The export potential of South African edible nuts : the special case of macadamia nuts to Germany

Abstract

One of the top priorities of the South African government is to maintain and enhance economic growth. The South African government is seeking to achieve this by implementing export-led growth policies. In many exporting economies. resources are scarce and often export promotion institutions face the double allocation problem. The double allocation problem implies that export promotion institutions face the difficulty of having to allocate scarce resources efficiently (Cuyvers. De Pelsmaker. Rayp & Roozen. 1995). The apportionment of financial resources is among several export promotion instruments that can be used to attain export success. In 2005. the Department of Trade and Industry (the dti). as the trade promotion organisation in South Africa. expressed the need for a scientific study on• the realistic export opportunities in products and markets. This would enable decision-makers to scientifically justify the allocation of public resources to promote products with the highest potential earnings. A Decision Support Model (DSM) designed by Cuyvers (1995) was applied to the South African economy (in a study done by Viviers & Pearson (2007)) to identify priority products with high export potential in new and I or existing markets. The DSM identified the product group,. under the Standard International Trade Classification (SITC). SITC 0577 as the twenty-second product with the most realistic export opportunities. SITC 0577 was identified as having thirty-six potential export destinations. This study evaluated each of the fifteen product categories corresponding to SITC 0577 on an HS level. to determine the product with the most potential for export success for the South African economy. This was achieved by employing a quantitative approach to construct a composite index. The composite export potential index comprised three sub indices: South Africa's export performance index. the world markets index and the production index. Based on an export potential index score of 4.16. macadamia nuts, classified under nuts not else specified (nes). were identified as the product with the highest potential for export success. Once the product with the highest export potential had been identified. trade and market access statistics were analysed to determine a target market with the highest import potential for South African macadamia nuts. Germany was selected from a group potential target markets as the target market for South African macadamia nuts based on an analysis of market size, growth trends, share in the world market trade, and market accessibility. Thereafter, a survey was conducted through unstructured telephone interviews and from secondary sources of information. The survey determined the market entry requirements, consumption trends and price information for South African exporters of macadamia nuts to Germany. This information was compiled into a market profile to provide exporters of macadamia nuts with essential market information on the German market.