Money in proteas

Finweek English Edition - - INSIDE - BY NICK VAN DER LEEK

Afarmer in Ge­orge re­cently made a claim that, hectare for hectare, protea farm­ing is one of the most lu­cra­tive forms of agri­cul­ture.

A bold claim to make, es­pe­cially con­sid­er­ing t hat i n 2012 South Africa ex­ported pro­duce to the value of R55.5bn (7.8% of to­tal ex­ports) and im­ported pro­duce to the value of R53.6bn (6.5% of to­tal im­ports), mak­ing the coun­try a net ex­porter of agri­cul­tural prod­ucts. In the same year, Africa rep­re­sented 31.2% of SA’s agri­cul­tural ex­ports with the EU rep­re­sent­ing 29.9%.

The ques­tion is with such a huge ex­port num­ber in agri­cul­ture alone, could protea farm­ing re­ally be one of the most lu­cra­tive?

While protea farm­ing is not very dif­fer­ent from other forms of agri­cul­ture, it can be very ex­pen­sive.

Mar­ius Huysamer, who han­dles the run­ning of Berghoff (a fam­ily farm run as a closed com­pany) in the Porter­ville moun­tain range in the Western Cape, says: “There can be a per­fect com­bi­na­tion of the right prod­uct with the right spec­i­fi­ca­tions flow­er­ing at the right time go­ing into the right mar­ket where buy­ers have more money than brains and you gross a few hun­dred thou­sand rand per hectare.

“But this is counter-bal­anced by the ma­jor­ity of the crop, where you’re happy to cover pro­duc­tion and ex­port cost and make some profit to rein­vest in new plan­ta­tions and your bank loan. The other side of the coin is that some­times you’re ac­tu­ally spend­ing more money than what you’re get­ting in. It’s a fal­lacy that protea grow­ers are all cream­ing it – if it were the case we’d have a hell of a lot more grow­ers in the in­dus­try and a thriv­ing in­dus­try in Ge­orge!”

The in­dus­try, how­ever, does ap­pear to be grow­ing. Japie van Staden, a protea farmer based in Gaut­eng, says: “The in­dus­try has changed and be­come more lu­cra­tive and com­pet­i­tive. Fif­teen years ago you would not have been able to f ind a protea farmer in Gaut­eng or ba­si­cally any other prov­ince other than the Cape. The in­dus­try has grown tremen­dously.”


Rand weak­ness is not nec­es­sar­ily a good thing when it comes to agri­cul­ture, Huysamer points out. “Over­all the gross sales prices in euro terms have been stag­nant to de­clin­ing, cou­pled with sharp in­creases in pro­duc­tion costs. This year it’s been partly off­set by the weak rand.

“How­ever, l ots of in­put costs are [also] heav­ily inf lu­enced by the ex­change rate. Such in­put costs would in­clude fuel, ship­ping, fer­tiliser and agri­cul­tural chem­i­cals. These are specif­i­cally with ref­er­ence to sen­si­tiv­ity to ex­change rates. Labour cost needs to be added if you’re talk­ing ‘ in­put costs’ in a broader con­text. This is not ex­chang­er­ate sen­si­tive, but one of our high­est costs,” says Huysamer.

Paul En­gels, a small- scale protea farmer based in Sedge­field in the Western Cape, says that there are many other as­pects that should be taken into ac­count. “Prepa­ra­tion of the land is ex­pen­sive – ridg­ing, and so on – and also ir­ri­ga­tion. Protea farm­ing is an ex­tremely labour-in­ten­sive farm­ing type.”

En­gels also ref­er­ences the long ‘ lag time’ vary­ing depend­ing on va­ri­eties cul­ti­vated, but can be as long as four years be­fore the f irst har­vest. “So it is many years be­fore a plant has de­vel­oped to the stage of giv­ing a good ret urn on stem num­bers. An­other as­pect to be ex­am­ined is the soil type and the mi­cro­cli­mate of the site.

Ac­cord­ing to Van Staden, af­ter three years of cul­ti­va­tion, prof­its will be made off a plan­ta­tion for at least the next f ive years.


How are farm­ers adapt­ing to these chal­lenges? “There’s a def­i­nite move to­ward re­duc­ing the length or com­plex­ity of the value chain, with grow­ers get­ting more in­volved in the lo­gis­tics and mar­ket­ing by cut­ting out the SA-- based ex­porters. The UK has be­come a sig­nif­i­cant buyer of SA fyn­bos where su­per­mar­kets are tak­ing in sig­nif­i­cant vol­umes of prod­uct in the form of bou­quets,” ex­plains Huysamer.

Over the past 15 years the in­dus­try has ex­pe­ri­enced some changes. “The in­dus­try has be­come very cut-throat,” Huysamer ob­serves. “Mar­gins are tight and this is forc­ing smaller grow­ers to bail out or grow to try and gain the ad­van­tage of econ­omy of scale. Over­head costs are sim­ply too high to be prof­itable on a small farm. The to­tal pro­duc­tion has been fairly steady at around 4m kilo­grammes ex­ported per an­num, but there have been sig­nif­i­cant plant­ings within the last decade that are com­ing into pro­duc­tion now and that will add to avail­able stems.”

Huysamer ex­plains that in the case of pin cush­ion proteas, the f low­ers have been planted ex­ten­sively but that there has been lit­tle mar­ket de­vel­op­ment in the EU, so there could be pres­sure on the sales prices once these f low­ers are ex­ported.


Huysamer de­scribes his oper­a­tion as “ex­port fo­cused” but says that he does sell some of his proteas in SA. “The ex­port mar­ket is very picky re­gard­ing qual­ity, whereas we tend to see some very poor prod­ucts in the do­mes­tic mar­ket. This is par­tic­u­larly the case where in­for­mal traders sell third-grade f low­ers on the side of the road. The lo­cal su­per­mar­kets ob­vi­ously have cer­tain qual­ity stan­dards, but these are not reg­u­lated at all in the way that ex­port f low­ers are in­spected for qual­ity so it’s a bit more vari­able lo­cally. There’s no doubt that proteas are start­ing to gain a foothold in the SA mar­ket – we have lots of queries es­pe­cially for wed­dings.”

In En­gels’ view, “Lo­cal and ex­port mar­kets vary to such an ex­tent they can­not re­ally be com­pared. Sales at the farm­ers’ mar­ket are much the same as lo­cal sales to florists, B& Bs, ho­tels, doc­tors and oth­ers re­cep­tion ar­eas. For the ex­port mar­ket, per­fect uni­for­mity of f lower, stem and leaf is nec­es­sary and no blem­ishes or leaf dam­age of any type. For lo­cal sales, curved stems as an ex­am­ple can be used to ef­fect in ar­range­ments. How­ever, pro­duce that can­not be utilised for ex­port can be used for lo­cal sales rather than be­ing dis­carded.”

This means that while our best f low­ers are ex­ported, South African farm­ers still make money off the re­main­ing proteas from lo­cals.


While the rev­enue gen­er­ated from ex­port­ing as well as from sell­ing within the coun­try has in­creased ex­po­nen­tially, fac­tors such as the im­pact of cli­mate needs to be taken into ac­count. Global warm­ing has not been a friend of the global agri­cul­tural sec­tor.

“There are cer­tain cul­ti­vars or species that are more suited to cer­tain cli­mates, such as Protea mag­nifica (the queen protea), which is found in the moun­tains and pro­duces best at high al­ti­tudes. If we have a sig­nif­i­cant warm­ing over the next 50 to 100 years we may find a de­crease in pro­duc­tiv­ity of the queens at lower al­ti­tudes where they may be­come bor­der­line in terms of their propen­sity to f lower. The plants won’t die,” says Huysamer.

“But they may pro­duce fewer or less suit­able f lower heads. The Univer­sity of Stel­len­bosch has in­ves­ti­gated the ef­fects of higher tem­per­a­tures on a few cul­ti­vars grown in green­houses un­der ar­ti­fi­cial warm­ing con­di­tions and found the proteas to be fairly adapt­able, but in gen­eral I would ex­pect a swing in se­lec­tion of cul­ti­vars to­wards those that are adapted to warmer re­gions. Given that the life ex­pectancy of a plan­ta­tion of proteas is 15-20 years, we need to have medium- to long-term view on things.”

Van Staden, who is based in Gaut­eng, takes per­haps a rosier view. “The cli­mate is not such a big prob­lem as you might think. Luck­ily a protea prefers the hot cli­mate rather than a cold cli­mate.” He fur­ther points out that the meth­ods used by farm­ers in other prov­inces dif­fer to those used by farm­ers in the Western Cape due to the win­ter rain­fall that oc­curs in that re­gion.


For those farm­ers who would like to try their hand at protea farm­ing, it’s hard work and ini­tia l ly ex­pen­sive. Huysamer says the costs to start up a hectare are “very vari­able” and “diff icult to gen­er­alise”. He adds that it costs about R125 000 to es­tab­lish a hectare of proteas, which is a size­able in­vest­ment. It bears re­peat­ing that the crit­i­cal fac­tor when it comes to these beau­ti­ful var­ied forms is that pro­duc­tion of f low­ers only starts in the third or fourth year af­ter plant­ing. “So you dip quite deeply into the red be­fore you come into pro­duc­tion.”

If you can stand the heat, protea farm­ing can pro­vide a prof­itable al­ter­na­tive for some farm­ers, even be­yond the Western Cape.

Since proteas are a pro­tected species, a per­mit is needed from Cape Na­ture to trade in fyn­bos prod­ucts. Since this is the case, is the farm­ing limited to fyn­bos ar­eas or can they be grown in green­houses else­where, and is this vi­able? Huysamer says no. “As with most plants they are adapt­able but gen­er­ally do bet­ter in their nat­u­ral en­vi­ron­ment. You can grow proteas in green­houses [Kew Gar­dens in Eng­land is a good ex­am­ple] but this would be hellishly ex­pen­sive and def­i­nitely not vi­able on a commercial scale. Proteas are now grown com­mer­cially in many re­gions. In SA, it’s pre­dom­i­nantly the Western Cape, South­ern Cape and East­ern Cape, but also in KZN and in Gaut­eng. In­ter­na­tion­ally, it’s RSA, Aus­tralia, New Zealand, Chile, Peru, Cal­i­for­nia, Hawaii, Por­tu­gal, Spain, Azores, Ca­nary Is­lands, Italy, Greece, Rus­sia, Is­rael and Peo­ples’ Repub­lic of China.”

The labour is­sues in protea farmi ng are no dif­fer­ent, ac­cord­ing to Huysamer, to what the other sec­tors of agri­cul­ture are ex­pe­ri­enc­ing. “It’s of­ten down to unique sit­u­a­tions on each farm – café own­ers and em­ploy­ers of do­mes­tic work­ers all have their own way of do­ing things and farm­ers are no dif­fer­ent – you get good em­ploy­ers and bad em­ploy­ers, but in agri­cul­ture we have con­sumer groups and large buy­ers like su­per­mar­kets watch­ing what we do, so we tend to toe the line.”


Yes, if the in­ter­na­tional mar­ket keeps im­port­ing sig­nif­i­cant vol­umes of pro­duce. The hum­ble protea will be renowned for more than just be­ing the coun­try’s na­tional flower if in­ter­na­tional trends con­tinue.

Farmer Jaco van Wyk be­lieves that, hectare by hectare, Protea farm­ing is the most lu­cra­tive form of agri­cul­ture in South Africa

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.