Rooibos industry expects low yields after poor rains

Image courtesy of FreeDigitalPhotos.net and Suat Eman

The rooibos industry is expecting low yields this year because of poor rains that led to smaller harvests, the South African Rooibos Council said.

The council's outlook for the year projects low stocks. Poor rainfall during last year's planting season contributed to lower yields, which will lead to pressure on retail prices this year.

Oversupply

The council's director for marketing, Donnée MacDougall, said an oversupply of the herbal tea for the past three years led to declining prices and prompted farmers to plant less rooibos last year.

In the same vein, the export market had steadily declined from 7200 tons in 2007 to 6300 tons in 2009. Export volumes fell a further 5% last year, pulled down by economic uncertainty in Europe and a strong rand. This resulted in a local surplus of about 3000 tons last year.

MacDougall said the export market showed some signs of recovery in the second half of last year but it was still 16% below pre-recession levels. "Despite lower volumes and some price pressure, we're confident of steady recovery in key export markets such as Germany and continued growth in the local market," she said.

On the domestic market, the council said demand had increased about 5% last year, with 72% of South African households stocking rooibos. "It is the only sector of the local tea market which is growing and represents about 23% of sales."

MacDougall said there were opportunities to increase sales, particularly in KwaZulu-Natal and the Eastern Cape where market penetration was not as high as in some other provinces. Gauteng remains the largest market for rooibos, accounting for 35% of sales, followed by the Western Cape with 14%.

Right Rooibos initiative

The council said it had made encouraging progress with an initiative that introduced common standards and measures for local farmers to sustainably produce rooibos products.

The Right Rooibos initiative includes certification, similar to programmes such as UTZ and the Rainforest Alliance, for sustainably produced rooibos products and gives a marketing advantage to producers, particularly in European markets.

MacDougall said the Right Rooibos project was closer to formulating a code of conduct following completion of a socio- economic study late last year. The code will provide guidelines for producers and manufacturers wanting to achieve certification and will help differentiate sustainably produced rooibos from other products.

Source: Business Day