A PROFILE OF THE SOUTH AFRICAN MUTTON MARKET VALUE CHAIN

A PROFILE OF THE SOUTH AFRICAN MUTTON MARKET VALUE CHAIN 214 Directorate Marketing Private Bag X 15 Arcadia 7 Tel: 12 319 8455 Fax: 12 319 8131 Email: MogalaM@daff.gov.za 1

1. DESCRIPTION OF THE INDUSTRY... 3 1.1. PRODUCTION AREAS... 4 1.3. EMPLOYMENT... 5 2. MARKET STRUCTURE... 5 2.1. DOMESTIC MARKET AND PRICES... 5 2.2. EXPORTS OF MUTTON... 6 2.3. SHARE ANALYSIS... 14 2.4. IMPORTS OF MUTTON... 18 3. MARKETING CHANNELS... 21 4. ORGANIZATIONAL ISSUES... 23 4.2. OPPORTUNITIES... 23 4.3. CHALLENGES... 24 5. MARKET INTELLIGENCE... 25 5.1. EXPORT TARIFFS... 25 5.2. IMPORT TARIFFS... 26 6. COMPETITIVENESS OF THE SHEEP INDUSTRY... 27 6.1. COMPETITIVENESS OF SHEEP INDUSTRY IN EXPORTS... 27 7. ACKNOWLEDGEMENTS... 41 2

Million Kilograms 1. DESCRIPTION OF THE INDUSTRY Sheep farming is practiced throughout the country but concentrated in the more arid parts of the country, i.e Northern Cape, Eastern Cape, Western Cape, Free State and Mpumalanga. There are approximately 8 commercial sheep farms throughout the country and about 5 8 communal farmers. The estimated number of sheep in South Africa is 24.3 million. Sheep farmers are represented by organizations with Dorper Sheep Breeders Society of South Africa and Merino SA being the most prominent. Dorper is a highly successful South African-bred mutton breed developed specially for the more arid areas of South Africa. Today they are widely spread throughout the country. The Dorper s excellent carcass qualities in terms of conformation and fat distribution, generally qualify it for top classification. They are especially concentrated in more arid parts of the country. Other mutton breeds which can also produce wool are Damara, Meatmaster, Ille de France, Dormer, Suffolk, Van Rooy and Vandor. The gross value of mutton production is dependent on the price and quantity of meat produced. Over the past ten years, the average gross production value amounted to R 4.3 billion per annum. The total gross value for the past 1 years amounted to R 42.9 billion. The gross value of mutton production increased continuously from 24 until 213. Declining sheep numbers and rapid population growth in South Africa have led to an increase in demand and subsequent shortages in the supply of mutton. The declining of sheep numbers is mainly through the predation and stock theft. Figure 1 below show the gross value of mutton production from 24 to 213. 7 Figure 1: Gross value of mutton production 6 5 4 3 2 1 Years Source: Statistics and Economic Analysis, DAFF 3

1.1. Production Areas Sheep numbers in South Africa is estimated at 24.3 million distributed in all nine provinces. Approximately 29% of the sheep are in Eastern Cape followed by Northern Cape with 25%, Free State by 2% and Western Cape by 11%. These four Provinces constitute 85% and the other five Provinces share the 15% of the country s sheep numbers. Percentage distribution is illustrated in Figure 2. Figure 2: Distribution of sheep per Province in 213 Mpumalanga 7% Kwazulu-Natal 3% Gauteng 1% Limpopo 1% North-West 3% Western Cape 11% Eastern Cape 29% Northern Cape 25% Free State 2% Source: Statistics and Economic Analysis, DAFF 1.2. Production trends Sheep and lamb are slaughtered in abattoirs that are distributed all over South Africa. Slaughtering outside the abattoirs is not easy to record. Most of the mutton produced in South Africa is consumed locally. Figure 3 below shows the comparison between the mutton produced in South Africa and its consumption. 4

Million Kilograms 2 Figure 3: Production vs consumption of mutton 16 12 8 4 Years Production Consumption Source: Statistics and Economic Analysis and Quantec Easydata Figure 3 above shows that the amount of mutton consumed is more than what was domestically produced during the period under review. The amount of mutton consumed reached its peak of 169 million Kg during 27 and the production peak of 153 million kilograms was reached in 213. There is an increase of 22 million Kg (28 %) of mutton production in 213 compare to 24 and a slight increase of mutton consumption of 13 million Kg (14 %) in 213 compare to beginning of the analysis in 24. This shows that South Africa will still remain a net importer of mutton to satisfy the local demand. 1.3. Employment There are approximately 8 commercial sheep farms around the country employing approximately 35 workers. 2. MARKET STRUCTURE 2.1. Domestic market and prices The prices are determined by forces of demand and supply. Figure 4 below show the price of mutton from 24 to 213. 5

Rands/ Kg 5. Figure 4: Price of mutton 45. 4. 35. 3. 25. 2. 15. 1. Source: Statistics and Economic Analysis, DAFF Years The price of mutton increased continuously from 24 to 212 mainly due to inflation factor, change of consumer s lifestyles and insufficient supply. There was a significant decrease in price of mutton in 213. In 24 the price of mutton was R 2.13/Kg but in 213 it was R 41.59/Kg, this means in a period of 1 years there was an increase of R 21.46/kg. 2.2. Exports of mutton Figure 5 below shows the comparison between mutton imports and exports. 6

Thousand kilograms Thousand Rands 35 Figure 5: Mutton export and imports quantities 3 25 2 15 1 5 24 25 26 27 28 29 21 211 212 213 Exports quantity Imports quantity It is clearly indicated from Figure 5 above that South Africa is the net importer of mutton because the amount of mutton imported is far higher than the amount of mutton exported. This might be due to the low supply of mutton experienced in the country. 45 4 35 3 25 2 15 1 5 Figure 6: Mutton exports 24 25 26 27 28 29 21 211 212 213 18 16 14 12 1 8 6 4 2 Quantity Value Figure 6 shows an extreme level of fluctuations in both export value and quantity of mutton from 24 to 26. From 27 to 28 the trend was increasing in both quantity and value. It was less profitable 7

Kilograms to export mutton from 24 to 26 as more quantity was exported for less value but the worse scenario was experienced in 25. It became profitable to export mutton from 27 to 213 because fewer quantities were exported with high values. The highest quantities (413 145 kg) of mutton was exported in 25 and highest value of R 16.5 million was received in 28. This might be due to the weaker rand. 15 Figure 7: Mutton export to SADC 12 9 6 3 24 25 26 27 28 29 21 211 212 213 Angola DRC Mauritius Malawi Mozambique Seychelles Tanzania Zambia Zimbabwe South African mutton is mainly exported to Angola and Mozambique in SADC. Angola commanded the highest exports from 24 to 26 and Mozambique took over the first position from 27 to 213. Democratic Republic of Congo (DRC) became the second highest commander of mutton from South Africa during 28 to 21,212 and in 213. 8

Kilograms 6 Figure 8: Mutton exports to middle and west Africa 5 4 3 2 1 24 25 26 27 28 29 21 211 212 213 Côte d'ivoire Ghana Nigeria Saint Helena Congo Gabon Mauritiana Figure 8 above shows that Nigeria and Gabon competed for the highest importer of mutton from South Africa. Nigeria commanded the greatest shares of South African mutton during the periods 24; 27 to 29 and 211 while Gabon was the greatest in 25 26 and in 21. Ghana commanded the greatest shares in 212 and 213. Averagely Nigeria commanded 19 549 kg per annum of mutton from South Africa during the past decade followed by Gabon by 17.764 kg. Mauritiana Qatar 1% Nigeria 4% Saint helena 2% Zambia 2% Malawi 2% 6% Figure 9: Mutton exports destination 213 Seychelles 3% Zimbambwe 2% Angola 6% DRC 21% Mozambique 36% Mauritius 5% Gabon 4% Ghana 6% 9

Thousand Rands Figure 9 above shows that Mozambique commanded the largest market share for South African mutton in 213 taking up to 36% followed by Democratic Republic of Congo (21 %) and Angola, Ghana and Zambia took (8 %) each. Mauritius commanded the equal by 5%. Figures 1 to 17 show the export of lamb and mutton by provinces. 14 Figure1: Values of mutton exported by Provinces 12 1 8 6 4 2 24 25 26 27 28 29 21 211 212 2 13 Western Cape 1 222 2 559 1 973 973 4 18 4 281 4 65 4 42 4 73 5 274 Eastern Cape 348 18 126 Northern Cape 1 138 1 215 69 11 12 Kwazulu-Natal 42 2 333 848 643 787 926 1 81 493 549 41 North West 6 81 6 76 19 Gauteng 1 33 3 943 3 345 13 86 11 561 1 233 7 318 4 632 4 688 7 834 Mpumalanga 146 134 77 55 237 885 944 1 124 987 Figure 1 showed that Gauteng Province dominated the export market. It recorded high values from 24 to 213. Western Cape Province recorded the second highest values during the periods 24 to 213. Regular mutton exports were also recorded from KwaZulu Natal and Mpumalanga Provinces and fractional exports were recorded in North West, Northern Cape and Eastern Cape Provinces. 1

Rands Rands Figure 11: Value of mutton exported by Western Cape Province 6 5 4 3 2 1 24 25 26 27 28 29 21 211 212 213 City of Cape Town 1 221 8 2 559 2 1 972 8 973 136 4 17 9 4 281 4 65 3 4 42 1 4 73 1 5 273 6 Cape Winelands 9 36 Eden 176 From the Western Cape Province, City of Cape Town metropolitan municipality recorded high values from the year 24 to 213 and some intermittent values were recorded from Cape Winelands and Eden district municipalities. This may be due to the fact that the City of Cape Town is the major exit point for the province. Figure 12: Value of mutton exported by Eastern Cape province 4 35 3 25 2 15 1 5 23 24 25 26 27 28 29 21 211 212 213 Cacadu District 347 916 Nelson Mandela 18 29 126 7 11

Rands Rands From the Eastern Cape Province, intermittent reports of mutton exports were recorded from Cacadu and Nelson Mandela district municipalities. Cacadu district municipality recorded the export values in 25 and Nelson Mandela district municipality recorded its exports of mutton in 26 and27. 1 4 1 2 1 Figure 13: Value of mutton exported by Northern Cape Province 8 6 4 2 24 25 26 27 28 29 21 211 212 213 Siyanda 1 138 41 1 214 684 69 174 1 684 12 351 In the Northern Cape Province, Siyanda district municipality recorded export values during the periods 24 until 26, 29 to 21 and again in 212. 2 5 Figure 14: Value of mutton exported by Kwazulu natal 2 1 5 1 5 24 25 26 27 28 29 21 211 212 213 Ugu 1 Uthukhela 149 94 Uthungulu 41 599 5 781 ethekwini 2 327 661 848 43 643 232 786 619 925 929 1 8 569 493 167 549 22 26 16 In KwaZulu Natal Province, ethekwini metropolitan municipality recorded high values from 25 to 213 except in 24 were it diminished. It is therefore the greatest exporter of mutton in the province 12

Thousand Rands Rands mainly because it is an exit point of exports. Fractional mutton exports were also recorded in UGu, UThukela and UThungulu district municipalities from 24 to 25 and in 213. Figure 15: Value of mutton exported from North West Province 9 8 7 6 5 4 3 2 1 24 25 26 27 28 29 21 211 212 213 Bojanala 5 546 Bophirima 81 99 69 574 Southern 5 576 5 944 189 948 North West Province recorded intermittent exports of mutton during the period under review. Bojanala district municipality recorded export values of mutton during 29 and Bophirima district municipality recoded in 21 & 212 and Southern district municipality recorded exports in 211, 212and in 213. Figure 16: Value of mutton exported from Gauteng Province 14 12 1 8 6 4 2 24 25 26 27 28 29 21 211 212 213 Sedibeng 8 177 Metsweding 186 76 46 West Rand 1 32 1 488 129 324 6 Ekurhuleni 42 32 348 1 189 114 822 1 779 378 1 574 2 281 City of Johannesburg 828 3 69 2 816 11 883 11 447 9 41 3 93 3 728 2 289 5 58 City of Tshwane 1 4 14 1 148 212 424 3 897 13

Rands In Gauteng Province, City of Johannesburg metropolitan municipality recorded high export values of mutton for the past ten years with the highest values recorded in 27, followed by Ekurhuleni district municipality. Irregular exports of mutton were recorded from Sedibeng, Metsweding, West Rand and City of Tshwane municipalities. Figure 17: Value of mutton exported by Mpumalanga Province 1 2 1 8 6 4 2 24 25 26 27 28 29 21 211 212 213 Gert Sibande 5 5 76 586 54 77 12 8 254 82 Nkangala 182 614 86 316 49 1 Ehlanzeni 146 491 128 617 54 59 799 62 931 336 82 593 986 61 From Mpumalanga Province, the value of mutton exports was mainly through Ehlanzeni district municipality which recorded the highest value in 24 to 25, 28 and 21 to 213. Irregular exports were also recorded from Gert Sibande and Nkangala district municipalities. There were no records of mutton exports in 27. 2.3. Share analysis Tables 1 to 7 show the export share analysis of mutton and lamb by provinces and districts. 14

Table 1: Share of provincial mutton exports to the total RSA mutton exports (%). Years Province 24 25 26 27 28 29 21 211 212 213 31.5 24.3 31.17 6.56 24.88 27.3 31.33 42.12 38.71 35.89 Western Cape 3.3.29.85. Eastern Cape 29.35 11.53 1.9.7.12. Northern Cape 1.7 22.15 13.4 4.34 4.76 5.9 7.35 4.7 5.22 2.79 KwaZulu-Natal.4 5.4.5.72 1.29 North West 5 34.3 37.44 52.85 88.25 7.2 65.25 49.78 44.14 44.55 53.32 Gauteng 3.78 1.27 1.21.33 1.5 6.2 9. 1.69 6.71 Mpumalanga TOTAL 1 1 1 1 1 1 1 1 1 1 Table 1 showed that Gauteng Province commands the greatest share of South African mutton exports, followed by Western Cape, KwaZulu Natal and Northern Cape Provinces. This is due to the fact that Gauteng province is the major exit point to the SADC region. Mpumalanga Province recorded regular exports of mutton but in contrary there are some irregular reports of mutton exports in Eastern Cape, Northern Cape, and North West Provinces. Table 2: Share of district mutton exports to total Western Cape Provincial mutton exports (%) Years DISTRICTS 24 25 26 27 28 29 21 211 212 213 City of Cape Town 99.99 1 1 1 97.8 1 1 1 1 Cape Winelands 2.2 Eden.1 TOTAL 1 1 1 1 1 1 1 1 1 1 The City of Cape Town metropolitan municipality has commanded the greatest share of mutton exports in Western Cape Province from 24 to 213. It commanded 1% in 25-27 and 29 to 213. Irregular exports were recorded from Cape Winelands and Eden district municipalities. Table 3: Share of district mutton exports to total Eastern Cape Provincial mutton exports (%). Years DISTRICTS 24 25 26 27 28 29 21 211 212 213 Amatole 1 1 98.23 84.91 91.76 Nelson 1.77 15.9 1 15

Mandela 8.24 TOTAL 1 1 1 1 1 The export shares of mutton were recorded in Amatole and Nelson Mandela district municipalities. Amatole district municipality commanded the greatest share from 28 to 212 and Nelson Mandela district municipality recorded some exports from 21 to 212. There were no exports of mutton in the Eastern Cape Province during 24 to 27. Table 4: Share of district mutton exports to the total Northern Cape Provincial mutton exports (%). Years DISTRICTS 24 25 26 27 28 29 21 211 212 213 Pixley ka Seme Siyanda 1 1 1 1 1 1 TOTAL 1 1 1 1 1 1 In Northern Cape Province, the greatest share of mutton exports was recorded from the Siyanda district municipality from 24 to 26 and again in 29, 21 and 212. Table 5: Share of district mutton exports to the total KwaZulu Natal Provincial mutton exports (%). Years DISTRICTS 24 25 26 27 28 29 21 211 212 213.24 Ugu UThukela 37 99.76.25 UThungulu 99.75 1 1 1 1 1 1 1 63 ethekwini TOTAL 1 1 1 1 1 1 1 1 1 1 From Kwazulu Natal Province, ethekwini municipality commanded the greatest share of mutton exports from the year 24 to 213 but diminished in 24. It commanded the highest values from 25 to 213. Mutton shares were also recorded in UThungulu district municipality from 24 to 25; and in Ugu district municipality in 24. UThungulu district municipality commanded the highest shares in 24. Table 6: Share of district mutton exports to the total North West provincial mutton exports (%). 16

Years DISTRICTS 24 25 26 27 28 29 21 211 212 213 Bojanala 1 Bophirima 1 92.13 Southern 1 7.87 1 TOTAL 1 1 1 1 1 Bojanala, Bophirima and Southern district municipalities in North West Province recorded mutton exports during 29 to 213. There were no export records before 29 in the province. Table 7: Share of district mutton exports to the total Gauteng Provincial mutton exports (%). Years DISTRICTS 24 25 26 27 28 29 21 211 212 213 6.5 5.25 Sedibeng. Metsweding 4.1 1.63.41 2.3.7.82 3 2.8 West Rand 31.54 7.65 1.4 9.9.98 8.4 24.3 1 6.92.53 8.15 33.5 7 2.1 1 Ekurhuleni City of 62.24 91.5 84.1 9.81 99. 91.8 53.3 8.4 48.8 Johannesbur 4 8 2 7 3 7 3 g City of.1.11.11.1 2.3 4.57 9.4 Tshwane TOTAL 1 1 1 1 1 1 1 1 1 1 In Gauteng Province, the greatest shares of mutton exports were recorded from City of Johannesburg municipality from 24 to 213 followed by Ekurhuleni municipality. Fractional exports were recorded in Sedibeng, Metsweding, West Rand and City of Tshwane district municipality. 44.5 9 34.3 6 Table 8: Share of district mutton exports to the total Mpumalanga Provincial mutton exports (%). Years DISTRICTS 24 25 26 27 28 29 21 211 212 213 Gert Sibande 4.1 1 22.85 1.36 22.66. Nkangala 77.15 9.75 4.37. Ehlanzeni 1 95.9 1 9.25 98.64 72.97 1. TOTAL 1 1 1 1 1 1 1 1 1. 17

Million Kilograms Million Rands From Mpumalanga Province, the greatest shares of mutton exports were recorded from Ehlanzeni district municipality. Intermittent export shares of mutton were recorded in Gert Sibande and Nkangala district municipalities. There were no exports values recorded in Mpumalanga Province during 27. 2.4. Imports of mutton South Africa imported an average of 16.3 million kilograms per annum of mutton during the past decade at a value of R 146.9 million per annum. Figure 18 below show the imports of mutton from 24 to 213. Figure 18: Mutton Imports 35 3 25 2 15 1 5 24 25 26 27 28 29 21 211 212 213 Quantity 17 23 33 28 25 12 8 7 5 4 Value 88 132 232 232 258 121 114 133 92 67 3 25 2 15 1 5 Import quantities of mutton started low in 24 and continued on an increasing rate from 25 until it reached the peak in 26 then decreased thereafter to the lowest in 213. It has been profitable to import mutton during 24 to 27 as more quantities were imported at a low rate and became expensive to import mutton from 28 to 213 because less quantity was imported with high values. 18

Kilograms Million Kilograms Figure 19: Quantity of mutton imported from Oceania 3 25 2 15 1 5 24 25 26 27 28 29 21 211 212 213 years Australia New Zealand Most of South African mutton imports were from Oceania (Australia & New Zealand). Australia commanded the greatest shares of South African import market throughout the decade except in 21 followed by New Zealand. The peak of R 25 million was reached in 26. The two countries are the main suppliers of mutton to the South African import market. 12 Figure 2: Quantity of mutton imported from South America 1 8 6 4 2 24 25 26 27 28 29 21 211 212 213 Years Argentina Brazil 19

From South America, mutton imports were from Argentina and Brazil. Argentina commanded the great shares in24 and 21, while Brazil was the highest from 25 to 28 and in 211. There were no imports of mutton from South America during 29, 212 and 213. Figure 21 below show the countries of origin of mutton from the world in 212. Figure 21:Countries of origin for mutton imports in 213 singapore 1% New Zealand 17% Australia 82% Source: Quantec Easydata 2

Figure 11 clearly indicate that the majority of mutton imported to South Africa was from Oceania in 213. Australia commanded a South African market share of 82% while New Zealand commanded 17%. Both of them contributed 1% share of South African import market. 3. MARKETING CHANNELS The Marketing Channel (see Figure 22) begins with the farmer who produces sheep and lamb. Most sheep farming practiced in South Africa is for wool and mutton/lamb. After about five to six years of shearing the sheep are sold directly to feedlot (small number) or abattoir; or sold through auctions. Live sheep and lambs can be imported by the farmer or the feedlot or the abattoir. Meat from abattoir is distributed through wholesalers, retailers and butcheries. Some is exported or processed. Import of meat is done by retailers and wholesalers and processors while exports are mainly by abattoirs. The final stages of the marketing channel end with the consumer. 21

Figure 22: Sheep Supply Chain Primary Producers - Farmers Imports Feedlots Auctions Abattoirs (meat) Skin & Wool Processors Wholesalers Retailers Butcheries Exports CONSUMERS 22

4. ORGANIZATIONAL ISSUES 4.1 EMPOWERMENT PLANS The communal wool farmers are formally represented in all structures of the National Wool Growers Association Board. Sinthema Mafama Wool Brokers is a BEE company affiliated to the Cape Mohair and Wool SA. When BKB (Boere Kooperative Beperk) purchases the wool from the informal producers a portion of the value is allocated to shares in the company. These producers then receive dividends based on the number of shares that they hold. The Sheep Forum of South Africa comprising of the major role players is the body responsible for driving the process for the sheep industry strategy. The following five working groups have been established: Resource Management Marketing and value adding Enabling Environment/ Infrastructure Development Human Resource development/training Research and development (Genetic improvement to improve the herd in the communal sector) The three main pillars for the sheep strategy are as follows: Equitable market access and participation Global competitiveness and profitability Sustainable resource management 4.2. Opportunities Important supplier of quality protein for human health. The A4 lamb carcass according to research is low in fat content and complies with the standards of the Heart Foundation. Industry has tremendous growth potential in the informal sector which could assist in addressing the shortage of mutton Niche markets and exports Through the use of the South African EU-accredited abattoirs mutton/lamb can be exported to niche markets. 23

4.3. Challenges Stiff competition both nationally and internationally Health, safety and traceability issues Phytosanitary issues Climatic conditions Smaller abattoirs do not comply with the Meat, Health and Safety Acts. Livestock agents are corrupt and are often not part of the organized marketing structure. Stock theft Research and Development is a problem Financial constraints Predators account for large losses in sheep herds Lack of infrastructure Veterinary services in South Africa are uncoordinated and insufficient Insufficient extension services Safety and Security 24

5. MARKET INTELLIGENCE 5.1. Export Tariffs Tariffs of different importing countries applied to mutton and lamb originating from South Africa in 212 and 213 are shown in Table 9. Table 9: Export tariffs for mutton No. Country Product description 1 Democratic Republic of the 241 & 2421 Congo & Angola 2 Gabon 241 & 2421 3 Maldives 241 & 2421 4 Mauritius 241 & 2421 5 Mozambique 241 & 2421 6 Zambia 241; 2421; 2422; 2423 & 2423 Trade Regime Description Applied Tariffs 212 213 Total Ad Applied Total Ad Valorem Tariffs Valorem Equivalent Equivalent Tariffs. Tariffs. MFN duties 1% 1% 1% 1% MFN duties 2% 2% MFN duties 15% 15% MFN duties % % MFN duties Preferential tariff for SA MFN duties Preferential for SA 2% 15% 2% 15% 2% 15% 25% % 2% 15% 25% % Source: Market Access Map Table 9 indicates that in 213 Zambia applied the highest MFN duties of 2% on fresh or chilled lamb carcasses and to fresh or chilled sheep carcasses from South Africa. Mozambique continues applying a preferential tariff of 15% during the past Three years. The moderate tariff of 1% applied to lamb and sheep exported by South Africa exist in Democratic Republic of Congo during 212 and 213. The lowest preferential tariff is applied by Zambia during 213. 25

5.2. Import Tariffs Tariffs that South Africa applied to imports of mutton originating from all possible countries in 212 and 213 are shown in table 1. Table 1: Import tariffs for mutton No Country 1 New Zealand & Australia Product code 2421; 2421: 2423 & 243 Trade Regime Description MFN duties 212 213 Applied Tariffs Total Ad Valorem Equivalent Tariffs. Applied Tariffs 4% or 24$/Ton OTQR: whichever is the 4% greater ITQR: 19% 4% or 186.19$/Ton whichever is the greater Total Ad Valorem Equivalent Tariffs. OTQR: 4% ITQR: 19% 2422 MFN duties 4% or 24$/Ton whichever is the greater OTQR: 4% ITQR: 13.2% 4% or 186.19$/Ton whichever is the greater OTQR: 4% ITQR: 13.2% Source: Market Access Map Table 1 indicates that tariffs applied by South Africa on imported mutton in 212 changed from 4% or $ 24.1/Ton whichever is greater and decreased to 4% or 186.19$/Ton whichever is the greater during 213. The total ad valorem tariff for 212 was at 4%. In order to discourage imports above quota limit in 213 the total ad valorem applied by South Africa to New Zealand and Australia was 4% and 4% for lamb and sheep respectively imported in excess tariff quota but imports within the limit of a quota was at 19% and 13.2% respectively. 26

6. COMPETITIVENESS OF THE SHEEP INDUSTRY 6.1. Competitiveness of sheep industry in exports Table 11: List of importing markets for the lamb carcasses and half carcasses, fresh or chilled exported by South Africa in 213 Importers Trade Indicators Exported value 213 (USD thousand) Trade balance 213 (USD thousand) Share in South Africa's exports (%) Exported quantity 213 Quantity unit Unit value (USD/unit) Exported growth in value between 29-213 (%, p.a.) Exported growth in quantity between 29-213 (%, p.a.) Exported growth in value between 212-213 (%, p.a.) Ranking of partner countries in world imports Share of partner countries in world imports (%) World 114-16,4 1 18 Tons 6,333 15 21 68 1 2 Total import growth in value of partner countries between 29-213 (%, p.a.) Mauritius 57 57 5 7 Tons 8,143 Mauritania 34 34 29.8 5 Tons 6,8 2 Swaziland 16 16 14 4 Tons 4, -41-43 48 Lesotho 3 3 2.6 2 Tons 1,5-19 -81 62 Mozambique 3 3 2.6 Tons 27.1 15 Gabon 1 1.9 Tons -53 67-53 2 Tariff (estimated) faced by South Africa (%) 27

South Africa s exports represent.19% of world exports for lamb; its ranking in world export is 19. Table 11 shows that during 213 South Africa exported a total of 464 tons of lamb carcasses and half carcasses at an average value of US$ 3 761/unit. South Africa exported greater quantities of lamb to Lesotho, Botswana, Swaziland, Mozambique and Namibia. The greatest share of South African mutton exports were destined to Lesotho which commanded 44.5% share during the year 213 followed by Botswana by 27.2% and Swaziland by 19%. South Africa s mutton exports (value & quantity) increased by 34% and 26% respectively between the periods 29 and 213. Exports of mutton to Mozambique increased by 25% in value and 31% in quantity during the periods 28 to 212. During the period 211 to 212 South Africa s exports to the rest of the world increased by 55% in value and exports to Mozambique increased by 67% during the same period. 28

Figure 23: Growth in demand for lamb exported by South Africa in 213 Source: Trademap, ITC 29

Figure 23 shows that between 29 and 213 South Africa s lamb exported to Angola were growing at a rate that is greater than its import growth from the rest of the world. During the same period, South Africa s mutton exports to Democratic Republic of Congo and Angola were growing at a rate that is less than their imports from the rest of the world. They were all representing losses in the declining market. DRC s annual import growth has declined drastically by 33%, Angola by 68% The most growing demand of South African fresh or chilled lamb carcasses exist in Mozambique. South Africa s mutton export growth to Mozambique is 26% 3

Figure 24: Prospects for market diversification for lamb exported by South Africa in 213 Source: Trademap, ITC 31

During 212, South Africa has exported lamb carcasses and half carcasses to Mozambique, Seychelles Democratic Republic of Congo (DRC) and Angola at a rate greater than what they imported from the world. If South Africa wishes to diversify the imports of lamb, the biggest market exist in France with the world market share of 42%. The disadvantage is that France s annual import growth declined by 2%. Therefore the lucrative markets for South Africa exist in Bahrain, Kuwait and Germany. They are both small markets, Bahrain, Kuwait and Germany has a world market share of 7.5%, 2.5% and 3.1%.. Therefore South Africa can develop a new market in Bahrain, Kuwait and Germany 32

Table 12: List of importing markets for the mutton exported by South Africa in 213 Importers Exported value 213 (USD thousand) Trade balance 213 (USD thousand) Share in South Africa's exports (%) Exported quantity 213 Quantity unit Unit value (USD/unit) Trade Indicators Exported growth in value between 29-213 (%, p.a.) Exported growth in quantity between 29-213 (%, p.a.) Exported growth in value between 212-213 (%, p.a.) Ranking of partner countries in world imports Share of partner countries in world imports (%) Total import growth in value of partner countries between 29-213 (%, p.a.) Tariff (estimated) faced by South Africa (%) World 114-16,4 1 18 Tons 6,333 15 21 68 1 2 Mauritius 57 57 5 7 Tons 8,143 Mauritania 34 34 29.8 5 Tons 6,8 2 Swaziland 16 16 14 4 Tons 4, -41-43 48 Lesotho 3 3 2.6 2 Tons 1,5-19 -81 62 Mozambique 3 3 2.6 Tons 27.1 15 Gabon 1 1.9 Tons -53 67-53 2 Source: ITC calculations based on COMTRADE statistics 33

South Africa s exports represent.4% of world exports for sheep carcasses and half carcasses fresh or chilled; its ranking in world export is 24. Table 12 shows that during 213 South Africa exported a total of 18 ton of sheep carcasses and half carcasses at an average value of US$ 6 333 /unit. 7 tons exported by South Africa during 213 were exported to Mauritius,5 to Mauritania, 4 tons to Swaziland and 2 tons to Lesotho. Mauritious commanded a share of 5%% of South African mutton followed by Mauritania with 3%, Swaziland with 14% and Lesotho with33%. South Africa s mutton exports (value & quantity) increased by 15% and 21% respectively during the periods 29 and 213. Between the periods 212 and 213 South African fresh or chilled sheep carcasses increased by 68% in value. 34

Figure 25: Prospects for market diversification for sheep carcasses exported by South Africa in 212 Source: Trademap, ITC 35

Figure 25 above shows that if South Africa wishes to diversify its exports of fresh and chilled sheep carcasses, the biggest and fastest growing market is in Bahrain. Bahrain has a world share market of 7.5% and its annual import growth was at 229%. South Africa is not supplying Bahrain with mutton therefore is can develop a new market in Bahrain. 36

6.2. Competitiveness of sheep industry in imports There are no records on the list of exporting markets for lamb and sheep carcasses and half carcasses imported to South Africa in 213. Figure 26: Prospects for diversification of suppliers for lamb imported by South Africa in 213 Source: Trademap, ITC 37

The chart above shows the prospects for diversification of suppliers for lamb carcasses and half carcasses (fresh or chilled) imports by South Africa in 213. If South Africa is to diversify its lamb carcasses and half carcasses (fresh or chilled) imports, Australia will be the possible market because its annual export growth is the highest by 41% and it is also the second biggest market after United Kingdom with the world market share of 21%. Figure 21 showed that most mutton is imported from Australia; therefore South Africa can diversify to United Kingdom which has a world market share of 37.2%. 38

Figure 27: Prospects for diversification of suppliers for sheep carcasses imported by South Africa in 213 Source: Trademap, ITC 39

The chart above shows the prospects for diversification of suppliers for sheep carcasses and half carcasses (fresh or chilled) imports by South Africa in 213. If South Africa is to diversify its sheep carcasses and half carcasses (fresh or chilled) imports, Ireland will be the possible market because its annual export growth is incomparable at a rate of 185% and it has a world share market of 7.2%. 4

7. ACKNOWLEDGEMENTS a. National Wool Growers Association (NWGA) www.nwga.co.za b. SAMIC www.samic.co.za c. Cape Wools www.capewools.co.za d. Department of Agriculture, Forestry and Fisheries www.daff.gov.za. e. TradeMap www.trademap.org. f. Quantec www.quantec.co.za g. Market Access Map. www.macmap.org.za. h. NERPO www.nerpo.org.za Disclaimer: This document and its contents have been compiled by the Department of Agriculture, Forestry and Fisheries for the purpose of detailing the sheep industry. The views expressed in this document are those of the Department of Agriculture, Forestry and Fisheries with regard to agricultural industry, unless otherwise stated and, therefore the Department of Agriculture, Forestry and Fisheries does not accept responsibility for any errors in such information and anyone acting on such information does so entirely at his or her own risk. 41