COMMODITY PROFILE: MUTTON INDUSTRY

1. DESCRIPTION OF THE INDUSTRY. Sheep farming is practiced throughout the country. There are approximately 8 000 commercial sheep farms throughout the country and about 5 800 communal farmers. Sheep farmers are represented by organizations with Dorper Sheep Breeders’ Society of South Africa and Merino SA being the most prominent. The major mutton breeds are Dorper, SA Mutton Merino and the Ile De France. The 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. 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 1 660.9 million. The gross value of mutton production increased continuously from 1999 until 2006/07. It remained stable in 2007/08. Figure 1 below show the gross value of mutton production from 1998/99 to 2007/08.

Figure 1: Gross value of mutton production

0

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

1998

/99

1999

/00

2000

/01

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2006

/07

2007

/08

Production Years

Ran

ds

Source: Agricultural Statistics.

1

1.1. Production Areas. Sheep numbers in South Africa is estimated at 25 million distributed in all nine provinces. Approximately 86% of the sheep are in Eastern Cape, Northern Cape, Free State and the Western Cape. Percentage distribution is illustrated in Figure 2.

Figure 2: Percentage distribution of live sheep in South Africa

Western Cape11%

Northern Cape25%

Free State20%

Eastern Cape30%

Kwazulu-Natal3%

Mpumalanga7%

Limpopo1%

Gauteng0%

North-West3%

Source: Agricultural Statistics. The largest number of sheep is found in the Eastern Cape with 30% of the national herd. The Northern Cape has 25%, Free State 20% and the Western Cape 11%. The sheep flock sizes vary between 125 and 1800 herd in commercial farming. 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. Figure 3 below show the number of sheep slaughtered and mutton production.

2

Figure 3: Total production of mutton and sheep slaughtered

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

1998

/99

1999

/00

2000

/01

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2006

/07

2007

/08

Years

Kilo

gram

s

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Num

ber o

f she

ep

slau

ghte

red

Production Slaughtering

Source: Agricultural Statistics. Figure 3 above show that the number of sheep slaughtered and production of mutton fluctuated from 1998/99 to 2001/02 before increasing until 2006/07. In 2007/08, production of mutton declined but remained higher than 2005/06 level while the number of sheep slaughtered declined to the lowest level for the past ten years. This may be due to high number of matured sheep slaughtered. 1.3. EMPLOYMENT. There are approximately 8 000 commercial sheep farms around the country employing approximately 35 000 workers.

3

2. MARKET STRUCTURE. 2.1. Domestic market and prices. Most of the mutton produced in South Africa is consumed locally. The prices are determined by forces of demand and supply. Figure 4 below show the price and consumption of mutton from 1999 to 2008

Figure 4: Consumption and price of mutton

020,000,00040,000,00060,000,00080,000,000

100,000,000120,000,000140,000,000160,000,000180,000,000200,000,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Years

Kilo

gram

s

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

Ran

ds /

Kg

Consumption Price Source: Agricultural Statistics. Consumption showed slight fluctuations over the past ten years. The highest consumption level was recorded in 2007 due to changing lifestyle of majority of consumers. In 2008, consumption of mutton declined mainly due to global economic recession that hit the world in August 2008. The price increased continuously from 1999 to 2008 mainly due to inflation factor and insufficient supply.

4

2.2. EXPORT OF MUTTON. Mutton is also an important earner of foreign exchange. The industry exports mainly to Angola, Mozambique, United Kingdom and Nigeria. Figure 5 below show the export destination of South African sheep in 2008.

Figure 5: Export destinations of South African mutton in 2008Mozambique

19%

United Kingdom 17%

Nigeria 13%

Others 31%

Congo 4% Gabon 5%

Democratic Republic of the

Congo 4%

Angola 3%

Malawi 3%

Netherlands 1%

Source: Quantec. Figure 5 above show that Mozambique commanded the largest market share for South African mutton in 2008 taking up 19% followed by United Kingdom (17%) and Nigeria (13%). Figure 6 below show trends in mutton exports to the world.

5

Figure 6: Exports of mutton

050,000

100,000150,000200,000250,000300,000350,000400,000450,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Years

Kilo

gram

s

02,000,0004,000,0006,000,0008,000,00010,000,00012,000,00014,000,00016,000,00018,000,000

Ran

ds

Export quantity Export values

Source: Quantec. Figure 6 shows an extreme level of fluctuations in both export value and quantity of mutton. From 2007 to 2008 the trend was increasing in both quantity and value. It was less profitable to export in 2005 as more quantity was exported for less value earned. Figure 7 to 13 show the export of lamb and mutton by regions.

Figure 7: Exports value of mutton from provinces

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

Year

Ran

ds

Western Cape 0 23,690 196,843 964,861 1,084,664 1,222,020 2,559,293 1,972,800 973,136 4,108,307

Eastern Cape 0 0 0 0 0 0 347,916 18,290 126,070 0

Northern Cape 0 0 0 40,652 4,812,893 1,138,401 1,214,684 69,174 0 0

Kwazulu-Natal 11,312 37,396 64,430 31,037 373,460 41,699 2,333,442 848,043 643,232 786,619

Gauteng 1,863,497 410,080 1,523,953 2,498,999 1,222,153 1,330,440 3,942,967 3,345,180 13,085,82411,560,984

Mpumalanga 167 25,757 215,931 0 406,721 146,491 134,117 76,586 0 54,509

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: Quantec.

6

Figure 8 showed that Gauteng province recorded high values from the period 1999 to 2008 with a very high increase in 2007 followed by Western Cape Province. Mutton exports were also taking place from Kwazulu – Natal, Mpumalanga, Northern Cape and Eastern Cape.

Figure 8: Value of mutton exports from the Western Cape province

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

Year

Ran

ds

City of Cape Town 0 23,690 119,762 964,861 1,084,664 1,221,844 2,559,293 1,972,800 973,136 4,017,947

Cape Winelands 0 0 0 0 0 0 0 0 0 90,360

Eden 0 0 77,081 0 0 176 0 0 0 0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: Quantec. From the Western Cape, City of Cape Town municipality recorded high values from the year 2000 to 2008. This may be due to the fact that the City of Cape Town is the major exit point for the province.

Figure 9: Value of mutton exports from the Eastern Cape province

0

100,000

200,000

300,000

400,000

Year

Ran

ds

Cacadu 0 0 0 0 0 0 347,916 0 0 0

Nelson Mandela 0 0 0 0 0 0 0 18,290 126,070 0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: Quantec.

In the Eastern Cape Province, Cacadu district only recorded export values of mutton during the 2005 year while Nelson Mandela municipality recorded in 2006 and 2007.

7

Figure 10: Value of mutton exports from the Northern Cape province

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Year

Ran

ds

Pixley ka Seme 0 0 0 308 2,168,718 0 0 0 0 0

Siyanda 0 0 0 40,344 2,644,175 1,138,401 1,214,684 69,174 0 0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: Quantec. In the Northern Cape Province, Siyanda district recorded export values from 2002 until 2006 which increased in 2003 followed by a continuous decline until 2006. Pixley Ka Seme recorded export values of mutton from 2002 to 2003 with a high value in 2003.

Figure 11: Value of mutton exports from the Kwazulu - Natal province

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Year

Ran

ds

Ugu 0 0 0 100 195,822 200 0 600 0 0

Uthungulu 0 0 3,400 7,314 2,250 24,198 11,562 0 0 0

eThekwini 11,312 37,396 61,030 23,623 175,388 17,301 2,321,880 847,443 643,232 786,619

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: Quantec.

In Kwazulu–Natal, eThekwini municipality recorded high values for the past ten years showing an increase in 2005 and thereafter declined dramatically in 2006 followed by minimal increase in 2008. Mutton exports were also recorded in Ugu and Uthungulu districts.

8

Figure 12: Value of mutton exports from the Gauteng province

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

Year

Ran

ds

Sedibeng 0 0 0 0 0 80,441 0 177,450 0 0

West Rand 0 0 1,227 0 0 947 32,165 0 0 0

Ekurhuleni 46,924 229,257 39,601 57,363 488,441 419,664 301,588 348,055 1,189,048 113,799

City of Johannesburg 1,816,573 180,823 1,483,125 2,144,410 733,712 828,093 3,609,215 2,816,055 11,882,662 11,447,185

City of Tshw ane 0 0 0 297,226 0 1,296 0 3,620 14,114 0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: Quantec. In Gauteng province, City of Johannesburg municipality recorded high export values of mutton for the past ten years with the highest values recorded in 2007 and 2008. Mutton exports were also taking place through Ekurhuleni municipality. Irregular exports of mutton were recorded from Sedibeng, West Rand and City of Tshwane municipalities.

Figure 13: Value of mutton exports from the Mpumalanga province

0

100,000

200,000

300,000

400,000

500,000

Year

Ran

ds

Gert Sibande 0 0 184,064 0 0 0 5,500 76,586 0 0Ehlanzeni 167 25,757 31,867 0 406,721 146,491 128,617 0 0 54,509

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: Quantec. From Mpumalanga, the value of mutton exports was mainly through Ehlanzeni municipalities which recorded the highest value in 2003. Irregular exports were recorded by Gert Sibande district.

9

2.3. Share analysis. Table 1 to 7 shows the export share analysis of mutton and lamb by provinces and districts. Table 1: Share of provincial mutton exports to the total RSA mutton exports (%).

Source: Quantec.

Provinces 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Western Cape 0.00 4.77 9.84 27.29 13.73 31.50 24.30 31.17 6.56 24.88 Eastern Cape 0.00 0.00 0.00 0.00 0.00 0.00 3.30 0.29 0.85 0.00 Northern Cape 0.00 0.00 0.00 1.15 60.92 29.35 11.53 1.09 0.00 0.00 Kwazulu-Natal 0.60 7.53 3.22 0.88 4.73 1.07 22.15 13.40 4.34 4.76 Gauteng 99.39 82.52 76.15 70.68 15.47 34.30 37.44 52.85 88.25 70.02 Mpumalanga 0.01 5.18 10.79 0.00 5.15 3.78 1.27 1.21 0.00 0.33 Total 100 100 100 100 100 100 100 100 100 100

Table 1 showed that Gauteng province commands the greatest share of South African mutton export. This is due to the fact that Gauteng province is the major exit point to the SADC region. Table 2: Share of district mutton exports to the total Western Cape provincial mutton exports (%).

Districts 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 City of Cape Town 0.00 100.00 60.84 100.00 100.00 99.99 100.00 100.00 100.00 97.80 Cape Winelands 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.20 Eden 0.00 0.00 39.16 0.00 0.00 0.01 0.00 0.00 0.00 0.00 Total 0 100 100 100 100 100 100 100 100 100

Source: Quantec. The City of Cape Town has commanded the greatest shares of mutton export in Western Cape from 1999 to 2008. Irregular exports were recorded from Cape Winelands and Eden districts. Table 3: Share of district mutton exports to the total Eastern Cape provincial mutton exports (%).

Districts 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Cacadu 0 0 0 0 0 0 100 0 0 0 Nelson Mandela 0 0 0 0 0 0 0 100 100 0 Total 0 0 0 0 0 0 100 100 100 0

Source: Quantec.

10

The export shares of mutton were recorded in Cacadu district and Nelson Mandela municipality. The former commanded the greatest share in 2005 while the latter commanded 100% share from 2006 to 2007 before they diminish in 2008. Table 4: Share of district mutton exports to the total Northern Cape provincial mutton exports (%).

Source: Quantec.

Districts 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Pixley ka Seme 0.00 0.00 0.00 0.76 45.06 0.00 0.00 0.00 0 0 Siyanda 0.00 0.00 0.00 99.24 54.94 100.00 100.00 100.00 0 0 Total 0 0 0 100 100 100 100 100 0 0

In Northern Cape Province, the greatest shares of mutton exports were recorded from the Pixley ka Seme district from 2002 to 2006. Fractional exports were recorded in Siyanda district and increased significantly in 2003 before diminishing completely. Table 5: Share of district mutton exports to the total Kwazulu–Natal provincial mutton exports (%).

Districts 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Ugu 0.00 0.00 0.00 0.32 52.43 0.48 0.00 0.07 0 0 Uthungulu 0.00 0.00 5.28 23.57 0.60 58.03 0.50 0.00 0 0 eThekwini 100.00 100.00 94.72 76.11 46.96 41.49 99.50 99.93 100.00 100.00 Total 100 100 100 100 100 100 100 100 100 100

Source: Quantec. From Kwazulu–Natal province, eThekwini municipality commanded the greatest share of mutton exports from the year 1999 to 2008. Mutton shares were also recorded in Uthungulu from 2001 to 2005; and in Ugu from 2002 to 2006. Table 6: Share of district mutton exports to the total Gauteng provincial mutton exports (%).

Districts 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sedibeng 0.00 0.00 0.00 0.00 0.00 6.05 0.00 5.30 0 0 West Rand 0.00 0.00 0.08 0.00 0.00 0.07 0.82 0.00 0 0 Ekurhuleni 2.52 55.91 2.60 2.30 39.97 31.54 7.65 10.40 9.09 0.98 City of Johannesburg 97.48 44.09 97.32 85.81 60.03 62.24 91.54 84.18 90.81 99.02 City of Tshwane 0.00 0.00 0.00 11.89 0.00 0.10 0.00 0.11 0.11 0.00 Total 100 100 100 100 100 100 100 100 100 100

Source: Quantec.

11

In Gauteng province, the greatest shares of mutton exports were recorded from the City of Johannesburg municipality from 1999 to 2008 followed by Ekurhuleni municipality. Fractional exports were recorded in Sedibeng, West Rand and City of Tshwane. Table 7: Share of district mutton exports to the total Mpumalanga provincial mutton exports (%).

Source: Quantec.

Districts 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Gert Sibande 0.00 0.00 85.24 0.00 0.00 0.00 4.10 100.00 0 0 Ehlanzeni 100.00 100.00 14.76 0.00 100.00 100.00 95.90 0.00 0 0 Total 100 100 100 0 100 100 100 100 0 0

In Mpumalanga province, the greatest shares of mutton exports were recorded from Ehlanzeni district from 1999 to 2005. Intermittent export shares of mutton were recorded in Gert Sibande with the highest shares in 2001 and 2006. From 2007 into 2008 exports shares in Mpumalanga province diminished completely.

12

2.4. IMPORTS OF MUTTON. Figure 14 below show the import of mutton from the world over past ten years.

Figure 14: Import of mutton by country of origin

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Years

Kilo

gram

s

Australia New Zealand

Source: Quantec. Figure 14 show that the value of mutton before 2006 were lower due to stronger Rand and it has increased considerably thereafter. The quantities of mutton imported responded negatively against the increasing value from 2007. South Africa imports mutton mainly from Australia and New Zealand. Over the past ten years greater quantities of mutton were imported from Australia. Figure 15 below shows the import of sheep from 1999 to 2008. 3. MARKETING CHANNEL. The Marketing Channel 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.

13

14

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.

Abattoirs (meat)

Wholesalers

Retailers Butcheries

Processors

Imports

Skin & Wool

Feedlots Auctions

CONSUMERS

Exports

Primary Producers - Farmers

15

Figure 16: Sheep Supply Chain.

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.

16

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

17

5. MARKET INTELLIGENCE 5.1. Export Tariffs. Tariffs that different importing countries applied to mutton and lamb originating from South Africa in 2008 are shown in table 8. Table 8: Export tariffs for mutton.

2007 2008 No. Country. Trade Regime Description

Applied Tariffs

Total Ad Valorem Equivalent Tariffs.

Applied Tariffs

Total Ad Valorem Equivalent Tariffs.

1 Malawi MFN 0.00% 0.00% 10.00% 10.00% 2 United Arab

Emirates MFN duties 5.00% 5.00% 5.00% 5.00%

3 Angola MFN duties 10.00% 10.00% 10.00% 10.00% 4 Democratic

Republic of the Congo

MFN duties 10.00% 10.00% 10.00% 10.00%

5 Congo MFN duties 20.00% 20.00% 20.00% 20.00% 6 Gabon MFN duties 20.00% 20.00% 20.00% 20.00% 7 Ghana MFN duties 20.00% 20.00% 20.00% 20.00% 8 Mozambique MFN duties 20.00% 20.00% 20.00% 20.00% 9 Nigeria MFN duties 20.00% 20.00% 20.00% 20.00% 10 United

Kingdom Preferential Tariff for South Africa

4.20% + 637.31 $/Ton

20.93% 2.1% + 283.84 $/Ton

9.94%

Source: Market Access Map. Table 8 indicates that in 2008 Malawi has increased the tariffs on mutton from 0.00% preferential tariff in 2007 to 10% MFN tariff in 2008. United Kingdom reduced its preferential tariff for South Africa from 4.2% + $ 637.31/ton applied tariff in 2007 to 2.1% + $ 283.84 / ton in 2008 while the ad valorem tariff decreased from 20.93% in to 9.94%.

18

19

5.2. Import Tariffs. Tariffs that South Africa applied to imports of mutton originating from all possible countries in 2008 are shown in table 9. Table 9: Import tariffs for mutton.

No. Country. Trade Regime Description

Applied Tariffs

Total Ad Valorem Equivalent Tariffs.

Applied Tariffs

Total Ad Valorem Equivalent Tariffs.

1 Australia MFN duties 40.00% or 276.65 $/Ton whichever is the greater

40.00% 40.00% or 198.66 $/Ton whichever is the greater

40.00%

2 New Zealand

MFN duties 40.00% or 276.65 $/Ton whichever is the greater

40.00% 40.00% or 198.66 $/Ton whichever is the greater

40.00%

3 United Kingdom

MFN duties 40.00% or 276.65 $/Ton whichever is the greater

40.00% 40.00% or 198.66 $/Ton whichever is the greater

40.00%

Source: Market Access Map. Table 9 indicates that tariffs applied by South Africa on imported mutton in 2008 changed from 40% or $ 276.65/ ton whichever is greater to 40% or $ 198.66/ ton whichever is greater. The ad valorem tariff remains unchanged at 40%.

20

6. COMPETITIVENESS OF THE SHEEP INDUSTRY. 6.1. COMPETITIVENESS OF SHEEP INDUSTRY IN EXPORTS. Table 10: List of importing markets for the mutton exported by South Africa in 2008 South Africa’s exports represent 0.04% of world exports for mutton; its ranking in world export is 31.

Trade Indicators

Importers Exported

value 2008, USD

thousand

Trade balance 2008 in

USD thousand

Share in

South Africa's exports,

%

Exported quantity

2008

Quantity unit

Unit value,

(USD/unit)

Exported growth in value between 2004-

2008, %, p.a.

Exported growth

in quantity between 2004-

2008, %, p.a.

Exported growth in value between 2007-

2008, %, 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 2004-

2008, %, p.a.

Tariff (estimated)

faced by South Africa

'World 2156 -28877 100 415 Tons 5195 33 29 -5 100 7 'Ship stores and bunkers 582 582 27 103 Tons 5650 79 72 30 91 0 25 n/a 'United Kingdom 440 416 20.4 68 Tons 6471 577 -58 2 11.7 3

'Nigeria 433 433 20.1 59 Tons 7339 67 61 112 'Democratic Republic of the Congo 139 139 6.4 26 Tons 5346 86 92 5 96 0 52

'Gabon 132 132 6.1 21 Tons 6286 43 36 39 71 0 26

'Mozambique 123 123 5.7 72 Tons 1708 55 35 89 141 0 -17

'Congo 94 94 4.4 17 Tons 5529 64 2250 94 0 45

'Angola 58 58 2.7 13 Tons 4462 -28 -35 -72 43 0.2 94

'Malawi 35 35 1.6 12 Tons 2917 119 84 162 0 75 Source: ITC calculations based on COMTRADE statistics.

21

Table 10 shows that during 2008 South Africa exported a total of 415 tons of mutton at an average value of US$ 5 195/unit. South Africa exported greater quantities of mutton to United Kingdom and Nigeria. The greatest share of South African mutton exports were destined to United kingdom which commanded 20.4% share during the year 2008 followed by Nigeria (20.1%). South Africa’s mutton exports increased by 33% in value and 29% in quantity between the periods 2004 and 2008. During the same period, exports of mutton to United Kingdom increased by 577% in value; while exports to Nigeria increased by 67% in value and 61% in quantity. Between the periods 2007 and 2008, South Africa’s exports of mutton decreased by 5% in value. During the same period, exports of mutton to United Kingdom decreased by 58% while those to Nigeria increased by 112% in value. Gabon and Mozambique commanded 6.1% and 5.7% respectively of South Africa’s mutton exports in 2008 and their imports of mutton from South Africa were growing by 43%% and 55% during the period 2007 and 2008 and 39% and 89% respectively during the period 2004 and 2008 in value, more than South Africa’s leading importers. They represent new markets for South Africa’s mutton.

22

23

The chart illustrates that between 2003 and 2008 South Africa’s mutton exported to Netherlands and Angola were growing at a rate that is less than their import growth from the rest of the world. During the same period, South Africa’s mutton exports to United Kingdom, Mozambique, Gabon, United Arab Emirates, Ghana and Democratic Republic of Congo were growing at a rate that is greater than their imports from the rest of the world.

24

25

During 2008, South Africa has exported mutton to United Kingdom and United Arab Emirates at a rate higher than what they imported from the rest of the world. If South Africa wishes to diversify the imports of mutton, France is the possible market as they have bigger market share and their imports are growing.

26

6.2. COMPETITIVENESS OF SHEEP INDUSTRY IN IMPORTS. Table 11: List of supplying markets for the mutton imported by South Africa in 2008 South Africa’s imports represent 0.63% of world imports for Mutton or goats - fresh, chilled or frozen, its imports in the world is 29.

Trade Indicators

Exporters Imported

value 2008, USD

thousand

Trade balance 2008 in

USD thousand

Share in

South Africa's imports,

%

Imported quantity

2008

Quantity unit

Unit value, (USD/unit)

Imported growth in value between 2004-

2008, %, p.a.

Imported growth

in quantity between 2004-

2008, %, p.a.

Imported growth in value between 2007-

2008, %, p.a.

Ranking of

partner countries in world exports

Share of partner

countries in world exports,

%

Total export growth in value

of partner

countries between 2004-

2008, %, p.a.

Tariff (estimated) applied by

South Africa

World 31033 -28877 100 25016 Tons 1241 24 10 -6 100 7 Australia 21845 -21845 70.4 17414 Tons 1254 21 9 -5 2 23.8 8 40 New Zealand 9148 -9148 29.5 7563 Tons 1210 32 16 -7 1 39.8 6

40

United Kingdom 24 416 0.1 22 Tons 1091 3 9.8 6

40

Brazil 9 -9 0 13 Tons 692 -24 -23 -80 59 0 162 40

Area Nes 7 -7 0 4 Tons 1750 40

Belgium 5 4 6 40

Ireland 4 4 2 40

Angola 58 0 Source: ITC calculations based on COMTRADE statistics.

27

Table 11 shows that during 2008 South Africa imported a total of 25 016 tons of mutton, at an average value of US$ 1 241/unit. South Africa imported greater quantities of mutton from Australia and New Zealand. The greatest share of South African mutton imports originated from Australia which commanded 70.4% share during the year 2008 followed by New Zealand (29.5%). South Africa’s mutton imports increased by 24% in value and by 10% in quantity between the periods 2004 and 2008. During the same period, imports of mutton from Australia increased by 21% in value and by 9% in quantity; and imports from New Zealand increased by 32% in value and 16% in quantity. Between the periods 2007 and 2008, South Africa’s imports of mutton decreased by 6% in value. During the same period, Australia and New Zealand’s mutton exports to South Africa decreased by 5% and 7% respectively in value.

28

29

The chart illustrates that between 2003 and 2008 South Africa’s fresh, chilled or frozen mutton imported from Brazil were declining while exports from Brazil to the rest of the world were increasing During the same period South Africa’s fresh, chilled or frozen mutton imported from Australia and New Zealand were growing at a rate that is greater than their exports to the rest of the world. It will also be noticed that South Africa’s fresh, chilled or frozen mutton imports from Australia and New Zealand were growing while exports from these countries to the rest of the world were declining.

30

The figure above shows the prospects for diversification of suppliers for mutton (fresh, chilled or frozen) imports by South Africa in 2008. The analysis of the figure shows that Australia commanded the greatest shares in South Africa’s mutton (fresh, chilled or frozen) imports during the year 2008, followed by New Zealand. If South Africa is to diversify its mutton (fresh, chilled or frozen) imports, Australia and New Zealand remain traditional suppliers to South Africa because they are the world’s biggest suppliers. Brazil has achieved the higher annual growth rate but it is the smallest supplier. It represents the future supplier to South Africa. 7. ACKNOWLEDGEMENTS/REFERENCES 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 Directorate Marketing of 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.

31