A competitiveness analysis of the South African floricultural industry

Abstract

From an international perspective the South African flower industry is marginal. When comparing South Africa’s domestic demand to that of 24 countries, South Africa is ranked last with an annual per capita consumption of approximately R3,04 per capita. In contrast Switzerland is ranked number 1 with a per capita consumption of R385,00. In terms of cut flower exports, South Africa is also performing marginally. Out of 20 countries, South Africa performed at number 17. Countries such as Israel – number 1; Chili – number 5; Zimbabwe – number 6; Equador –number 8 and New Zealand – number 9 outperformed South Africa by far. The high demand for South Africa flowers experienced in many international markets provide a sound basis for expanding international trade. Important reasons for this high markets in the Northern Hemisphere and South Africa’s unique floricultural bio-diversity. The competitiveness of Kenya and Zimbabwe in the international arena is also an indication that African countries have the ability and potential to compete in Europe. Compared to it’s infrastructure, the largest and most developed domestic flower industry and a highly developed domestic market with a growth rate of approximately19% per annum over the past 5 years. However, the South African grower face numerous disadvantages such as high import tariffs in to the European Union, less favourable climatic conditions for flower production, higher labour costs, labour unrest, difficulty organizing growers scattered over such a large geographic area, a lack of motivation to export and a good local market, but one with low standards that does not prepare growers to compete overseas. Two major forces will have to be dealt with to fulfill the South African flower industry’s full potential. These are related to the increasing globalization and opening up of markets in the international trade. South African flower producers therefore expect to face increasing competition from producers elsewhere in the world. An example of a force that the South African flower industry have to contend with is the Australian flower industry. The Australian flower industry has made substantial progress in recent years. Competition especially with respect to the marketing of unique indigenous flowers to similar target markets in Europe and Japan are intensifying between those two countries. Australia is also one of South Africa’s fastest growing export markets and South Africa has grown to the second largest importer of flowers to Australia which is a further implication of the significance of the relationship between South Africa and Australia. The competitiveness of the South African flower industry should thus receive attention from policy and industry level to promote the viability in the industry. Policies should focus on leveling playing fields, especially in view of the subsidization and preference trade agreements which often favour competitors, especially countries in Sub-Sahara Africa. Policies should also facilitate the promotion of technology to enable South African producers to compete cost effectively in international markets. At industry level the challenge should focus on the creation of “time, place and form” utility to provide markets with the required product at the required time and place.