Network / 10 OCTOBER 2019,
Durban – The agricultural sector in KwaZulu-Natal is growing at around 12% per annum compared with single digit growth in other provinces.
This is according to Dawie Maree, head of information and marketing at FNB Agriculture, who said the sector contributes around 4% to KZN’s gross domestic product and has seen a dramatic increase in the production of macadamia nuts and avocados, mainly for the export markets.
He said “marginal sugar land” was being used for macadamia nuts.
“According to Macadamia SA, 90% of production is exported.
“However, to establish a macadamia farm is capital intensive. A lot of the smaller farmers will be left out.
“Economies of scale will play a role, as it has in the maize industry.”
He added that the price for avocados – local prices vary from R80 to R140 for a 16kg bag – is driven by demand, mainly from Europe and the Middle East.
“In agricultural terms, the province is still growing and there is significant arable land available, specifically in the tribal areas,” Maree said.
He said FNB has a substantial market share in the province’s agriculture. However the sector faces specific risks.
“Expropriation without compensation is one of the key risks. There is little farmers can do to mitigate this.
“We consider the new policy on land a risk but are not overly concerned at this stage. We expect more clarity around March.”
Other factors include climate change and cheaper imports.
“The price of sugar has seen a significant drop, and not only because of the drought. The new sugar tax has caused a marked decline in the demand for sugar.
“There is also ‘cheap’ sugar from South America and increased competition from Zambia and Mozambique.”
Maree said dairy was the second most important commodity in KZN, but prices were currently too low.
“Long-life milk (UHT) is imported tariff-free, while milk powder and cheese carry tariffs of R4.50/kg.
“Prices are suppressed mainly because of UHT milk imports are landed at cheaper prices.”
He said increased collaboration would enhance profitability.
“This could include negotiating discounts on bulk sales,” Maree said.