Estimated reading time: 10 minutes
Potatoes are the fourth most consumed staple food after maize, wheat, and rice. The global market for potatoes was estimated to be about US$116 billion (about R2,3 trillion) in 2024. It is expected to increase by an annual average of 3.5% in the next five years to around US$138 billion. It is therefore a strategic crop for income, food, and nutrition security.
Potatoes enhance diets as it provides carbohydrates, vitamins and minerals to consumers. From a socio-economic perspective, the production of the crop supports livelihoods, creates jobs along the value chain and thus contributes further to the gross domestic product (GDP) of a country. Given that more than half of the production is from developing countries, most of them would be keen to use the crop to advance their socio-economic goals.
This article provides an overview of the South African potato industry over the past decade (2013 to 2023). It further explores whether there are some main changes in the industry, given that it covers the Covid-19 pandemic years when most commodity markets were adversely affected. The focus is on production, market and price trends, with the market component split between domestic and regional trade in Africa.
Local production trends
South Africa produces an average of 2.5 million tonnes of potatoes per annum, up from around 2.2 million tonnes a decade ago. It is the third largest potato producer on the African continent, after Egypt and Algeria, which produce an average of 6.2 and 4.3 million tonnes per annum, respectively. Africa, however, accounts for less than 10% of global production.
South Africa’s potato harvest has been sourced from a relatively steady area of approximately 50 000 ha over the past decade. The average yield in the last five years has been around 50 t/ha, up from around 45 t/ha in the earlier part of the decade (Figure 1).
The main production regions are Limpopo, and the Eastern and Western Free State. These two provinces account for more than half the average annual production, with the Sandveld region in the Western Cape contributing a further 12%. The remainder of the production is made up by other regions such as KwaZulu-Natal (KZN), Mpumalanga, and the Northern Cape. The shares of the area harvested are distributed in a similar pattern to the production volumes.
Domestic market and prices
South African potato consumption per capita increased from about 31 kg in 2007 to about 37 kg in 2023 – growth of about 1.3% per annum. In this period, South Africa’s average consumption exceeded the global average of around 33 kg per annum.
Consumption is driven by factors such as population growth, income, urbanisation, and lifestyle changes. Urbanisation and income seem to have a stronger influence on consumption in South Africa, as 40 to 50% of potatoes are purchased through urban and peri-urban fresh produce markets.
Potatoes are consumed in fresh or processed form such as fries, chips, and other by-products. The rest of the potatoes are kept for seeds. Fresh consumption represents the largest share of potato consumption in the country, ranging from 1.7 to 1.9 million tonnes. Processing of potatoes for various products, including local production and imports, varied from 348.90 to 478.28 thousand tonnes annually.
This category reflects the demand for processed potato products such as chips and other processed foods. Seed potato consumption is important for maintaining agricultural productivity and remains steady, ranging between 172.33 and 174.09 thousand tonnes annually (Figure 2).
Local demand and supply dynamics influence price movements in the fresh produce markets. Generally, average potato price changes tend to be higher than average food price changes. Supply from the different regions, as well as seasonality, influence national and regional prices. Figure 3 shows South African monthly prices for 2019 to 2023, as well as the average for the period.
Prices tend to rise in the middle of the year starting gradually around May, and accelerating in August before declining around October.
The decline in prices towards the end of the year is associated with the time when production from areas in Limpopo enters the market. This province accounts for about one fifth of national production.
Another factor that influences potato prices is the cultivar that is delivered to the markets. There are more than 150 cultivars registered with the Registrar of Plant Improvement in South Africa. The three most planted cultivars are Mondial, Sifra, and Lanorma. These three accounted for about half of total market sales between 2013 and 2021. Sifra fetched the highest price per kilogram.
Further product differentiation can be done within each cultivar by size and class. Prices tend to decrease with a reduction in size, for example from Large to Medium, and in class, such as from Class 1 to 2.
Regional market expansion
Potatoes are a staple vegetable in many African diets, given their ease of access and cost-effectiveness, hence demand is growing across the African continent. This is reflected in imports coming into the region, although these are more seasonal than throughout the year. The top five importers are Egypt, Algeria, Morocco, Mozambique, and Tunisia.
On the export side, Egypt is by far the largest supplier at 72% of African exports. This is followed by South Africa with a market share of 11.9% in 2022. Most South African products go to the Southern African Customs Union (SACU) and Southern African Development Community (SADC) countries. Trade agreements and geographical proximity allow South Africa to benefit from duty-free access. The top five destinations by value of exports are Mozambique, Namibia, Zimbabwe, Lesotho, and Eswatini. Mozambique and Namibia account for about half of all exports.
The importance of regional markets is also illustrated through border posts. The main exit points by volume of potatoes are the Komatipoort (52%), Beit Bridge (8%), Vioolsdrift (7%), Skilpadshek (7%), and Oshoek (7%) borders. The rest of the potatoes would then follow the deep-sea route.
Potential expansion includes exploring North Africa, where countries such as Egypt, Morocco, and Tunisia have a short window every year when imports flow into the region. This window is in the fourth quarter, which is around the same time when South African prices are declining due to an increase in supply. However, to exploit this potential market, South Africa would have to address factors such as transport costs, the bulkiness of the product, etc.
Potential product diversification
Potatoes are a common staple in African diets. Consumption is influenced by disposable income, as people tend to spend more on a greater variety of foods. Potatoes are consumed largely in urban areas where incomes are relatively high. Another driver of consumption is urbanisation.
The rate of urbanisation on the continent has been rapid over the past three decades. This growth is expected to increase in the coming years and thus reflects further opportunities to grow consumption. Urbanisation also creates a demand for convenience foods such as fries and chips.
These developments create opportunities for South Africa to expand its export footprint of fresh potatoes beyond the SADC region. There is also potential to export to Middle Eastern countries such as the United Arab Emirates (UAE) and Kuwait, due to their net import status.
There is more potential growth in the domestic market through potato processing. A paradox currently exists as the country is a net exporter of fresh potatoes and one of the leading importers of processed products such as frozen French fries (Figure 3). Approximately 14% are sold to processors and manufacturers.
Processing potatoes into French fries can further expand demand, through both domestic consumption and exports. Demand for processed potatoes in Africa amounted to 747 000 tonnes in 2023. The main suppliers were countries from outside the continent, such as Denmark, Portugal, the United Kingdom (UK), Belgium, and Poland. Approximately 80% of the 2023 imports entered through Djibouti, which is why it is shown on a different scale in Figure 4.
When the latter three years are considered, Djibouti is the leading importer on the continent. Others include South Africa, Morocco, Nigeria, Libya, Senegal, Botswana, Congo, Angola, Cabo Verde, and Gabon. Djibouti’s imports started in 2021, with volumes that were more than ten times higher than those of South Africa.
Those volumes increased by 8% in the following years. Given the Djibouti scenario, the East African market is worth exploring further.
The Djibouti and Ethiopia nexus
It is worth noting that the demand for potatoes in Djibouti has grown tremendously over time, increasing from 0.03 kg/capita in 2000 to 20.86 kg/capita in 2022. Djibouti is the smallest mainland in Africa, with a population of about one million.
The country is strategically located in the north-eastern region of the Horn of Africa. It is bordered by Somalia to the south, Ethiopia to the southwest, and Eritrea to the north. Djibouti serves as a gateway to the Suez Canal, one of the world’s busiest shipping routes.
The Port of Djibouti and the Doraleh Container Terminal were initially developed to facilitate trade between France and Ethiopia. The port is the lifeblood of the economy, providing a source of income and employment. About 97% of Ethiopia’s import and export cargo has been handled through the Port of Djibouti since the 1990s. The rapid expansion of Ethiopia’s economy has increased the flow of traffic through this port.
Given Djibouti’s position as the main port of entry for Ethiopia, it is likely that the imports of frozen French fries are destined for Ethiopian markets. The increase in imports into Djibouti between 2021 and 2023, following the completion of the new Djibouti-Ethiopia Highway, further supports the notion that products may be destined for Ethiopia.
This infrastructure development improved transportation times and associated costs between the two countries.
The potato subsector is expanding in Ethiopia and is further boosted by population growth, urbanisation, and economic growth. Ethiopia is the third most populous African country after Nigeria and the Democratic Republic of the Congo (DRC), with approximately 110 million people. The country is urbanising at a rate of 4% per annum, which is one of the highest rates in the world. Its economy grew at an average annual rate of 7.8% between 2014 and 2023 based on the World Bank Development Indicators database. The International Monetary Fund (IMF) projects an annual growth of 7.8% in 2029, compared to 6.1% in 2024. Tourism is another driving force behind the demand as Ethiopia recorded 1.1 million international arrivals in 2023, which is one third higher than the pre-Covid-19 era.
These factors imply that there is a need for value-added products such as potato chips. These can be consumed by households and sold by retailers, including hotels, restaurants, and supermarkets. Lack of adequate and reliable supply in the domestic market implies there will be import demand for frozen French fries by hotels and big retailers. The current and potential demand highlighted in Ethiopia creates additional opportunities for South Africa to enter the East African region through the Doraleh Container Terminal.
Opportunities can be further expanded through the African Continental Free Trade Area (AfCFTA), which has been ratified by almost all countries on the continent. Also, Ethiopia joined BRICS (Brazil, Russia, India, China, and South Africa) in 2024. Although BRICS does not have a free-trade area, the member states promote trade and economic ties among each other. However, trade concessions are made bilaterally between BRICS members, thus increasing its chances of a viable market (through the Djibouti route) against other competitors. – Mmatlou Kalabo, Bureau for Food and Agricultural Policy
For more information, email the author at mmatlou@bfap.co.za.