 13 shows volume of sunflower exports to various regions in the world from 2006 to 2015. The period under analysis opened with moderate volumes of sunflower exports from South Africa to various regions. The figure further indicates that sunflower seed exports from South Africa to various regions/continents were very low and unreliable over the period under analysis, mainly due to relatively lower levels of local production. Sunflower seed from South Africa is exported mainly to Africa, Asia and Europe and intermittently to the Americas. The exports to these regions fluctuated considerably over the past ten years with a peak in exports destined to Europe and Asia in the year 2008. The period under review closed with very low volumes of sunflower seed exports to all regions in 2015.

Source: Quantec Easy Data

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sedibeng 2018 7158 1848 0 2477 2719 5665 1894 424 22424

West Rand 511429 446363 1119 16475 243121 0 1506060 3836511 5627431 211782

Ekurhuleni 12197 11168 4076 552294 20417 108716 103477 57221 95331 74851

City of Johannesburg 94699 19626 4.24E+08 19503 3140787 4812121 5283941 5308765 4325844 3517587

City of Tshwane 0 0 0 1759 27407 14500 133175 90409 48118 349328

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Figure 12: Value of Sunflower seed exports from Gauteng Province

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Africa 333.147 335.619 1305.19 1187.21 313.755 538.37 1037.18 1578.84 1766.8 682.052

Americas 4.193 23.768 81.441 21.207 0.637 70.125 20.551 1.777 0.148 0

Asia 172.287 146.758 18005.1 0.034 10.55 63.67 118.18 172.954 144.36 53.2

Europe 2.94 3.145 60083.6 0.165 1.986 3.68 51.255 66.577 3.883 0.587

Oceania 0 0 0 0 0 0 0 0 22 0

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Figure 13: Volume of Sunflower seed exports to various regions

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Figure 14 below summarizes the trend of sunflower seed exports from South Africa to other African countries. The figure indicates that SADC, Eastern Africa and SACU are the major recipients of South African sunflower seed exports. On the African continent South Africa export sunflower seed mainly to Eastern Africa, SACU, Northern Africa and SADC with insignificant amounts of exports going to Northern Africa Rest and Western Africa. In the Eastern Africa, exports of sunflower seed are mainly destined to Kenya and Uganda while Zimbabwe remains the major importer of sunflower seed originating from South Africa in the SADC region. During the years 2008 and 2009, larger amounts of sunflower seed exports from South Africa were destined to Northern Africa followed by exports to SADC and the Eastern Africa Rest respectively. Exports of sunflower seed from South Africa to the African continent have also declined during the year 2010 and this was followed by a slight increase 2011. The situation with exports to Africa is very similar to the situation that was observed with regard to exports to the rest of the world. However, in 2014 the sunflower seed exports to the SACU region reached a peak above 1400 tons followed by export to the Eastern Africa. The period under review closed with relatively lower sunflower seed exports in 2015, with majority of exports destined to the Eastern Africa.

Source: Quantec Easy Data

2.3.1. Share Analysis

Table 2: Contribution of various provinces to the total SA sunflower seed exports (%)

Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Province

Western Cape

1.29 1.89 0.06 0.62 1.66 12.91 13.42 25.72 11.10 8.12

Eastern Cape

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

Free State 0.01 0.04 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.54

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Eastern Africa Rest 176.986 124.948 388.327 99.755 116.584 288.165 219.104 197.147 173.82 389.2

Northern Africa 118 200 762.025 849.21 0.034 0.034 110.439 0.03 0.034 0

Western Africa 4.342 0.778 1.246 0.602 1.155 0.599 1.032 1.145 1.363 1.382

SADC (excluding SACU) 33.668 9.893 153.59 237.639 39.682 19.189 24.865 53.506 89.999 90.059

SACU (Excluding RSA) 0 0 0 0 156.3 230.293 681.737 1327.01 1501.59 201.282

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Figure 14: Volume of Sunflower seed exports to Africa

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Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Kwazulu- Natal

91.11 92.88 12.32 98.06 92.41 0.00 77.47 58.47 59.47 75.51

North-West 0.00 0.01 0.00 0.00 0.00 81.55 1.63 0.00 5.04 1.00

Gauteng 7.57 5.16 87.61 1.24 5.92 3.92 7.48 15.79 21.35 13.07

Limpopo 0.00 0.00 0.00 0.072 0.01 1.62 0.00 0.00 0.00 0.00

Mpumalanga 0.00 0.00 0.00 0.012 0.00 0.00 0.00 0.00 2.97 1.02

Source: Calculated from Quantec easy data Table 2 above confirms the earlier observation that Gauteng, Kwazulu-Natal and Western Cape Provinces are the major exporters of sunflower seed in South Africa, while exports from Limpopo and Mpumalanga remained minimal throughout the period under analysis. Gauteng Province commanded the greatest share of South Africa’s total sunflower seed exports during the years 2008 while KwaZulu-Natal Province became be the largest exporter of sunflower seed from 2006 to 2015 with the exception for 2008 and 2011. The table further indicates that KwaZulu-Natal Province accounted for 75.51% of South Africa’s total sunflower seed exports in 2015 while the contribution of other provinces remained minimal. Table 3: Contribution of various districts in Gauteng Province to the provincial sunflower seed exports (%)

Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

District

Sedibeng 0.32 1.47 0.00 0.00 0.68 1.47 0.32 0.02 0.06 0.54

West Rand 82.44 92.16 0.00 2.79 66.78 0.38 78.00 93.17 86.13 5.07

Ekurhuleni 1.96 2.30 0.00 93.60 5.63 59.11 5.21 1.54 1.86 1.79

City of Johannesburg

15.26 4.05 100 3.31 25.68 31.15 16.15

3.12 7.31 84.23

City of Tshwane

0.00 0.00 0.00 0.29 1.22 7.89 0.31

2.18 4.63 8.37

Source: Calculated from Quantec easy data Table 3 indicates contribution of different districts to Gauteng province’s total value of groundnuts exports. The figure indicates that the West Rand district, City of Johannesburg and Ekurhuleni are the major exporters of sunflower seed in Gauteng province while contribution in City of Tshwane and Sedibeng district are minimal. On average, West Rand is the major contributor to Gauteng’s total sunflower seed exports followed by City of Johannesburg. City of Tshwane Metropolitan District only recorded sunflower seed exports between the years 2009 and 2015. The table further indicates that West Rand accumulated higher share between 2006 and 2007 whereas City of Tshwane accumulated zero percent during the same period. The table further indicates that the City of Johannesburg district was responsible for about 84.23% of Gauteng’s total value of exports in 2015.

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Table 4: Contribution of various districts in KwaZulu-Natal Province to the provincial sunflower seed exports (%)

Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

District

UMgungundlovu

0.06 0.00 0.00 0.00 0.01 0.01 2.48

0.00 0.00 0.08

UMzinyathi 99.94 99.66 0.00 100 99.99 99.99 97.51 99.9 99.91 99.07

ILembe 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

EThekwini 0.00 0.34 0.00 0.00 0.00 0.00 0.012 0.01 0.09 0.84

Source: Calculated from Quantec easy data Table 4 indicates contribution of various districts in KwaZulu-Natal province to the provincial sunflower seed exports from 2006 to 2015. The figure indicates that in Kwazulu-Natal province, the UMzinyathi district commanded the greatest share of sunflower seed exports throughout the period under analysis with very fractional exports recorded for the EThekwini district in 2007, 2012, 2013, 2014 and 2015. During the 2015 season UMzinyathi district accounted for 99.07% of sunflower seed exports from the KwaZulu-Natal, with the remaining 0.93% originating from EThekwini and UMgungundlovu districts.

2.4. Imports

South Africa imports sunflower seed from the following regions: Europe, Asia, the Americas and Africa particularly from the SADC region. Figure 15 indicates that over the past ten years South Africa has been importing sunflower seed consistently from Africa, the Americas, Europe and Oceania. The major sunflower seed import market for South Africa is Europe followed by Africa and the Americas. On average, South Africa imports about 32 192 tons of sunflower seed annually from Europe while imports from Africa and Asia are about 6 057 tons and 283.3 tons per annum, respectively. Figure 15 shows that, during the year 2015, South Africa’s imports of sunflower seed originated mainly from Europe followed by those from Africa and the Americas. However, imports from all five regions have been insignificant over the period under review, until imports from Europe peaked in 2009 and in 2014. The period under analysis closed with decreasing trends of sunflower seed imports from Europe and those of other regions.

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Source: Quantec Easy data Figure 16 below indicates volume of sunflower seed imports from Africa for the period ranging from 2006 to 2015. The figure indicates that the period under analysis opened with fewer volumes of sunflower seed imports. The figure further indicates that on the African continent South Africa imports its sunflower seed mainly from SADC region, which might be attributed to the SADC Free Trade Agreement which facilitates flow of commodities among SADC countries at no tariff charges. In the SADC region, sunflower seed imports originate mainly from countries such as Sudan, Malawi, Namibia and Mozambique, with fractional and erratic quantities originating from DRC, Angola and Zimbabwe. The highest volumes of imports from SADC were experienced during the year 2010 when about more than 10 000 tons were imported by South Africa from the region. The figure furthers indicates that more was imported from SACU between 2010 and 2013. The period under analysis closed with more imports from the SACU region in 2015.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Africa 559.64 3968.09 680.817 510 13337.4 11513.1 12563.2 1833.13 6322.02 9291.23

Americas 27.55 235.416 289.959 486.05 80.138 176.585 83.069 174.826 85.49 139.799

Asia 409.363 686.545 307.146 396.811 430.533 252.381 92.446 114.384 75.594 67.806

Europe 17.52 45.48 52.087 87627.2 23183.2 25502.3 776.639 32341.1 120618 31765.5

Oceania 13.605 42.11 32.559 176.037 0.58 0 0.001 0.84 0.121 0.308

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Figure 15: Volume of Sunflower seed imports from various regions

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Source: Quantec Easy data Figure 17 below shows volume of sunflower seed imports originating from Oceania from 2006 to 2015. The period under review opened with lower imports of sunflower from Oceania. The figure further indicates that sunflower seed imports originating from Oceania are mainly from Australia and New Zealand. However, the volumes of sunflower seed imports from this region were very low in 2006, while on the other hand the local production was also relatively higher. The figure furthers indicates that less was imported from Polynesia throughout the period under analysis.

Source: Quantec Easy Data Figure 18 indicates volume of sunflower seed imports originating from Europe between 2006 and 2015. The principal exporters of sunflower seed to South Africa in Europe are Eastern Europe and

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Northern Africa 0 0 0 0 0.275 0 0 0 69 0

SADC (excluding SACU) 559.64 3968.09680.817 510 1818.23 503.5 1587.191175.85 946 859.492

SACU (Excluding RSA) 0 0 0 0 11518.911009.6 10976 657.2875307.028431.74

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Figure 16: Volume of Sunflower seed imports from Africa

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Australia and New Zealand 13.605 41.97 32.559176.037 0.58 0 0.001 0.84 0.121 0.308

Polynesia 0 0.14 0 0 0 0 0 0 0 0

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Figure 17: Volume of Sunflower seed imports from Oceania

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European Union respectively. Figure 18 shows that the highest volume of sunflower seed imports from Europe originated from Eastern Europe in 2009. The figure further shows that sunflower seed imports from the European Union were dominant throughout the period under analysis. It is also clear that that there were no imports of sunflower seed from Eastern Europe between 2006 and 2008. The imports of sunflower seed from Europe closed from the higher margins attained in 2014 to the lower in 2015.

Source: Quantec Easy Data

2.5. Processing

Sunflower seed provides 40-50% of oil, which is mostly processed to cooking oil. The oil is used on a daily basis in households, restaurants and various food industries. Sunflower is the basic raw material for the preparation of margarine and spreads, used daily by millions of people. Some pet food also contains oilseed raw material. In desperate times sunflower oil can also be converted to diesel for use in diesel engines as bio-fuel. Figure 19: The production of oil Source: Grain SA

0

20000

40000

60000

80000

100000

120000

140000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Imp

ort

Vo

lum

e (T

on

s)

Period (Years)

Figure 18: Volume of Sunflower seed imports from Europe

Eastern Europe Western Europe Rest European Union

Production of

Sunflower Press

Hexane Oilcake of

Sunflower

Crude oil Refining Sunflower

Oil

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During pressing there are two different methods of extracting oil from the oilseeds i.e. production of crude oil and production of oil cakes from hexane. Sunflower seed provides 40 – 50% of oil and about 40% of oilcake, which is processed to cooking oil and for animal feed respectively, see the (Figure 19) above. Other oil products include margarine, fuel in diesel engines and other foods. The sunflower seed also produces oil cake, which is widely used for animal feeds (as sunflower oilcake meal) because of its high protein content. Sunflower oil is marketed in the form of refined oil for domestic and industrial cooking as well as baking processes. In South Africa, the main crushers of sunflower seed are Nola Industries, Epic and Epko. Pressing plants with relatively smaller crushing capacity in the country are Sealake Industries, Elangeni Oil & cake Mills and Capital Oil Mills. According to the South African Oil Processors Association there are thirteen oil refineries in South Africa, namely Capital Oil Mills, Continental Oil Mills, Elangeni Oil & Cake Mills, Epic Foods, Epko Oil Seed Crushing, Hentiq 1320, Nedan Oil Mills, Nola Industries, Sealake Industries, Sun Oil Refineries, Sunola Oil Mills, UBR and Willowton Oil Mills. Figure 20 below indicates that when sunflower seed is crushed the oil is extracted from the seed and the oilcake that remains is then used to manufacture animal feeds in the form of sunflower oilcake meal. The oil can be used as cooking oil or if hydrogenated it becomes margarine that is used by households. The oil can also find its usage in the biofuel industry to manufacture biodiesel that is used in automotive engines or it can be blended with other vegetable oils to manufacture other foods.

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Figure 20: The uses of sunflower seed.

Source: Adapted from Grain SA

Sunflower

Seed

OIL

OILCAKE

FUEL IN DIESEL

ENGINES

COOKING OIL

MARGARINE

OTHER FOODS: Massage blends with

Vegetable oils

ANIMAL FEEDS

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3. MARKET VALUE CHAIN

There are five main levels that can be identified in the sunflower seed-to-sunflower oil value chain: sunflower seed producers, crushers of seed, refineries of crude oil, the wholesalers and retailers, and finally the consumers as shown in Figure 22 below:

Figure 21: Sunflower Seed market value chain. Producers of sunflower seed usually deliver their produce to seed expressers who crush the seed to produce crude oil and oilcake. The crude oil can then be used by refineries to produce various products as explained in Figure 22 while the oilcake is used by animal feed manufacturers to manufacture a concentrate in the form of sunflower oilcake meal. Refineries may also import crude oil from the international market and, their products and those of the animal feed manufacturers are packaged, labelled and sent to wholesalers and retails who in turn will sell to consumers.

Sunflower seed

Producers

Crushers/Expressers

of Seed

Refineries of Crude

Oil

Wholesalers &

Retailers

Consumers

Imports of

Crude Oil

Animal feed

Manufacture

rs

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4. MARKET INTELLIGENCE

4.1. Tariffs

South Africa applies the following tariffs to the imports of sunflower seed originating from the following trading partners: Table 5: Tariffs applied by South Africa on sunflower imports, 2015

EXPORTING COUNTRY

TRADE REGIME DESCRIPTION

APPLIED TARIFF

ESTIMATED TOTAL AD VALOREM EQUIVALENT TARIFF 2014

Romania MFN duties (Applied 9.40% 9.40%

Preferential tariff for European Union Countries

0.00% 0.00%

Botswana Intra SACU rate 0% 0%

Bulgaria MFN duties (Applied 9.40% 9.40%

Preferential tariff for European Union Countries

0.00% 0.00%

Argentina MFN duties (Applied) 9.40% 9.40%

Malawi MFN duties (Applied) 9.40% 9.40%

Preferential tariff for SADC countries

0% 0%

United Arab Emirates MFN duties (Applied)

9.40%

9.40%

China MFN duties (Applied) 9.40% 9.40%

Israel MFN duties (Applied) 9.40% 9.40%

India MFN duties (Applied) 9.40% 9.40%

Source: ITC Market Access Map Table 5 indicates that South Africa charges 9.40% tariff on imports of sunflower seed from other countries, but all the European Union Countries (such as Belgium, Slovakia, Bulgaria and Netherlands) and SADC countries receive preferential treatment of not having to pay any tariff when they export sunflower seed to South Africa. This is because of SADC Free Trade Agreement and the EU-SA Trade, Development and Cooperation Agreement that exist between South Africa and EU. The following countries apply the following tariffs to the exports of sunflower seed originating from South Africa:

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Table 6: Tariffs faced by South African sunflower exports, 2015

Importers Selected product codes

Product description

Trade regime description

Applied tariffs

Total ad valorem equivalent tariff (estimated)

Sudan (Sudan and South Sudan)

12060000

Sunflower seeds, whether or not broken

General tariff

25.00% 25.00%

Malawi 12060000

Sunflower seeds, whether or not broken

MFN duties (Applied)

10.00% 10.00%

Namibia

12060000

Sunflower seeds, whether or not broken

Intra SACU rate

0.00% 0.00%

Swaziland

12060000

Sunflower seeds, whether or not broken

Intra SACU rate

0.00% 0.00%

Thailand

12060000

Sunflower seeds, whether or not broken

MFN duties (Applied)

30.00% 30.00%

Botswana

12060000

Sunflower seeds, whether or not broken

Intra SACU rate

0.00% 0.00%

Lesotho

12060000

Sunflower seeds, whether or not broken

Intra SACU rate

0.00% 0.00%

Source: ITC Market Access Map Table 6 indicates that countries such as Namibia, Swaziland, Botswana and Lesotho charge no tariffs on imports of sunflower seed from the rest of the world. South African sunflower seed exports face tariff barriers in countries such as Kenya, Sudan, Malawi and Thailand. Malawi charges tariffs at the level of 10.00% ad valorem on the imports of sunflower seed originating from South Africa. Thailand and Sudan charge much higher tariffs at the level of 25.00% and 30.00% on their imports sunflower seed originating from South Africa.

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4.2. Performance of the South African sunflower seed industry

Figure 22: Competitiveness of supplying countries for sunflower imported by South Africa, 2015

Source: ITC Trade Map

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Figure 22 above shows that South Africa’s sunflower seed imports from Romania, Bulgaria and Israel increased significantly between the years 2011 and 2015. South Africa increased its imports of sunflower seed from Bulgaria, Romania and Israel at a faster pace than these countries’ sunflower seed export growth to the rest of the world. Over the same period, imports of sunflower from China, Argentina, India and Botswana declined significantly. Table 7 below and the figure on the next page (Figure 23) show the major export destinations of sunflower seed produced in South Africa. On average South Africa’s sunflower seed exports to the world have declined by 19% in value terms and 1% in volume terms between 2011 and 2015. During 2015 South Africa exported sunflower seed mainly to Sudan, Malawi, Namibia and Swaziland. A total of 502 tons of sunflower seed originating from South Africa were exported to the world during 2015, of which 88 tons went to Sudan. Table 7: Importing markets for sunflower seed (120600) exported by SA in 2015

Importers

Trade Indicators

Exported value 2015 (USD thousand)

Share in South Africa's exports (%)

Exported quantity 2015

Unit value (USD/unit)

Exported growth in value between 2011-2015 (%, p.a.)

Exported growth in quantity between 2011-2015 (%, p.a.)

Exported growth in value between 2014-2015 (%, p.a.)

World 940 100 502 1873 -19 -1 -67

Sudan (Sudan and South Sudan)

415 44.1 88 4716 0 0 0

Malawi 200 21.3 51 3922 140 44 38

Namibia 104 11.1 157 662 -11 -5 55

Swaziland 34 3.6 58 586 7 -6 -70

Thailand 33 3.5 48 688 0 0 0

Botswana 33 3.5 31 1065 -43 -4 -89

Lesotho 27 2.9 3 9000 -13 0 0

Angola 17 1.8 3 5667 0 0 0

Kenya 17 1.8 6 2833 -58 -55 -98

Source: ITC Trade Map During 2015 Sudan and Malawi commanded the greatest share of sunflower seed exports originating from South Africa. During the same year, Sudan alone absorbed 44.1% of South Africa’s total sunflower seed exports followed by Malawi with 21.3%.

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Figure 23: Prospects for market diversification for South African sunflower exports, 2015

Source: ITC Trade Map

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Table 8: Supplying markets for sunflower seed (120600) imported by SA in 2015

Exporters

Trade Indicators

Imported value 2015 (USD thousand)

Share in South Africa's imports (%)

Imported quantity 2015

Unit value (USD/unit)

Imported growth in value between 20112015 (%, p.a.)

Imported growth in quantity between 2011-2015 (%, p.a.)

Imported growth in value between 2014-2015 (%, p.a.)

World 30462 100 70418 433 31 42 -48

Romania 25755 84.5 61599 413 246 25 -50

Botswana 3110 10.2 6904 450 -21 -15 50

Bulgaria 1019 3.3 1055 966 51 72 -72

Argentina 186 0.6 45 4133 -26 -21 -17

Area Nes 146 0.5 348 420 0 0 873

Malawi 143 0.5 384 372 -11 -7 -61

United Arab Emirates

29 0.1 0 0 0 0 0

China 22 0.1 14 1571 24 0 0

Israel 9 0 1 9000 -44 -43 -91

India 9 0 5 1800 9 0 -72

Source: ITC Trade Map During the year 2015 South Africa imported a total of 70 418 tons of sunflower seed from the world. These imports originated mainly from Romania, Botswana, Bulgaria and Argentina. Romania commanded the greatest share in South Africa’s sunflower seed imports followed by Botswana, Bulgaria and Argentina respectively. Imports of sunflower seed from Botswana increased by 50% in value between the years 2014 and 2015. Sunflower seed imports from Bulgaria to South Africa decreased by 72% in value over the same period.

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Figure 23 on the previous page shows that if South Africa is to diversify its sunflower seed imports, the biggest markets exist in China, United States of America and Argentina. Other markets exist in countries such as Netherlands, Malawi and India since these countries recorded a positive growth in exports to the rest of the world between 2011 and 2015.

5. STRATEGIC CHALLENGES AND OPPORTUNITIES

As mentioned in the description sunflower seed production is very suitable for South African climatic conditions and is performing well for income generation to the rest of the agricultural sector. According to the FPMC report in 2003 the crushing capacity is not fully utilized by the companies therefore, there is an opportunity for any role player in the industry to crush seed, sell the crude oil at a lower price than the import parity price and still manage to realize profit. The challenge is how to get new role players in the industry as it is highly capitalized and requires sophisticated technology. There is a lack of black economic empowerment in this industry and also in the seed trade industry in general. Lack of funding to purchase equipment to get projects off the ground is often cited as one of the major obstacles to transformation. The fact that the growth season of sunflower is short, added to its drought tolerance; it can serve as an ideal alternative crop on low-potential soils when it is late to plant maize.

6. OTHER INFORMATION

In the agricultural sector, food safety is very important. As result the oilseed industry is also expected to adhere to o several regulations in this regard. The regulations include: Foodstuffs, Cosmetics and Disinfectants Act of 1972 (Act 54 of 1972) Health Act of 1977 (Act 63 of 1977) Fertilizers, Farm Feeds Agricultural Remedies A of 1947 (Act 31 of 1947) Agricultural Products Standards Act of 1990 (Act 119 of 1990)

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7. ACKNOWLEDGEMENTS

The following organizations and references are acknowledged: Animal Feed Manufacturers Association Tel: (012) 663 9097 www.afma.co.za Grains South Africa Tel: (056) 515 0918 Fax: (056) 515 1517 www.grainsa.co.za Directorate Statistics and Economic Analysis, DAFF Tel: (012) 319 8453 Fax: (012) 319 8031 www.nda.agric.za Quantec Easydata www.quantec.co.za ITC Market Access Map http://www.macmap.org/SouthAfrica ITC Trade Map http://www.trademap.org. Disclaimer: This document and its contents have been compiled by the Department of Agriculture, Forestry and Fisheries for the purpose of detailing the sunflower seed industry. Anyone who uses the information as contained in this document does so at his/her own risk. The views expressed in this document are those of the Department with regard to the industry, unless otherwise stated. The Department therefore accepts no liability that may be incurred resulting from the use of this information.