The Sunflower Oil Market in the Africa
As climate change continues to affect agriculture in Africa, many farmers are turning to drought-resistant crops, especially those that rely on the land for their livelihood. Sunflower is one of the crops farmers have turned to because it favors warm and dry weather conditions. Sunflower can grow to a height of 4 meters with a strong root system that can go as deep as 2 meters in search of water and nutrients. These properties make sunflower ideal for weather patterns in most African countries.
Many maize farmers are abandoning maize farming for horticulture in Kenya because sunflower can be grown twice a year, yet maize is grown once. South Africa is the world’s tenth-largest sunflower producer, and the largest in Africa, producing more than 700, 000 tons of sunflower annually. This volume comes third, after maize and wheat. The sunflower seeds are mainly used for the production of cooking oil and oil cake.
Other African nations that grow sunflower and produce significant volumes of sunflower oil include Tanzania, Uganda, Egypt, Morocco, Zambia, Mozambique, Zimbabwe and Angola. Since Sunflower oil is the fourth most consumed cooking oil, many African countries are ramping up production for export, although most are currently producing for the domestic market.
The Impact of Intra-trade Agreements on the Oilseed market
Although most African countries focus on meeting domestic demand before focusing on export, over the past couple of years, sub-regional agreements, such as the East African Community (EAC), the Economic Community of West African States (ECOWAS), the Common Market for Eastern and Southern Africa (COMESA), and the Southern African Development Community (SADC) have bolstered trade between member states increasing the possibility of products, including sunflower oil production and export.
Other than intra-trade agreements with countries near one another, in March 2018, a landmark trade agreement, the African Continental Free Trade Area Agreement (AfCFTA), was signed by African countries to liberalize trade between African nations. The target is the removal of tariffs on at least 90% of the goods traded within the African continent. This agreement aims to help countries to diversify their economies.
These agreements arose due to low intra-regional trade and the low price of raw materials exported to developed nations. For years, most African countries have been exporting raw materials, like sunflower seeds, to developed countries only to buy finished products like the sunflower oil at much higher rates. Intra-trade agreements offered African countries the opportunity to construct industries, including refineries, for value addition.
The increased interest in producing sunflower oil over exporting sunflower seed is evident in the market structure of most sunflower producing African countries. For example, 2009 was the turning point for the South Africa sunflower seed export market, where oil production was favored over the export of sunflower seeds. However, this doesn’t mean South Africa is no longer trading with sunflower seeds. Kenya, Sudan, Namibia, Botswana, Chile and Zambia are importing sunflower seeds from South Africa.
Although the trade of raw materials is still significantly higher, manufactured and processed goods are increasingly taking over the trade agreements between nations. Manufactured goods make up about 42% of goods currently traded regionally, compared to 14.8% in 2014.
Southern African economies, like Botswana and South Africa, remain more sophisticated in the export market, while others are still catching up. Uganda and Rwanda have shown great progress over the past three decades. In 2018, Uganda exported 4000 tons of sunflower oil, the highest volume in more than a decade. Switzerland is the major export market for Uganda’s sunflower oil.
In the East Africa region, Tanzania is the largest producer of sunflower seeds, constituting about 78% of the market share, followed by Uganda. Interestingly, Kenya doesn’t produce as much sunflower seed, especially for cake to meet the burgeoning livestock industry. Tanzania and Uganda remain the primary source for sunflower cake for the Kenya livestock market. Kenya also imports from South Africa, Argentina, and Egypt.
Steps taken by African Nations to Boost Sunflower Oil Production
The Use of Improved hybrid seeds
One of the challenges farmers in Africa is the absence of high yielding seeds that often make the cost of production high since the returns are too low to make the investment worthwhile. Fortunately, the availability of high-yielding hybrid sunflower seeds has become a game-changer in sunflower oil production. Countries, like Tanzania, ensure these seeds are available for current sunflower farmers and those interested in venturing in oilseed agriculture and at an affordable rate. The improved seed increase production by up to three times. The farmers also have a higher profit margin on every harvest.
Policy adoptions targeting increased investments in sunflower farming
Each country in Africa has taken steps to help ensure there is increased production in the oilseed sector. For example, Tanzania no longer attaches VAT on agricultural processing equipment, including oil refining equipment used in the production of sunflower oil.
Adopting a holistic approach for long-term benefits
Agriculture is the one sector that does not benefit from knee-jack reactions. Governments need to ensure the domestic market is sufficiently provided for before edible oils are exported. This is the reason behind the different annual quantities of exports.
This is why major sunflower producers encourage small-scale farmers to come aboard to increase production. Egypt encourages planting sunflowers as part of crop rotation so the country can increase production while the farmers enjoy crop rotation benefits. Taking a systems approach helps to ensure every aspect of the production process is covered, from the farmers to the market.
Compared to other edible oil seeds, sunflower is one of the cheapest. This is one of the reasons it has been adopted expansively in many African countries. The low production cost is not the only consideration, but the price of this cooking oil is also favorable, considering the poverty levels in Africa. The byproducts also make it a worthwhile venture for entrepreneurs.