MARKET ANALYSIS REPORT NO 2 OF 2013: POTATO

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1 MARKET ANALYSIS REPORT NO 2 OF 213: POTATO 1. INTRODUCTION The following text is a review of potato marketing environment. This analysis is updated on a quarterly 1 basis. The interval covered in the current issue is from January 212 to March 213. This period is subdivided into five, 3 months long quarters. The issues discussed in the review are the quarterly sales, pricing, sales in the national fresh produce markets, exports, growth and volatility. 2. PRODUCTION TRENDS Table 1 and figure 1 below illustrate the quarterly production of potatoes during the five quarters that are under review. Table 1: Quarterly production of potatoes Quarters Quarter Quarter Quarter Quarter Quarter Quarterly production (Tons) Gross Value (Rand) R R R R R Quarterly production volume of potatoes decreased by 2.3% to tons in quarter 1 of 213 when compared to the quarterly production volume in the previous quarter (quarter 4 of 212) and the volume has decreased by.7% compared to the quarterly production volume at the same time in the previous season (quarter 1, 212). Quarterly gross value of potatoes was R in quarter 1 of 213 which was 12% below the quarterly gross value in the previous quarter (quarter 4, 212) and the value has increased by 19.8% when compared to the gross value at the same time in the previous season (quarter 1, 212). The production of potatoes was 1 Quarter 1 (January to March), Quarter 2 (April to June), Quarter 3 (July to September), Quarter 4 (October to December) 1

2 Tons Rand fairly stable from quarter 1 of 212 to quarter 1 of 213. In quarter 1 of 213, the gross value eased lower due to low production output and poor producer prices at the same quarter. Figure 1: Quarterly production of potatoes Q1 212 Q2 212 Q3 212 Q4 212 Q1 213 Quarters Volume(tons) Gross Value (Rand) 3. PRICING TRENDS Table 2 and Figure 2 illustrate the quarterly producer prices of potatoes. Table 2: Quarterly producer prices of potatoes. Quarters Quarter Quarter Quarter Quarter Quarter Price in Rand/Tons R R R R R Quarterly producer price for potatoes was R /ton in quarter 1 of 213. The price has gone down by 1.3% when compared to quarterly price in the previous quarter (quarter 4, 212) and the price has gone up by 18.9% compared to the quarterly price at the same time in the previous season (quarter 1, 212). Potato prices eased lower in quarter 1 of 213 despite to 2.3% decrease in potato output at the same quarter. This can be attributed to poor potato uptake in the same quarter. The producer prices peaked in the fourth quarter of

3 Rand /ton Figure 2: Quarterly producer prices of potatoes R 3 R 2 5 R 2 R 1 5 R 1 R 5 R Q1 212 Q2 212 Q3 212 Q4 212 Q1 213 Quarters 4. SALES AT THE NATIONAL FRESH PRODUCE MARKETS Table 3 and Figure 3 below illustrate monthly volumes and prices of the potatoes sold at national fresh produce markets. Table 3: Monthly sales of potatoes at national fresh produce markets (NFPMs) Months Volume (tons) Price (Rand/ton) Jan R Feb R Mar R Apr R May R Jun R Jul R Aug R Sep R Oct R Nov R Dec R Jan R Feb R Mar R

4 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Tons Rand/ton In March 213, monthly price of potatoes at national fresh produce markets decreased by 7.8% to R /ton when compared to the monthly price of February 213 and the price has gone up by 19.7% compared potato price at the same time in the previous season (March 212). According to Potatoes South Africa, a long term trend indicates that prices will follow a declining trend from the beginning January until end March. Monthly volume at national fresh produce markets for potatoes was tons in March 213 which was 12.6% above the monthly volume of February 213 and the volume has decreased by 3% when compared to monthly volume at the same in the previous season (March 212). Potato prices eased lower from January 213 to February 213 despite consecutive decrease in potato volumes across the markets. This can be attributed to poor potato uptake in the same months. Figure 3: Monthly sales of potatoes at national fresh produce markets R 4 R 3 5 R 3 R 2 5 R 2 R 1 5 R 1 R 5 R Months Volume (tons) Price (Rand/ton) 5. EXPORT Table 4 and Figure 4 below illustrate the quarterly export volumes and values of potatoes. Table 4: Quarterly export of potatoes Quarters Quarter Quarter Quarter Quarter Quarter Volume ( tons) Value (Rands) R R R R R Source: Quantec Easy data 4

5 Volume (tons) Value (Rand) In quarter 1 of 213, quarterly export volume of potatoes increased by 4.6% to tons when compared to the quarterly export volume in the previous quarter (quarter 4, 212) and the export volume has decreased by 9.6% when compared to the quarterly export volume at the same time in the previous season (quarter 1, 212). Quarterly export value of potatoes was R in quarter 1 of 213 which was 9% lower, when compared to the quarterly export value in the previous quarter (quarter 4, 212) and export value has increased by 1.8% when compared to the quarterly export value at the same time in the previous season (quarter 1, 212). It was more profitable to export potatoes in quarter 1 of 213 when compared to quarter 1 of Figure 4: Quartely potato exports Q1 212 Q2 212 Q3 212 Q4 212 Q1 213 Quarters Volume (tons) Value (Rand) Source: Quantec Easy data 6. GROWTH, VOLATILITY & STABILITY ANALYSIS Potato industry growth rate was calculated from regression analysis results. The volatility and stability measures were determined by calculating the coefficient of variation for the various potato industry statistical series. The formula for the coefficient of variation is as follows: V x i N where: V = Coefficient of Variation = Standard deviation = mean = observation in quarter i x i N = Number of quarters 5

6 The outcomes of these growth and volatility calculations are presented in Table 5. They are calculated using quarterly statistics and covered the same five-quarter period under review beginning in January 212 and ending in March 213. Table 5: Potato industry Growth Rates and Coefficients of Variation (January 212 March 213) Category Subcategory Growth Rate Coefficient of Variation Production Volume.5%.39 Gross Value of Production Value 6.4%.128 Producer Prices Value 5.9%.119 Export Volume -19.5%.443 Export Value.8%.92 Source: Calculated from Statistics and Economic Analysis Data As shown in Table 5, on average potato production volume, gross value of production, producer price, export volume and export value were less volatile with variation coefficients of.4,.13,.12,.44, and.9 respectively. The low volatility indicates that potato industry has displayed minimum changes during the five quarter period. Potato industry has generally experienced a positive growth except for export volume. 6

7 7. Acknowledgements Acknowledgement is given to the following information sources: 7.1 Directorate: Statistics and Economic Analysis Quantec Easy Data Potatoes South Africa For more information contact: Director: Marketing Department of Agriculture, Forestry and Fisheries Private Bag X 15 Arcadia 7 Tel: (12) Fax: (12) MogalaM@daff.gov.za Website: http//. Acting Deputy Director: Commodity Marketing Tel: (12) Fax: (12) ElvisN@daff.gov.za Horticulture (Vegetables): Senior Agricultural Economist Tel: (12) Fax: (12) NdinannyiM@daff.gov.za Disclaimer: This document and its contents have been compiled by the Department of Agriculture, Forestry and Fisheries for the purposes of detailing the potato industry. Anyone who uses this information does so at his/her own risk. The views expressed in this document are those of the Department of Agriculture, Forestry and Fisheries with regard to the industry, unless otherwise stated. The Department of Agriculture, Forestry and Fisheries therefore, accepts no liability for losses incurred resulting from the use of this information. 7