1. DESCRIPTION OF THE INDUSTRY

After wheat, barley (Hordeum vulgare L.) is the most important small grain in South Africa. It is mainly used for production of malt (which is used for brewing of beer), animal feed and pearl barley. A very small part of the South African barley crop is generally less suitable for malting purposes: it is used for animal feed. On average the annual commercial production in South Africa is about 220 000 tons while the local consumption requirements for barley are around 265 987 ton per year. The contribution of the barley industry to the gross value of agricultural production is summarized in Figure 1.

Figure 1: Barley: Gross Value of Agricultural Production

050000

100000150000200000250000

300000350000400000450000500000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Production Years

R'0

00

Source: Agricultural Statistics Figure 1 indicates that the contribution of the barley industry to the gross value of agricultural production was at its lowest level in 1999 mainly as a result of the decline in production volumes while the prices remained relatively stable at that period. The industry’s contribution to the gross value of agricultural production increased dramatically from 2000 to 2003 as a result of concurrent increase in producer prices and production volumes at that period. The gross value started to decline from 2004 until 2005 due to a decline in production which occurred then but increased again between 2006 and 2008 despite declines

1

BARLEY MARKET VALUE CHAIN PROFILE

in both the area planted to barley and total production. The increase in the gross value is mainly driven by increases in the domestic producer prices that occurred from 2007.

1.1 Producing Areas

Barley is a winter cereal crop whose production is restricted to specific areas in the Northern and Southern Cape (two-thirds of our barley production happens here) as well as the North West Province. In the Southern Cape (Overberg region) barley is grown in areas surrounding Caledon, Bredasdorp, Riviersonderend, Napier and Swellendam and is grown under dry land conditions and in the Northern Cape under irrigation (Vaalharts Douglas, Barkley West, Rietrivier and Hopetown Area). Barley is also grown by some emerging farmers at Taung in the North West Province. In the Northern Cape and North West Provinces, barley production takes place close to stable water sources namely the Vaal River, Harts River, Orange River and the Vaalharts Irrigation scheme. The main world barley producers are Russian Federation followed by Canada, Germany, France, Australia, Turkey and Ukraine respectively. In Africa, barley is produced mainly in Ethiopia, followed by Morocco, Algeria and South Africa respectively. Contribution of various provinces to the total South African barley production is represented by Figure 2. The larger barley production volumes in the Western Cape can be attributed to the fact that the latter is a winter rainfall area while barley is planted mainly in winter.

Figure 2: Barley Production by province in 2008

58%

36%

5% 1%

Western Cape Northern Cape North West Free State

Source: Agricultural Statistics

2

Figure 2 indicates that during 2008 the Western Cape Province was the largest producer of barley in South Africa with a share of 58% followed by the Northern Cape and North West Provinces with shares of 36% and 5% respectively. Smaller quantities of barley are also

produced in the Free State Province which commanded a 1% share of total production during 2008. As indicated by Table 1 production of barley has been declining between 2004 and 2005 in the Eastern Cape Province until there was virtually no production during the years 2006 to 2008. In the Western Cape Province the increase in barley production that occurred between 2004 and 2006 was followed by successive decreases between 2007 and 2008 while the Northern Cape and North-West Provinces increased their volumes of barley produced during the latter period. Table 1: Barley Production by provinces Province Production

in 2004 (tons)

Production in 2005 (tons)

Production in 2006 (tons)

Production in 2007 (tons)

Production in 2008 (tons)1

Western Cape

114 500 154 000 169 000 152 000 110 000

Eastern Cape

1 200 600 0 0 0

Northern Cape

55 000 60 300 58 000 60 000 67 200

North West 13 200 9 000 8 000 9 100 10 100 Free State 1 100 1 100 1 000 1 400 1 500 Source: Agricultural Statistics Production of barley in the Free State Province declined marginally during 2006 but later experienced an increase between the years 2007 and 2008. 1.2 Production Trends Globally, the major producers of barley are Russia, Ukraine, France, Germany, Canada, Spain and Australia as depicted in Figure 3. Russia produces the greatest quantities of barley with an estimated production of approximately 23.14 million tons followed by Ukraine with a production of 12.6 million tons in 2008. The lowest producer of barley in the world is Lesotho, having produced only 240 tons of barley in 2008. South Africa is ranking number 51 in the world in terms of barley production and produced only 215 thousand tons of barley during the year 2008.

3

1 Preliminary

Figure 3: World Barley Producers 2008

0

5000000

10000000

15000000

20000000

25000000

RussianFederation

Ukraine France Germany Canada Spain Australia

Vol

ume

(Ton

s)

Source: FAOSTAT In the African continent, the top barley producer is Morocco and Ethiopia having produced producing 1, 35 million tons each in 2008, followed by Algeria and Tunisia who produced 1, 2 million tons and 254 thousand tons respectively, during the year 2008. South Africa is the fifth largest producer of barley in Africa.

Figure 4: Barley Production in Africa - 2008

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

Morocco Ethiopia Algeria Tunisia South Africa Egypt

Volu

me

(Ton

s)

Source: FAOSTAT Domestic barley production trends and areas planted to barley in South Africa from 1999 to 2008 are represented by Table 1 and Figure 3.

4

Table 2: Barley: Area Planted and Total Production Year

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Area Planted (1000 ha)

102 78 73 72 84 83 90 90 73 68

Total Production (1000 tons)

92 116 131 180 240 185 225 236 222 189

Source: Agricultural Statistics

Figure 5: Barley: Area planted & Production

0

20000

40000

60000

80000

100000

120000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Production Years

Area

Pla

nted

(Ha)

0

50000

100000

150000

200000

250000

300000

Pro

duct

ion

(tons

)Area Planted (Ha) Production (tons)

Source: Agricultural Statistics Table 1 and Figure 3 indicate that area planted for barley declined from 1999 until 2002 while production volumes experienced a continual increase during the same period. The production volume increased until a peak was reached in 2003 even though the area planted was experienced just a marginal increase, indicating that farmers were becoming more efficient then (they managed to produce more barley per unit area). In 2004 the production volume decreased following a slight decline in area planted. Production quantities increased from 2005 until 2006, motivated by an increment in area planted. Both the area planted to barley and the total production declined between 2007 and 2008 in spite of increases in the producer prices during these years.

5

1.3 Local Consumption

Figure 6 depicts local consumption of barley comparing it to the total production for each year to determine if the country is self-sufficient in terms of barley or not.

Figure 6: Barley: Deliveries & Quantities processed

0

50000

100000

150000

200000

250000

300000

350000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Years

Tons

Deliveries (tons) Quantity Processed (tons)

Source: Agricultural Statistics Figure 6 indicates that between the years 1998 and 2007 South African barley production was lower than local consumption. In general the figure indicates that in South Africa more barley is consumed than it is produced and this makes it extremely important for our country to import barley. During the period between 1998 and 2002 domestic deliveries of barley was extremely lower that quantities of barley used in processing within the domestic market. Domestic deliveries began showing increases from 2003 until 2006 triggered mainly by slight increases in the area planted and total production of barley. However, deliveries of barley experienced a marginal decline again during 2007. The implication is that the market for barley in South Africa is huge though the production volumes are low and this makes it clear that we need to come up with various strategies in which we can improve our capacity to increase production of this product.

2. MARKET STRUCTURE

2.1. Domestic Market and Prices

6

In South Africa barley is planted mainly for malting purposes, as there is no significant feed market for barley due to the oversupply of maize produced in the country. Barley differs from most other agricultural commodities in that there is only one major barley buyer in South Africa, namely South African Breweries Malting (Pty) Ltd, which supplies its major

stakeholder South African Breweries, with malted barley. Barley producers have a guaranteed market and fixed price contracts. Average producer prices of barley from 1999 to 2008 are as indicated in Table 3 and Figure 7 respectively. Table 3: Barley Producer Prices Marketing Year

1999

2000

2001

2002

2003

2004

2005

2006

2007 2008

Producer Prices (R/ton)

758.24 800 1000 1200 1433 1342.30 1067.98 1578.79 1936.05 2 300.02

Source: Agricultural Statistics Table 3 and Figure 7 indicate that barley producer prices increased from 1999 to 2003 mainly as a result of a decline in the value of rand against US dollar. Generally, price fluctuations for the past five years can be attributed to fluctuations in production volumes which occurred mainly as a result of variable weather conditions. However, barley producer prices experienced an increase from 2006 into 2008 marketing year with continued decrease in the domestic production levels.

Figure 7: Barley Producer Prices

0

500

1000

1500

2000

2500

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Production Years

Ran

ds/to

n

Source: Agricultural Statistics

A substantial decrease in the producer price for barley was experienced during 2005 owing to a substantial increase in both the area planted to barley and total production volume compared to the past five years.

7

Figure 8: Barley Production vs Consumption

0

50000

100000

150000

200000

250000

300000

350000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Years

Tons

Production (ton) Consumption (ton)

Source: Agricultural Statistics The figure above clearly indicates that the domestic production of barley in South Africa has been far below the domestic consumption2 requirements between the years 1999 and 2008. It is only during the 2008 year when the domestic production exceeded the domestic consumption. The above graph explains the main reason why South Africa is a net importer of barley.

2.2. Import-Export Analysis

Figure 9 compares the volumes of imports and volumes of exports of barley from 1999 to 2008.

8

2 Consumption includes animal consumption

Figure 9: Barley Import and Export Volume

50 000

100 000

150 000

200 000

250 000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Years

Volu

me

(tons

)

Import Volume Export Volume

Source: Agricultural Statistics Figure 9 indicates that for the period under analysis, South Africa was a net importer of barley as indicated by the figure. This means that we use more barley than we produce in our country and this could be because in South Africa barley is planted only for malting purposes where there is only one major buyer (SAB Maltings) and farmers find it too risky to participate in such a market since they know that failure to meet SAB quality requirements would mean no or narrow market for their products. On average imports of barley increased substantially between the years 1999 and 2002 after which declines were experienced until 2008.

2.2.1. Exports

9

South Africa has an import-led barley industry, and as such during 1999 there were practically no exports of barley to the world.

Figure 10 : Value of barley exports by province

0

200000

400000

600000

800000

1000000

1200000

Period (Years)

Exp

orts

Val

ue (R

ands

)

Western Cape Free State Kwazulu-Natal Gauteng

Western Cape 0 0 0 0 0 0 3 770 0 750

Free State 0 0 0 0 0 0 150000 0 0 0

Kw azulu-Natal 0 0 0 130 3784 338 17 19902 0 462

Gauteng 0 64274 70 1013134 10318 392 56542 657722 13186 29266

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: Quantec Easy Data Although it is not forming part of the main producers of barley, the Gauteng Province is indicated in Figure 10 as the main exporter of barley in South Africa. This is mainly as a result of availability suitable infrastructure for storage and value adding facilities in the Gauteng Province which attracts many producers to transport their products to this province after harvest. KwaZulu-Natal and Western Cape Provinces also take part in the exportation of barley mainly because of availability of harbors in these provinces which serve as an overpass for barley exports to other countries, but exports from these provinces are minimal. Intermittent exports of barley were recorded from the Western Cape Province in between 2005 and 2008.. The Kwazulu-Natal province recorded barley exports between the years 2002 and 2008. The values of barley exports from the Gauteng Province which is the main exporter of barley in South Africa are indicated in Figure 11.

10

Figure 11: Value of barley exports from the Gauteng Province

0

500000

1000000

1500000

Period (Years)

Expo

rts

Valu

e (R

ands

)

Sedibeng District municipality West Rand District Municipality

Ekurhuleni Metropolitan Municipality City of Johannesburg Metropolitan Municipality

Sedibeng District municipality 0 0 0 0 0 0 0 0 0 2700

West Rand District Municipality 0 0 0 0 0 0 0 0 0 0

Ekurhuleni Metropolitan Municipality 0 0 0 0 10028 0 0 0 0 0

City of Johannesburg MetropolitanMunicipality

0 64274 70 1013134 290 392 56542 657722 13186 26566

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: Quantec Easy Data In the Gauteng Province, the City of Johannesburg Metropolitan Municipality played a major role in exportation barley between 1999 and 2008. Exports from the district were at their lowest levels between 1999 and 2001 but later experienced a peak during 2002. The value of barley exports from the Gauteng province began to decline immediately after 2002 to reach the lowest level in 2007. These declines are in tandem with the general decrease in the total production of barley in the domestic market.

2.2.1 Share Analysis

This section reviews the analysis made on contribution of various provinces to the country’s total barley exports and contribution of various districts to provincial exports. Table 4: Share of provincial barley exports to the total South African Barley exports (%) Year 2007 2008 Province

1999 2000 2001 2002 2003 2004 2005 2006

Western Cape

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.11 0.00 2.46

Free State 0.00 0.00 0.00 0.00 0.00 0.00 72.62 0.00 0.00 0.00 KwaZulu-Natal

0.00 0.00 0.00 0.01 26.83 46.30 0.00 2.93 0.00 1.51

Gauteng 0.00 100 100 99.99 73.17 53.70 27.37 96.95 100 96.02Source: Calculated from Quantec Easy Data

11

Table 4 indicates that between the years 2000 and 2004 the Gauteng Province commanded a greater share of barley exports followed by the KwaZulu-Natal Province. This indicates that

the greatest percentage of barley is recorded as originating from the Gauteng Province and partly from the KwaZulu-Natal Province despite the fact that the Gauteng Province does not form part of the main producing areas for barley. The implication is that Western Cape and the Free State provinces transport their barley to the Gauteng Province for value adding before exportation and trade arrangements for these products are done by the traders in the Gauteng Province. Table 5: Share of District barley exports to the total Gauteng Barley Exports (%) Year 2007 2008District

1999 2000 2001 2002 2003 2004 2005 2006

Sedibeng 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 9.23 Ekurhuleni 0.00 0.05 0.00 0.00 97.19 0.00 0.00 0.00 0.00 0.00 City of Johannesburg

0.00 100 100 100 2.81 100 100 100 100 90.77

Source: Calculated from Quantec Easy Data Table 5 indicates that between the years 2000 and 2008 the City of Johannesburg Metropolitan District commanded a greater share of barley exports with the exception of the 2003 year when the Ekurhuleni district commanded 97% share in the value of barley exports. The reason behind City of Johannesburg’s dominance in the exportation of barley is availability of suitable infrastructure in the district making it easier for the district to deal with larger volumes of agricultural products.

2.3. Imports

12

South African barley processors depend mainly on barley imports to successfully carry out their daily operations and as such South Africa imports an average of about 121 thousand tons of barley per annum. Over the past five years, variability in rainfall has caused fluctuations in barley quality and yields in South Africa. When local crop has fallen short of requirements, SAB Malting has imported mostly from Canada and to a lesser extent from the EU and Australia. Barley imports from 1998 to 2007 pursue the pattern which is shown in figure 13.

Figure 13: Barley Imports from the World

50 000

100 000

150 000

200 000

250 000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Years

Volu

me

(ton

)

0

50000000

100000000

150000000

200000000

250000000

300000000

350000000

Valu

es (R

and)

Import Volume Import Value

Source: Quantec Easy Data and Agricultural Statistics Figure 13 indicates that barley imports (in terms of both value and quantity) into South Africa from 1999 to 2005 were considerably high. Considerable declines in both the volume and value of barley imports then occurred between the years 2006 and 2007, followed by a marginal increase in 2008. This is mainly because in South Africa barley consumption is more than production which makes it extremely important for South African processors to import barley from other countries at all the times. In 2006 barley was imported in lower volumes because local production was higher than that for other previous years.

Figure 14: Value of barley imports by regions

0

50000000

100000000

150000000

200000000

250000000

Period (Years)

Impo

rts

Val

ue (R

ands

)

Americas Asia Europe Oceania

Americas 0 74452 31789511 191010209 75374086 40160964 91501706 59272564 47247533 40808147

Asia 289 1159 396 1055 2215 2272 3756 1621 3887 22877

Europe 65144424 90645963 23267132 49489791 42016355 26850233 27337010 0 7823 889

Oceania 16 63882579 133498238 77399931 15170604 0 0 7296 0 124170161

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: Quantec Easy Data

13

Figure 14 indicates that in the late 90’s South Africa used to rely heavily on barley imports from the European Union Countries and this changed in 2001 when imports from Oceania increased significantly to be above imports from all regions. However, since 2002 up until 2007 the Americas became a leader in exportation of barley to South Africa and this can be because Canada is one of the largest producers of barley in the world. During 2008 South Africa imported its barley mainly from the Americas and Oceania with smaller values from Asia and Europe.

Figure 15: Value of barley imports from NAFTA

0

50000000

100000000

150000000

200000000

250000000

Period (Years)

Impo

rts

Val

ue (R

ands

)

Canada United States

Canada 0 74452 31788570 191010209 60716150 40160964 60087625 59272564 17602203 20573790

United States 0 0 0 0 14657936 0 31414081 0 29645330 0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: Quantec Easy Data In the North American Free Trade Area (NAFTA) South Africa sourced its imports of barley mainly from Canada between the years 2001 and 2008 while menial imports were also obtained from the United States of America between 2003 and 2007.

Figure 16 : Value of barley imports from the EU

0

10000000

20000000

30000000

40000000

50000000

60000000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Period (Years)

Impo

rts V

alue

(Ran

ds)

Belgium Germany Denmark France United Kingdom Hungary Italy Netherlands

14

Source: Quantec Easy Data

Between the periods 1999 and 2000 barley imports into South Africa originated mainly from France and the United Kingdom in the European Union. From 2001 to 2006 barley imports originated from Denmark, France and the UK as shown in Figure 16. The value of barley imports from the EU into South Africa decreased substantially between 2007 and 2008 as imports from Oceania replaced those from the EU.

Figure 17: Value of barley imports from Oceania

0

20000000

40000000

60000000

80000000

100000000

120000000

140000000

160000000

Period (Years)

Impo

rts

Val

ue (R

ands

)

Australia 16 63882579 133498238 77399931 15170604 0 0 7296 0 124170161

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: Quantec Easy Data

The value of barley imports originating from Australia increased substantially from 1999 with a peak attained during 2001 and thereafter declined to reach the lowest levels between 2004 and 2007. During 2008, the value of barley imports originating from Australia increased considerably, replacing those from other regions such as the EU and NAFTA.

2.4. Processing

Malting barley is a particular type of barley used in making beer, flavourings, and extracts. Only a portion of the malting barley planted each year has the specific qualities needed to be selected for malt. To produce malt, barley kernels are soaked, germinated, and dried. Although the kernels look the same on the outside, this process causes chemical changes inside. The malted barley can now be used to make malt extract, beer and flour. Like regular barley, hulless barley does have a hull, but it is only weakly attached to the kernel and therefore easily removed during harvesting. The hull is the inedible outer coating of the kernel that protects the seed like a jacket. Hulless barley is convenient and is becoming increasingly popular both for human nutrition and as feed for livestock.

15

Barley grain may be milled to produce barley flour, flakes, and bran. Milling involves crushing the seed kernel and separating the outside (bran) from the endosperm, which is the inside part of the kernel where food is stored to nourish a new plant. The endosperm is then ground to make flour. To improve its digestibility, barley grain is cracked or rolled for cattle feed and ground to make feed for hogs and chickens.

Barley straw is the dried stems of the barley plant after the head that holds the grain kernels has been removed. Straw is often used as a soft, dry bed for livestock. It can also be made into building materials, paper and fiber board. To make silage, the entire plant is cut down, piled, compacted, and then allowed to ferment. Fermentation preserves this highly nutritious feed for beef and dairy cattle. Figure 15: Barley Value Chain Tree explaining its uses

Source: Alberta Barley Commission 2.5 Barley Market Value Chain

16

Whole Barley Plant

Grain Stem

Silage Flour

Flakes

Bran Livestock Feed

Malt/Beer

Starch

Paper Coating

Paints

Bio-degradable

Plastics Paper Building Materials

Bedding for

Livestock

Farm Animal feed Manufacturers

SAB Malting South African Breweries

Wholesalers Bottle Stores & Pubs

Imports

2.5. MARKET INTELLIGENCE 2.5.1 Tariffs There is no import tariff charged for barley imports into South Africa from other countries. This is due to the fact that South Africa is a net importer of barley and it is considered that imposing an import tariff would make it expensive to import. Table 6 indicates the tariffs that are applied by France to the imports of barley originating from South Africa (for 2008 and 2009): Table 6 HS Code Product

Description Trade Regime Description

Applied Tariffs 2008

Ad valorem equivalent of specific applied tariffs 2008

Applied Tariffs 2009

Ad valorem equivalent of specific applied tariffs 2009

1003001000 Barley seed Preferential tariff for RSA

45.89 $/ton

11.47% 20.57 $/ton 2.98%

1003009020 Barley (excl. seed): for the manufacture of malt with the following quality criteria: 60,5 kg/hl or more, damaged grains

Preferential tariff for RSA

45.89 $/ton

28.76% 20.57 $/ton 8.91%

1003009030 Barley (excl. seed): Other

Preferential tariff for RSA

45.89 $/ton

28.76% 20.57 $/ton 8.91%

1003009090 Barley (excl. seed): Other

Preferential tariff for RSA

45.89 $/ton

28.76% 20.57 $/ton 8.91%

Source: ITC Market Access Map During 2008 France applied a preferential tariff of 45.89$/ton to exports of all forms of barley originating from South Africa. For barley seed, this is equivalent to 11.47% of the FOB price while for barley that excludes seed; it is equivalent to 28.76% of the FOB price. It must be borne in mind that France is among the top world barley producers. The situation changed during 2009 when the applied tariff was reduced to 20.57$/ton which is equivalent to 2.98% of the FOB price for barley seed and 8.91% for other forms of barley. Table 7 shows the tariffs that are applied by Germany to the imports of barley originating from South Africa (for 2008 and 2009):

17

Table 7 HS Code Product

Description Trade regime description

Applied tariffs 2008

Ad valorem equivalent of specific applied tariffs 2008

Applied tariffs 2009

Ad valorem equivalent of specific applied tariffs 2009

1003001000 Barley seed Preferential tariff for RSA

45.89$/ton 11.47% 20.57 $/ton

2.98%

1003009020 Barley (excl. seed): for the manufacture of malt with the following quality criteria: 60,5 kg/hl or more, damaged grains

Preferential tariff for RSA

45.89$/ton 28.76% 20.57 $/ton

8.91%

1003009030 Barley (excl. seed): Other

Preferential tariff for RSA

45.89$/ton 28.76% 20.57 $/ton

8.91%

Source: ITC Market Access Map During 2008 Germany applied a preferential tariff of US$45.89/ton for exports of barley originating from South Africa; which is equivalent to 11.47%% for barley seed and 28.76% for barley that excludes seed. Similar to France, Germany is also among the top world barley producers and; it is therefore necessary to protect their market to a certain degree. However, during 2009 Germany reduced its applied tariff on barley originating from South Africa, to 20.57$/ton which is equivalent to 2.98% of the of the FOB price for barley seed and 8.91% for other forms of barley. Table 8 shows the tariffs that are applied by Ukraine to the imports of barley originating from South Africa (for 2008 and 2009). Table 8 HS Code Product

Description Trade Regime description

Applied tariffs 2008

Ad valorem equivalent of specific applied tariffs 2008

Applied tariffs 2009

Ad valorem equivalent of specific applied tariffs 2009

1003001000 Barley: seed General tariff

29.99$/ton 16.26% 5.00% 5.00%

1003009000 Barley: other General tariff

29.99$/ton 16.26% 5.00% 5.00%

18

Source: ITC Market Access Map

During 2008 Ukraine applied a general tariff of 29.99$/ton to the exports of barley that originated from South Africa; which is equivalent to 16.26% of the specific applied tariff. Ukraine is also among the top world barley producers. In 2009 Ukraine decreased its applied tariffs for all forms of barley from 16.26% to 5.00%. Table 10 shows the tariffs that are applied by Australia to the imports of barley originating from South Africa (for 2008 and 2009). Table 10 HS code Product

description Trade regime description

Applied tariffs 2008

Total ad valorem equivalent tariff (estimated) 2008

Applied tariffs 2009

Ad valorem equivalent of specific applied tariffs 2009

10030000 Barley MFN duties (Applied)

0.00% 0.00% 0.00% 0.00%

Source: ITC Market Access Map In spite of the fact that Australia is among the top world barley producers, barley exports from South Africa enter the country free of duty since the country applies a 0% MFN rate to barley imports from members of the WTO. Table 10 shows the tariffs applied by the United Kingdom to imports of barley originating from South Africa (for 2008 and 2009). Table 10

19

HS code Product description

Trade regime description

Applied tariffs 2008

Ad valorem equivalent of specific applied tariffs 2008

Applied tariffs 2009

Ad valorem equivalent of specific applied tariffs 2009

1003001000 Barley seed Preferential tariff for RSA

45.89$/ton 11.47% 20.57 $/ton

2.98%

1003009020 Barley (excl. seed): for the manufacture of malt with the following quality criteria: specific weight 60.5 kg/hl or more, damaged

Preferential tariff for RSA

45.89$/ton 28.76% 20.57 $/ton

8.91%

grains 1 1003009030 Barley (excl.

seed): other Preferential tariff for RSA

45.89$/ton 28.76% 20.57 $/ton

8.91%

1003009090 Barley (excl. seed): other

Preferential tariff for RSA

45.89$/ton 28.76% 20.57 $/ton

8.91%

Source: ITC Market Access Map During 2008 the United Kingdom applied a preferential tariff for exports of barley originating from South Africa; which is 45.89$/ton for barley seed which is equivalent to 11.47%% of the FOB price for barley seed and 28.76% for barley (excluding seed). In 2009 the applied tariffs for all forms of barley originating from South Africa to the United Kingdom decreased from 45.89$/ton to 20.57$/ton. Table 11 indicates that the Russian federation applies a general tariff of 5.00% to all forms of barley originating from South Africa, which remained unchanged between 2008 and 2009. Table 11 HS code Product

description Trade regime description

Applied tariffs 2008

Total ad valorem equivalent tariff (estimated) 2008

Applied tariffs 2009

Ad valorem equivalent of specific applied tariffs 2009

1003001000 Barley: barley seed

General tariff 5.00% 5.00% 5.00% 5.00%

1003009000 Barley: other barley

General tariff 5.00% 5.00% 5.00% 5.00%

Source: ITC Market Access Map Table 12 indicates that Canada applies a general tariff of 94.50% to barley for malting purposes originating from South Africa and 21% for other forms of barley from South Africa. Table 12 HS code Product

description Trade regime description

Applied tariff 2008

Ad valorem equivalent of specific applied tariffs 2008

Applied tariffs 2009

Ad valorem equivalent of specific applied tariffs 2009

10030012 Barley for malting purposes: over access commitment

MFN duties (Applied)

94.50% 94.50% 94.50% 94.50%

10030092 Barley: over access commitment

MFN duties (Applied)

21.00% 21.00% 21.00% 21.00%

Source: ITC Market Access Map

20

The import tariff for barley into Canada originating from all countries belonging to the WTO has remained unchanged between 2008 and 2009. Table 13 shows the tariffs that are applied by the United States of America to the imports of barley originating from South Africa (for 2008 and 2009). Table 13 HS code Product

description Trade regime description

Applied tariffs 2008

Ad valorem equivalent of specific applied tariffs 2008

Applied tariffs 2009

Ad valorem equivalent of specific applied tariffs 2009

10030020 Barley, for malting purposes

MFN duties (Applied)

1.00$/ton 0.58% 1.00$/ton 0.37%

10030020 Barley, for malting purposes

Preferential tariff for AGOA countries

0.00% 0.00% 0.00% 0.00%

10030040 Barley, other than for malting purposes

MFN duties (Applied)

1.50$/ton 0.15% 1.50$/ton 0.14%

10030040 Barley, other than for malting purposes

Preferential tariff for AGOA countries

0.00% 0.00% 0.00% 0.00%

Source: ITC Market Access Map There is no import tariff in USA for barley imports from African countries due to the Africa Growth and Opportunities Act (AGOA). For other members of the WTO the USA applies a tariff of 1.00$/ton on barley that is imported for malting purposes, which is equivalent to 0.58% of the FOB price in 2008 and 0.37% in 2009. The USA also applies a tariff of 1.50$/ton for barley other than for malting purposes. Because USA produces only lower quantities of barley, it is unnecessary for them to excessively protect their barley industry with tariffs. Table 14 indicates the tariffs that are applied by Denmark to imports of barley originating from South Africa (for 2008 and 2009). Table 14

21

HS code Product description

Trade regime description

Applied tariffs 2008

Ad valorem equivalent of specific applied tariffs 2008

Applied tariffs 2009

Ad valorem equivalent of specific applied tariffs 2009

1003001000 Barley seed Preferential tariff for

45.89$/ton 11.47% 20.57$/ton 2.98%

South Africa

1003009020 Barley (excl. seed): for the manufacture of malt with the following quality criteria: specific weight 60.5 kg/hl or more, damaged grains 1

Preferential tariff for South Africa

45.89$/ton 28.76% 20.57$/ton 8.91%

1003009030 Barley (excl. seed): other

Preferential tariff for South Africa

45.89$/ton 28.76% 20.57$/ton 8.91%

1003009090 Barley (excl. seed): other

Preferential tariff for South Africa

45.89$/ton 28.76% 20.57$/ton 8.91%

Source: ITC Market Access Map During 2008 Denmark applied a preferential tariff of 45.89$/ton to the imports of barley seed that originated from South Africa; which is equivalent to 11.47% of the FOB value at the time. It also applied a preferential tariff of 45.89$/ton for other forms of barley, excluding barley seed originating from exporter South Africa. This is equivalent to 28.76% of the FOB value. In 2009 the applied tariffs for all forms of barley originating from South Africa to Denmark were decreased to 20.57$/ton as indicated in table 14. 2.5.2. Performance Analysis Table 15: Barley imports during 2008 Exporter Imported

value 2008(thousand US$)

Share in SA’s imports (%)

Imported quantity in 2008 (tons)

Unit value (US$/unit)

Import growth in value between 2004 -2008 (% p.a.)

Import growth in quantity between 2004 -2008 (% p.a.)

Import growth in value between 2007 -2008 (% p.a.)

World 19 833 100 74 357 267 3 -11 195 Australia 14 925 75.3 27 528 542 Canada 2 473 12.5 25 014 99 -27 -40 -1 Argentina 2 432 12.3 21 808 112 Source: ITC Trade Map

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Table 15 indicates that during 2008 South Africa imported a total of 74 357 tons of barley from the world, which represented an increase of 3% in value and a decrease of 11% in quantity between 2004 and 2008. These imports were mainly from Australia and Canada. The Australia commanded 75.3% share in South Africa’s barley imports while Canada commanded 12.5%. Barley imports from Canada into South Africa declined by 27% and 40% in both value and quantity terms respectively..

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Source: ITC Trade Map

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The Figure above indicates that between 2004 and 2008 South Africa’s imports of barley from the Canada grew at a rate slower than Canada’s exports of barley to the rest of the world. Canada’s barley exports to the rest of the world increased by 28% between the year 2004 and 2008 while the value of imports by South Africa from Canada declined drastically over the same period.

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Source: ITC Trade Map

If South Africa is to diversify its imports of barley from the world, the biggest markets exist in France, Ukraine, Germany and Australia. During 2008 South Africa imported no barley from most of these countries while their barley exports to the rest of the world have increased dramatically between 2004 and 2008. A small market for barley imports also exist in Romania whose exports of barley exports to the world have increased by 91% between 2004 and 2008. Traditional markets for barley imports for South Africa remain Canada, Australia and Argentina.

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ACKNOWLEDGEMENTS

The following organizations are acknowledged:

Agricultural Statistics: Department of Agriculture Tel: (012) 319 8453

Fax: (012) 319 8031 www.nda.agric.za Alberta Barley Commission www.albertabarley.com Quantec Easydata P.O.Box 35466 Menlo Park Pretoria 0102 Tel: 012 361 5154 Fax: 012 348 5874 Website: www.quantec.co.za

ITC Trade Map Website: http://www.trademap.org.za ITC Market Access Map www.macmap.org

Food and Agriculture Organization (FAO) www.fao.org/faostat Disclaimer: This document and its contents have been compiled by the Directorate Marketing of the Department of Agriculture, Forestry and Fisheries for the purpose of detailing the barley industry. Anyone who uses the information as contained in this document 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 that can be incurred resulting from the use of this information.