21 Sep 2011 International research project seeks to boost rooibos exports

An international project is underway to improve the export competitiveness of rooibos could increase current production, sustain jobs and boost the value of exported tea.

The technical assistance project is being funded by the government of the Netherlands and managed by the International Trade Centre, a joint agency of the World Trade Organisation and the United Nations, in collaboration with the Centre for the Promotion of Imports from developing countries, an agency of the Netherlands’ Ministry of Foreign Affairs. The South African Rooibos Council is the local lead partner.

Currently about half of the 12 000 tons of rooibos produced annually is exported, mostly to Germany. Exports have declined after reaching a peak of over 7000 tons in 2008 to just over 6000 tons in 2009.

Production is not the constraint. Although cyclical and influenced by weather conditions there is enough capacity to grow production should demand increase.

Another factor is that while the value of exported tea has increased by an average 26% year-on-year between 2005 and 2009, more than 90% of rooibos is exported in bulk, with little value added.

The industry provides about 4 500 jobs and is labour-intensive with a lot of work being done by hand mainly by non- or semi-skilled workers. It is a significant employer in the Cederberg and surrounding areas of the Western Cape where rooibos is grown. Government has recognised this and one of the key action plans in its Industrial Policy Action Plan (IPAP3) is to promote the exports of added-value rooibos products to prevent job losses in the sector.

• The initial six-month NTFII project takes these factors into account and aims to improve the rooibos’ export competitiveness by:
• An in-depth analysis of the structure and pricing of the German rooibos market to identify new opportunities and market segments.
• Assessing the potential for direct exports of value-added rooibos products in markets where tea is currently re-exported from Germany.
• Assessing the way production data is collected, analysed and disseminated to enable better production forecasts, supply capacity and market price.
• Developing a rooibos export development plan.

“This inception phase is the first part of the project and should the results prove encouraging a second phase might be initiated to implement activities to improve the positioning of rooibos in international markets,” explains Liiia Naas, the programme manager at the International Trade Centre.

The inception phase will include preparing a 12-month project implementation plan, implementing specific interventions to add value to rooibos exports, preparing an export marketing strategy for the industry and developing a globally recognised seal for South African rooibos.

Martin Bergh, chairman of the SA Rooibos Council, says the project should help the industry better understand the rooibos’ export potential.

“To sustain the growth we’ve achieved over the past 12 years we need to continue to develop the domestic market as well as assess new opportunities to expand exports.”

Source: SA Rooibos Council