Rooibos farmers have had trouble adapting to post 1994 markets which are much more open within South Africa; and off course also much more open to the world-wide challenges and opportunities created by globalization. The following article appeared in the Financial Mail (25th May, 2012) and written by Shannon Sherry, is a short summary of some (but not all) of the issues involved:
Move to stabilise rooibos market
Rooibos tea is brewing up a storm globally, but its Cederberg, Western Cape-based growers are stuck in a time warp, preventing the industry from taking full advantage of the demand. “Our farmers should start thinking as marketers and leave behind the mind-set of the days before deregulation [of agriculture] in 1994,” says Willem Engelbrecht, director of cultivation research & producer affairs at the SA Rooibos Council.
Engelbrecht believes this uniquely SA tea industry, with a turnover of R600m/year, has failed to adjust. “Growers still see their role simply as producers and believe the marketing is someone else’s problem.”
This is one reason for the price volatility of recent years, he adds. The producer price was R16,50/kg in 2004; it plunged to R4,50/kg in 2010. With production costs of R8/kg, many farmers stopped growing it. The resultant shortage drove the price to R11,50/kg.
Engelbrecht says more control over rooibos marketing would help stabilise things. “A price of R10/kg-R12/kg would sustain the industry. Rooibos can be stored for up to 20 years and though it might be costly, storage and releasing certain amounts to the market would provide greater stability to the industry.” He says the farmers need more information on areas planted, harvest forecasts and demand. A Dutch-funded project hopes to develop an independent production forecast model and to gauge the potential of direct exports of value-added rooibos products.
The 450 rooibos growers and their 5 000 workers produce about 12 000 t/year; half is exported. The main destination for bulk exports of rooibos tea is Germany, where value is added to the product and it is resold to other markets in the EU. The council is assessing the potential for direct exports to those markets.
Interest in rooibos, says Engelbrecht, is also growing in the US and Japan. An application to trademark the name rooibos will be made next month.