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Raisins industry is striving towards inclusive growth

6th Jul 2021
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Raisins industry is striving towards inclusive growth

by Kayalethu Sotsha
6th Jul 2021
in Between the Headlines
Reading Time: 4 mins read
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raisins industry

The raisin industry is hard at work to mitigate challenges brought on by the Covid-19 pandemic. Photo: Raisins SA/Facebook

raisin industry
Overall, there is a lot for the raisins industry to pride itself about regarding inclusive growth of the industry, writes Kayalethu Sotsha, senior agricultural economist at the National Agricultural Marketing Council (NAMC). He has been tracking the industry’s development support of smallholder farmers closely.

The South African raisins industry celebrated its 100 years of existence in 2019. The industry is supported by 1000 growers categorised into small, medium and large-scale farmers. It has grown steadily in the seasons between 2015/16 and 2020/21, reaching an originally estimated 88 000 tonnes from about 54 000 tonnes.

This growth is mainly due to an increase in area planted, new vineyards coming into production and improved yields. In terms of raisins production, South Africa is currently ranked the fifth largest producer in the world.

The Covid-19 pandemic has presented several challenges to global trade, particularly in a number of aspects, such as shortage of labour, transportation and shipping delays, among others. South Africa was no different and this is crucial in export-oriented industries.

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South Africa’s production of raisins is contracted mainly to processors, and therefore it is considered sold at the end of the season. This is good from the farmers’ perspective and more so given that the country is usually left with minimal or no closing stock by the end of each marketing year. However, when global trade is affected, it implies that the country may also be likely to carry over stock into the next marketing year. This was the case in 2019 when the global prices were low, coupled with increased local production.

ALSO READ: Raisins industry exports hampered by heavy rains

According to the United States Department of Agriculture (USDA) (2020), South Africa had a closing stock of 12 533 tonnes in the 2019/20 marketing year due to low global prices in 2019. Although the closing stock level was expected to decline in the 2020/21 season, the USDA recommended South Africa to be aggressive in opening export markets. Increased international demand will stimulate domestic investments to reverse the shrinking processing capacity.

At present, the country has a processing capacity of roughly 90 000 tonnes per annum and it is estimated to be at 97% utilisation rate.

Tracking smallholders’ progress

The NAMC has used the Smallholder Market Access Tracker (SMAT) to measure the progress of smallholder raisin producers towards market access (report available here). The SMAT revealed that smallholder raisin farmers have an average of 20 years of experience in raisins production. However, there is a large disparity among these farmers, with some generating a net farm income of over R2 million while some get just R2 000. This is mainly due to land access limitations. Some farmers have access to up to 85 hectares whereas some have access to a minimum of 1 hectare.

Common amongst these farmers is the high labour cost, among other costs such as pesticides, fertilisers, irrigation, transport and hired implements. The main reason is that smallholder raisin producers have not mechanised their operations as far as their commercial counterparts who have done this over the years. The follow-up study will likely reveal the magnitude and effect of the adjusted minimum wage on labour use and net farm income of smallholder raisin farmers.

Moreover, the produce from these farmers is contracted to processors. Although the farmers perceive processors to be accessible, safe, convenient and flexible, they felt that there is no fairness. This was mainly due to a lack of transparency in the grading of the produce and the pricing thereof. This was a similar situation to what was observed in the citrus industry among smallholder producers who deliver their produce to packhouses. 

However, the raisins industry is attempting to address this by introducing new machinery to help with processing and grading on the farm, while also offering market information beyond deliveries to processors.

The industry has also increased its expenditure on enterprise development by about R4 million in the 2020/21 season.

The government has also committed to supporting these farmers over the years. As such, the farmers have access to the marketing services and facilities. However, insurance is still inaccessible although the farmers deem it is necessary for their farming endeavours.   

Overall, there is a lot for the raisins industry to pride itself about regarding inclusive growth of the industry. It is also encouraging that a couple of issues which have been identified through the SMAT exercise as key areas to focus on in the future already receive the industry’s attention. This is the positive energy from which the Agriculture and Agro-processing Master Plan will build upon, particularly the issue of access to land as it could prove to be a hinderance to inclusion of smallholder farmers in an industry with such potential. 

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ALSO READ: ARC researchers rewarded for developing new raisin variety

Tags: Covid-19National Agricultural Marketing CouncilSA raisin industryThe Smallholder Market Access Tracker
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Kayalethu Sotsha

Kayalethu Sotsha

Kayalethu Sotsha, Senior Economist: Smallholder Market Access at the National Agricultural Marketing Council.

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