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A study of the scope and extent of the
utilisation of indigenous resources by bio-prospecting industries in South Africa
Focus on the economic impacts
Contents
• Industry description
• Markets and prices
• Macro-economic context
• Unlocking the value of the industry
Salient features
• Revenue produced from value-added products in domestic retail market, and which contained bio-resources as an ingredient = R1,470 Million in 2011 – Cosmetics (R555 million or 38% of products)
– Personal hygiene products (R585 million or 40% of products)
– Oils (R50 million or 3% of products)
– Food flavourings (R110 million or 8% of products)
– Complimentary medicines (R170 million or 11% of products).
Salient features
• Products containing bio-resources as an ingredient sells between 50%-100% more by retail value – enables bio-prospectors to adopt a variety of marketing strategies
– premium prices,
– or increased stock turn.
Salient features
• Revenue generated in bio-trading segment = R482 million in 2011
– R322 million exported
– R160 million transformed into value-added products
Salient features
• Wild harvesting and cultivation industry = 2,000 to 2,800 tons per year – Weighted average price = R50/kg.
– Revenue of R41 - R57 million per year.
Resource Estimate of the
current size of the
market for bio-
products
(Rand)
Aspalanthus linearus (Rooibos) 34%
Aloe ferox 25%
Pelargonium 11%
Apis (Honey) 10%
Other 20%
RSA Industry growth = 6%/a
-
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
RSA market size
-
100
200
300
400
500
600
700
800
900
1 000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Bioresources market
Projection (high)
Projection (low)
Driven by retail trade
RSA vs Global industry growth (20%/a)
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Global growth Index RSA Growth Index
Largest global markets
-
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
1 600 000
1 800 000
2 000 000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
US$
10
00
United States of America
Germany
Japan
France
United Kingdom
Largest global suppliers (RSA = 0.4% of Supply)
-
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
1 600 000
1 800 000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
US$
10
00
China
India
United States of America
Germany
Argentina
Macro-economic context
• Ideal development sector :
– It realises the economic value of indigenous species;
– It facilitates rural economic development;
– It has very high value added potential;
– It has a high potential to earn foreign currency;
– It enables the development of new product markets;
– This is a 100% renewable economy
Job creation
• Occurs throughput the whole value chain • Wild harvesting, cultivation and bio-trading holds the highest
potential • Currently generate an estimated 2,100 jobs • Largest job creation component is in the wild harvesting segment,
– However job quality is lowest, both from a wage rate and job security point of view
– Approximately 50% of bio-products species are sourced from wild harvesting with the rest being cultivated
• New job creation potential is highest in the cultivation and bio-trading segments – An additional 700 to 1,700 new jobs possible by 2018 – (1 perm. Job/ha and 10 seasonal jobs/ha. Source SEOBI)
UNLOCKING THE VALUE OF THE BIO-PROSPECTING INDUSTRY
Cultivation segment
Wild harvesting segment
Bio-prospecting segment
Cultivation segment
• Cultivation is an agricultural activity and holds the largest potential for growing the industry and creating formal jobs
• In order to realise the minimum market potential
– at least 500 hectares per year established for 5 years
• NDA and DLARD have a role to play
Wild harvesting
• Increasing demand for bio-prospecting products will place these wild resources at increasing risk
– Develop suitable resource plans for each key species
– Sustainable harvesting practices
– Consistent permitting requirements
– Effective monitoring systems
• SANBI and the provincial conservation agencies have large roles to play
Bio-prospecting
• Product quality control • Setting of product standards through certification, labelling guidelines and other
means can greatly support the development of the industry. • This would improve the value experience of both wholesale and retail customers
and lead to better prices and increased sales while protecting the brand of the industry.
• A precedent for such an arrangement exists within the wine and spirits industry in South Africa.
• The bio-prospecting industry would have to develop its own governance arrangements, and quality and scientific standards for certification.
• An important step forward for the growth and development of the industry. • The economic asset value South Africa’s unique biodiversity can be significantly
enhanced through this and a uniquely South African brand and trade-mark can be built.
• The DST and DTI would both be instrumental in supporting such an initiative
DEAs role
• DEA has the lead role to play in enabling this sector to develop and should thus be the owner of the strategy required to support this exciting sector.
Conclusion
• Amazing industry
• Market is growing
• Prices are amazing
• Macro-economic impact is still relatively small but has potential to grow
“How can we take advantage of this?”.
THANK YOU
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