What's hindering SA's groundnut industry?

While global demand for groundnuts is increasing, the South African industry is struggling to remain profitable amid cheap imports. Efforts to increase import tariffs are ongoing and, should they succeed, will secure a brighter future for the local groundnut industry. Lindi Botha reports.

- Lindi Botha

Global consumption of groundnuts is growing at a compound annual rate of 8%. This year, the world is expected to consume just over 55 million tons of groundnuts, which is more than the 52 million tons expected to be produced, according to figures from the International Nut & Dried Fruit Council.

Demand from South Africa will continue to place increasing pressure on the global pool of groundnuts, since local production has stagnated, and the country's status as a large importer of groundnuts is not set to change. These imports are hindering further growth in the industry.

IMPACT OF IMPORTS

Imported groundnuts attract a 10% tariff, but imports of peanut butter and roasted peanuts land virtually duty-free at 0,03%.

“[Peanut] butter imports have been increasing, putting pressure on the local processing industry and discouraging farmers from planting groundnuts,” says Adri Botha, chairperson of the SA Groundnut Forum (SAGE).

Figures from the South African Grain Information Service show that South Africa will deliver a crop of 52 000t for the 2024/25 season. This is slightly down from the 10-year average of 53 881t.

South Africa remains a large importer of groundnuts, with 24 326t expected to be imported this year, compared with only 8 744t that will be exported.

Botha notes that, despite a decrease in local production over the past two decades, demand for groundnuts remains stable.