MARKET ANALYSIS REPORT NO 1 OF 2015: POTATO

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1 MARKET ANALYSIS REPORT NO 1 OF 215: POTATO Pest Alert: Tuta absoluta (Tomato Leaf Miner) The Department of Agriculture, Forestry and Fisheries has issued a pest alert on Tuta absoluta (Tomato Leaf Miner). Tomato plants are the main host of Tuta absoluta, but other plants in the family Solanaceae, such as eggplant, peppers, potatoes and several weeds, are also attacked. The larvae (worms) of this minute moth pest tunnel inside leaves and may also enter the fruit. This damage causes leaves to dry up and die and fruit such as tomatoes to become unmarketable. Initial reports indicated that there is no risk of the leaf miner attacking potato tubers in the ground and storage, but recent reports as well as historical reports indicate damage on potato tuber as well. There are no records of this pest occurring in South Africa, but there is a risk that this pest might enter the country undetected. The National Plant Protection Organisation of South Africa (NPPOZA) within DAFF is already developing an early warning system for this pest in collaboration with the tomato Producers Organization, PDAs, Potato South Africa and Potato certification Scheme. Potato producers are advised to be alert and report possible detection of Tomato Leaf Miner to DAFF and their nearest certification offices. More information on the pest is available on 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 publication is from October 213 to December 2. 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 Figure 1 below illustrates the quarterly production volumes and gross value of potatoes. Quarterly production volume of potatoes grew by 12.6% to tons in quarter 4 of 2, when compared to the quarterly production volume in the previous quarter (quarter 3 of 2) and the volume has increased by 13.7% compared to the quarterly production volume at the same time in the previous season (quarter 4, 213). Potato production output was stable above 53 tons per annum during the period under review. 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 The quarterly gross value of potatoes was R in quarter 4 of 2, which was.4% above the quarterly gross value in the previous quarter (quarter 3, 2) and the value has increased by 1.9%, when compared to the gross value at the same time in the previous season (quarter 4, 213). In quarter 4 of 2, the gross value eased higher due to an increment in production output, which occurred while the producer price was favorable at the same quarter. Figure 1: Quarterly production of potatoes Q4 213 Q1 2 Q2 2 Q3 2 Q4 2 Volume(tons) GrossValue(Rand) Source: Statistics and Economic Analysis, DAFF 3. PRICING TRENDS Figure 2 illustrates the quarterly producer prices of potatoes. Quarterly producer price for potatoes was R /ton in quarter 4 of 2. The price has gone up by 1.6%, when compared to quarterly price in the previous quarter (quarter 3, 2) and the price has increased by 2.4%, in comparison to the quarterly price at the same time in the previous season (quarter 4, 213). Potato prices eased higher in quarter 4 of 2, despite a 12.6 % growth in potato output and this can be attributed to strong potato uptake at the same quarter. Producer prices were less volatile with the lowest price of R and the highest price of R during the five quarter period. 2

3 Rand /ton Figure 2: Quarterly producer prices of potatoes R 3 2 R 3 1 R 3 R 2 9 R 2 8 R 2 7 R 2 6 R 2 5 Quarters Q4 213 Q1 2 Q2 2 Q3 2 Q4 2 Price ( Rand/ton) Source: Statistics and Economic Analysis, DAFF 4. SALES AT THE NATIONAL FRESH PRODUCE MARKETS Figure 3 below illustrates monthly volumes and prices of the potatoes sold at national fresh produce markets. Monthly volume at national fresh produce markets for potatoes was tons in December 2, which was 3% above the monthly volume of November 2 and the volume has gone up by 18%, when compared to monthly volume at the same in the previous season (December 213). Monthly volumes supplied at the market in October 213 and October 2, were stable above 94 tons per month. In December 2, monthly price of potatoes at national fresh produce markets has decreased by 6.5% to R3 299/ton, in comparison to the monthly price of November 2 and the price has gone down by 18% compared potato price at the same time in the previous season (December 213). Potato prices eased lower in November 2, despite a 4.2% decline in potato volumes supplied across the markets in the same month and this can be attributed to poor uptake of potatoes. 3

4 Tons Rand/ton Figure 3: Monthly sales of potatoes at national fresh produce markets Months Oct 13 Nov 13 Dec 13 Jan Feb Mar Volume (tons) Price (Rand/ton) Apr May Jun Jul Aug Sep Oct Nov Dec R 5 R 4 5 R 4 R 3 5 R 3 R 2 5 R 2 R 1 5 R 1 R 5 R Source: Statistics and Economic Analysis, DAFF 5. EXPORT Figure 4 below illustrates the quarterly export volumes and values of potatoes. In quarter 4 of 2, quarterly export volume of potatoes dropped by.7% to /tons, when compared to the quarterly export volume in the previous quarter (quarter 3, 2) and the export volume has increased by 22.3%, when compared to the quarterly export volume at the same time in the previous season (quarter 4, 213). Quarterly export volume of potatoes eased higher in quarter 4 of 2, and this can be ascribed to a 12.6 % growth in domestic production output at the same quarter. The quarterly export value of potatoes was R in quarter 4 of 2, which was 12% higher, when compared to the quarterly export value in the previous quarter (quarter 3, 2) and export value has increased by 24%, when compared to the quarterly export value at the same time in the previous season (quarter 4, 213). It was more profitable to export potatoes in quarter 4 of 2, when compared to quarter 4 of 213 potato export. 4

5 Volume (tons) Value (Rand) Figure 4: Quartely potato exports Q4 213 Q1 2 Q2 2 Q3 2 Q4 2 Volume (tons) Value (Rand) Source: Quantec Easy data 6. GROWTH, VOLATILITY & STABILITY ANALYSIS The 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 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 October 213 and ending in December 2. Table 5: Potato industry Growth Rates and Coefficients of Variation (October 213 December 2) Category Subcategory Growth Rate Coefficient of Variation Production Volume 2.8%.65 Gross Value of Production Value 3%.17 Producer Prices Value.5%.58 5

6 Category Subcategory Growth Rate Coefficient of Variation Export Volume 3.8%.87 Export Value 4.7%.81 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 less than 1. The low volatility indicates that potato industry has displayed minimum changes during the five quarter period. Potato industry has generally experienced a positive growth. 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//. Deputy Director: Commodity Marketing Tel: (12) Fax: (12) ElvisNak@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